Home sale scams ramp up amid a housing market short on inventory
Last month, a real estate agent in Patty Zuzek’s office got a call about selling a plot of land.
The caller, who had heard about the real estate agency through a Facebook post wanted to sell the vacant lot $75,000 below the market value. The caller’s only request was that the transaction be in cash.
“What they wanted was a quick deal,” Zuzek, a broker with Fieldstone Real Estate Specialists in Minnesota, told Yahoo Finance.
Zuzek’s colleague found a buyer, who was a builder. When the purchase agreement on the property came in, the builder buying the property put a “build your custom home” sign on the lot.
Two days later, the property owner contacted the builder.
“‘Get your sign off my lot,’” Zuzek said the owner told them. “That property is not for sale.”
It turned out that Zuzek’s coworker fell victim to a growing type of fraud across the country: scammers trying to sell land they don’t own.
In 2022, the FBI received 11,727 real estate-related complaints with losses of over $396 million, an 86% increase versus 2020 levels. Earlier this year, the US Secret Service, in conjunction with CertifID Inc., which offers wire fraud protection services, put out an advisory over the “sharp increase in reports of real estate fraud associated with vacant and unencumbered properties.”
And a Secret Service representative at the New York field office told Yahoo Finance on Friday that these scams are becoming a bigger issue and she frequently takes calls on the matter.
“This is a very new crime that's being committed in the United States,” Tyler Adams, CEO at CertifID, told Yahoo Finance. “It almost didn't exist in previous years and compared to what we've seen this year.”
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The notion of selling someone’s property without them knowing might seem unthinkable. But it's happening more often than not.
Data from CertifID shows that 77% of real estate professionals surveyed reported seeing an increase in seller impersonation fraud attempts within the last six months, with 54% experiencing at least one seller impersonation fraud attempt during that period.
Fraudsters are becoming savvy in using publicly available records to impersonate the owner of a vacant property to benefit from the sale. The current housing landscape hasn’t helped either. Real estate agents are more vulnerable and desperate for a potential deal as the inventory of homes to sell remains historically low.
“If you're a real estate agent, two years ago you were doing 12 or 20 deals a month, and now you're doing one and somebody shows up and says, ‘Hey, I want to sell my vacant land.’ That looks like gold to a real estate agent who hasn't done a deal in a long time,” Adams said.
Some fraudulent sellers are getting away with minimal paperwork to prove they actually own the place and are able to conduct transactions via phone and email using fake IDs to impersonate owners, Zuzek said.
Scammers “are going to do everything in the world to try to make you think you're talking to the right person or you're communicating with the right person and those tactics are going to get harder and harder to detect,” Adams said.
It also is more difficult to spot a scam if the property is vacant, which is the type of property many of these fraudsters are targeting.
“The focus of the scam is vacant parcels and unoccupied properties that are lien-free,” Deanne Rymarowicz, associate counsel for the National Association of Realtors, told Yahoo Finance.
For a buyer caught up in one of these scams, a lot of legwork awaits them. The buyer has to regain any money they lost through a title insurance claim, a process that could be very aggravating and time-consuming, according to the National Association of Realtors.
So far, CertifID has helped 378 customers, who have fallen victim to this type of scam, with 60% of those representing buyers.
For Zuzek’s coworker, once the police got involved two weeks later, the real estate firm stepped back and let them take the lead. Zuzek said the builder will get back the money they paid already once the original owner of the property files a complaint with authorities.
“It'll just take some time,” Zuzek said.
"What's interesting is I go around and speak at different offices and talk with other brokers, and it's amazing how many people are like, ‘that's just happening to one of our agents,’” she said. “It's like, wow, this is like a plague.”
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv.
