By Steve Strode, Real Estate Commissioner - June 2023
Earlier this month the topic of seller impersonation fraud surfaced several times in the span of just a few days – each with different stakeholders. First, it was discussed at the Real Estate Board meeting as a possible topic for the next biennium's Law and Rule Required Course. A day later, our complaint intake staff were reviewing a complaint from a property owner against a licensee who improperly listed that property owner's vacant land. Later that week, a broker shared his personal experience of almost being duped by a fraudster seller who was trying to enlist his services. Considering this, the need became clear to share more information here.
Outlined below are some of the recurring themes and a few recommendations to mitigate risk.
Common characteristics
- A seller contacts a listing agent to list a property, often non-owner occupied or vacant land.
- The seller will claim to be out of town and need to conduct the transaction remotely.
- They usually want a quick sale and will ask to list the property far below market value.
- The seller wants a cash offer.
- The preferred mode of contact is email over phone calls, and the fraudster may refuse video calls.
- They insist proceeds are wired only instead of mailing a check.
- They may request to use their own notary.
- They ask that no For Sale sign be posted on the property.
Viewed individually any of these characteristics may not be red flags. But when several or most apply, the risk becomes more apparent. So, what are some techniques to prevent the real property owner – and you as a licensee – from getting wrapped up in this fraud?
The old adage “trust, but verify"
In the example of the complaint that came into the Agency, one of the easiest steps may include the low-tech option. The sellers were unknown to the listing agent, and no visual personal verification was obtained – such as a Zoom call and/or collecting IDs. The vacant land listing agreement was simply completed and sent by DocuSign to the fake sellers' bogus email address. Worth noting is that the listing agreement was drafted with the legitimate sellers' out of area home address found on the vacant land's tax address.
Since the listing agent did not or was unable to obtain visual verification of the seller's identity, a simple risk-mitigation step could have been employed. That would have been to express mail a copy of the electronically signed listing agreement to the address of record with a request to confirm the accuracy of the listing. The legitimate owner would have been alerted to the potential fraud immediately and could have called the listing agent to stop moving forward.
Licensees may think of other methods to mitigate risk in this situation, and this example is meant to provide one real-world example.
Additional ways to protect you and property owners from seller impersonation fraud:
- Contact the seller at an independently researched phone number.
- Obtain proper identification.
- Conduct a video conference call; be very suspicious if that party is unwilling or claims they are unable.
Any legitimate seller planning to conduct an entire transaction remotely must have access to technology in order to comply with escrow office's remote online notary process.
The American Land Title Association has also prepared a handout related to the topic. Principal brokers are encouraged to develop written policies with respect to listing properties in which the licensee and seller have never met in person.