If it sounds too good to be true, it probably is.
Every week there’s a new horror story of someone saying they were lured by a promising home sale, but the seller wasn’t available for a phone call or to meet on-site.
“Just wire the money” ought to be a huge red flag, but in the post-pandemic days of doing business via Docusign and text messages, the scammers came out in full force and have gotten smarter over time.
Scott Rooker, senior vice president, branch manager, and legal counsel for Republic Title of Texas said his firm has seen so much of this type of fraud they created a fact sheet on fake sellers to warn clients.
“Fraudsters are impersonating property owners to illegally sell commercial or residential property,” the flier states. “Fraudsters are using the real property owner’s Social Security and driver’s license numbers in the transaction, as well as legitimate notary credentials, which may be applied without the notary’s knowledge. The criminals are highly sophisticated and hard to detect if you are not vigilant.”
Realtors can be a huge part of the solution if they know the red flags to look for and understand how important their role is, Rooker told daltxrealestate.com.
What to Look For
The industry has seen a rash of fraudulent transactions where “sellers” advertise a non-owner-occupied property and their mailing address is different from the property they’re selling, Rooker explained.
“Somebody’s holding title to a piece of dirt here in Texas and they live in Florida or California or Oklahoma,” he said. “So it’s just an investment deal. The other thing these fraudsters target are properties that have no outstanding mortgage liens or debts. They’re able to go into the public record, they’ll find the vacant land, and they’ll see no debt and no liens. These are prime targets because if you’re going to sell property and you’ve got to pay off a lien, you need to talk to the lender and the lender needs to talk to the seller. That’s an added layer.”
And sometimes even the listings are fake.
AI is a Boon For Scammers
While artificial intelligence has revolutionized the way some people do business, there’s a dark side, Houston-based Keller Williams Realtor Paul Hunter wrote in an article published last month on LinkedIn.
“One of the most insidious uses of AI in the real estate industry is the creation of fake property listings,” Hunter said. “With the help of AI-generated content, scammers can craft convincing property descriptions, generate realistic images of nonexistent properties, and even fabricate virtual tours to deceive prospective buyers. These fake listings can appear on legitimate platforms, making them challenging to identify.”
Again, the verbal interaction is limited or nonexistent.
“It’s quick; there’s not a lot of people between themselves and the money,” Rooker said. “The communication is generally text messages or emails. These fraudsters won’t be on the phone with you. They won’t do a video conference. They’ll request that they use their own mobile notary. They won’t come to closing. They refuse to do a multi-factor authentication process.”
It’s only going to get worse with artificial intelligence coming into play, Rooker added.
“It’s really scary,” Rooker said. “We’re just hitting the tip of the iceberg. Even if we do a two-way authentication with video, they could just AI the person’s image.”
Don’t Fall For The Scam
So what should a homebuyer do when they think a deal sounds too good to be true?
It’s important to run it by a professional and note inconsistencies.
“When we get too many inconsistencies, we’re going to terminate the deal and just respectfully decline to insure,” Rooker said. “We’ve caught some because, all of a sudden, they disappear.”
The attempts at fraudulent transactions have picked up this year, he added.
“With all the damage in Hawaii and Florida, with all those insurance proceeds, seller impersonation fraud could be rampant over there,” Rooker said. “It’s something that the agents need to be aware of. We’re obviously going to be aware of it because it’s a loss. It’s fraud, and it’s void.”
The National Association of Realtors also has cautioned agents to use data systems that detect and flag fake information, to implement encryption security measures, and to conduct thorough due diligence, such as previewing and inspecting a property and reviewing legal documents.
And, Rooker added, report fraud or suspected identity theft to the authorities.
The fraudsters know the market and that the inventory is low, Rooker said. That means people are hungry for deals.
These types of scams are likely to continue infiltrating North Texas.
“How do we do mobile closings anymore?” Rooker said. “These are things the industry is really going to have to think about.”
