Seller Impersonation Fraud: Red Flags and Best Practices

This information is courtesy of the Texas Land Title Association.

With the increasing prevalence of remote work and communicating with clients through email and text, it’s crucial to confirm the identity of potential clients. Any verification process your brokerage uses must be applied uniformly to all individuals. Stay up to date with these recommendations to protect you and your clients from seller impersonation fraud.

Red Flags

Absentee Owners

  • Listing property that is non-owner occupied.
  • Examples include vacant land, in-fill vacant lot, unoccupied acreage or ranch land, rental property, short-term rental property such as Airbnb, a second home, and a vacation home.

Low-Priced or All-Cash Deals

  • A prospective seller wants to list the property below market value and only wants offers from buyers willing to pay all cash.

FSBO, Unknown Seller

  • The property wasn’t listed with a regular agent, but instead through a for-sale-by-owner website that shares the listing on public platforms like Zillow.
  • No one involved knows the seller or has even talked to the seller until a buyer wants to make an offer.

Communicates Only Through Text or Email

  • The seller actively avoids any face-to-face or phone conversations, solely relying on text or email for communication.
  • When called, the seller’s voicemail picks up and the seller responds through text or email.

Rush To Close

  • During negotiations with the buyer, the seller readily accepts almost all terms, prioritizing a quick cash transaction.
  • The seller shows no objections to proposed fees, cost allocations, commissions, or other terms.

Refuses To Attend Closing

  • The seller might initially express a willingness to attend the closing in person, but as the closing date nears, the seller suddenly becomes unavailable. However, the seller is still available to sign the documents with a notary, often in a different city or state.

Suspicious Wire Instructions

  • The seller provides wiring instructions for the proceeds to a bank that is not geographically close to the property or the mailing address for the tax bill.

Suspicious Phone Number

  • When the seller’s phone number is reverse searched to determine if it belongs to the owner of the property, it shows as a completely unrelated name or as unknown (e.g., a burner phone).

Best Practices to Protect Your Business and Clients

Check the Tax or Appraisal Records Online to Find the Name and Address of the Owner in the Record of the Property

  • If the property address and mailing address are different from where the seller appears to be calling from, it raises a question of whether the seller may be someone impersonating the property owner and whether the agent should take steps to verify their identity.

Send a Confirmation Letter to the Property Owner

  • Send it to the property address (forwarded if it’s not the primary residence) and the mailing address for the tax bill. The letter should clarify that you are listing the property and sending the letter as a fraud-prevention measure. It should provide your contact details and request the property owner to reach out to confirm the owner’s intent to sell the property.

Access the Secretary of State Corporate Records Online for Properties Owned by an LLC or Corporation.

  • These records include the name and address of the manager, registered agent, and/or officers. You can then reach out to them for help in contacting and verifying the true property owner

Ask the Seller To Provide a Government Issued Photo ID.

  • Once received, follow these steps:
    • Verify that the address on the ID matches the tax records and if it’s presently valid.
    • Compare the signature on the ID with recorded documents in the county clerk’s real property records, such as a deed of trust or MUD notice. Your preferred title company can help provide the necessary documents for comparison.

Set Up a Video Call With the Seller.

  • If the seller refuses a video call without a valid reason, it’s a red flag indicating potential fraud. If you can have a video call, ask the seller property-specific questions that only the owner would know. Trust your instincts if anything seems suspicious during the conversation.

Request Copies of Documents That Only the Property Owner Would Have

  • Ask for a copy of a tax bill, utility bill, copy of the settlement statement, title policy, or survey from when the property was purchased

Perform a Reverse Directory Search on the Provided Phone Number Using Investigatory Databases Like Forewarn or IDI Core.

  • This search will reveal the owner of the phone number or indicate if it’s unknown, suggesting the use of a burner phone to conceal the person’s true identity.

Use a Trusted Title Company

  • Make sure the title company has implemented its own fraud-detection procedures.

Encourage Recipients of Your Mailings To Create a Google Alert for the Property Address.

  • This alert will notify them if the property is marketed or mentioned publicly. You should also set up Google alerts for your own listings to prevent scams and fraudulent activities.

If You Believe You Are a Victim of Seller Impersonation Fraud

  • Cease all communication with the fraudulent seller.
  • Terminate the listing immediately.
  • Notify all involved parties of the fraud.