At some point, many folks will buy or sell property, which is why real estate can be lucrative. Because of this, and the prevalence of internet advertising and online listing platforms, scammers are always seeking new avenues to exploit unsuspecting individuals. Land listing scams in real estate have become increasingly common, with fraudsters creating fake listings and luring people into making payments for properties that do not exist. Why are these scams becoming more common, and what can be done to protect your investment?
The lack of affordable properties and the desperation of someone looking for a place to live is a leading cause. Criminals create fake listings, often using stolen photos and descriptions from legitimate websites, to lure unsuspecting individuals into making payments for properties that do not exist. According to the Federal Trade Commission (FTC), Americans lost over $1.9 billion to fraud in 2019, with real estate scams among the top five types of fraud reported.
The internet has undoubtedly made a REALTOR®’s job easier (anyone remember the paper books that made up our Multiple Listing Service?). But one drawback to our electronic age is the ease that a criminal could exploit online portals. These platforms make it easy for fraudsters to create fake listings and attract potential buyers. The scammers typically ask for payment upfront, using various tactics to convince people to part with their money. For instance, they may offer a property at a price significantly lower than the market value or claim that the property is in high demand and only available for a limited time.
This practice has had such an uptick that the U.S. Secret Service has become involved and issued guidance on the matter. They have released information detailing what these schemes entail, along with possible ways to prevent them in the first place.
So what does this land scam consist of exactly? The U.S. Secret Service summarizes it as:
Criminals search public records to identify real estate that is free of mortgage or other liens and the identity of the property owner. These often include vacant Lots or rental properties. The criminal poses as the property owner and contacts a real estate agent to list the targeted property for sale, and requests it being listed below current market value to generate immediate interest. The criminal, posing as the property owner, demonstrates preference for a cash buyer, and quickly accepts an offer. Then the criminal, posing as the property owner, refuses to sign closing documents in person, and requests a remote notary signing. The criminal, or co-conspirator, also impersonates the notary and provides falsified documents to the title company or closing attorney. At this point, the title company or closing attorney unwittingly transfers the closing proceeds to the criminal. It’s important to note that all communication is electronic, not in person.
So what steps can people take against this fraud? The Secret Service suggests the following steps:
- Independently search for the identity and a recent picture of the property seller.
- Request an in-person or virtual meeting and to see their government issued identification.
- Be on alert when a seller accepts an offer below market value in exchange for receiving the payment in cash and or closing quickly.
- Never allow a seller to arrange their own notary closing.
- Use trusted title companies and attorneys for the exchange of closing documents and funds.
Think you might be experiencing this type of fraud? You can report real estate scams to the FTC (www.ftc.gov), or your state’s attorney general’s office.
There may be an uptick in recent land scams, but they are far from the only way to be targeted during a real estate transaction. In coming weeks, after we release February’s Housing Market Statistics, we will revisit some other fraudulent activity and how to remain on guard against them. The risk of online scams can make someone who is interested in buying property wary, but don’t let that stand in your way. Just utilize the services of a REALTOR® to help ensure that your property transaction goes smoothly. REALTORS work with clients every day and help guide them through the homebuying process. That’s Who We R®.
Founded in 1912, Greater Chattanooga REALTORS® is the voice for real estate in Greater Chattanooga. A regional organization with more than 2,700 members, Greater Chattanooga REALTORS® serve Hamilton and Sequatchie counties in southeast Tennessee and Catoosa, Dade, and Walker counties in northwest Georgia. The Association is one of approximately 1,100 local associations/board of REALTORS® nationwide that comprise the National Association of REALTORS®. Greater Chattanooga REALTORS® owns and operates a Multiple Listing Service (MLS), which is one of approximately 600 MLSs in the country and services more than 3,000 MLS users. Local Association membership is comprised of REALTORS® servicing the Greater Chattanooga area and specializing in a variety of disciplines – appraisal, commercial, industrial, land, multi-family, property management and residential. Working alongside REALTORS® are our Affiliate members, who represents related industries in sympathy with the objectives of the Association. Our Affiliate members include mortgage lenders, home inspectors, title and closing services, pest inspection and control and insurance.