Seller Impersonation Fraud: An Emerging Threat

Seller Impersonation Fraud: The Basics

Seller impersonation fraud is a type of real estate fraud that occurs when someone falsely poses as a property owner to sell real estate and collect the proceeds. These fraudsters typically use stolen non-public personal information, such as social security numbers and driver’s license credentials, to create convincing fake identification documents. In some cases, they may even forge notary credentials – the official authorization that allows someone to witness and verify signatures on legal documents.

While this type of fraud can affect any real estate transaction, vacant land has become an especially attractive target. According to the American Land Title Association (ALTA), 85% of seller impersonation fraud attempts in 2023 involved vacant land properties. Vacant land is particularly vulnerable because it features specific characteristics that make these properties easier targets.

Vacant Land Fraud

Vacant land refers to property without structures or improvements – essentially an empty lot without any buildings. Often, these properties aren’t actively being used by their legitimate owners, who may even live in different counties or states. Some lots may be inherited family land, while others may be purchased as an investment. Vacant land usually isn’t regularly visited or monitored. 

Fraudsters specifically seek out unencumbered vacant land, which is owned outright without any mortgage liens or other third-party claims against it. The process typically begins with fraudsters searching public records to identify suitable properties and gather information about the legitimate owners. Once they’ve selected a target, they begin assembling the materials needed to impersonate the property owner through the sales process.

Two key factors make vacant land particularly appealing for this type of fraud. Alison Sheshull, Director of Business Development at Bluegrass Land Title says, “Land transfers generally require minimal in-person interaction between real estate agents and sellers. Unlike home sales, there are no keys to exchange, no property showings to coordinate, and no walk-throughs to schedule. Agents can typically complete their necessary work without ever meeting the purported seller face-to-face.” 

Second, when a property is unencumbered, the transaction requires contact with fewer entities. Title companies don’t need to obtain confidential payoff information from lenders or coordinate with other parties who have a legal interest in the property. 

Although this streamlined process is normally beneficial for legitimate transactions, it creates opportunities for fraudsters to avoid detection. “The combination of minimal face-to-face interaction and simplified documentation requirements makes vacant, unencumbered land an ideal target for seller impersonation schemes,” Sheshull explains. Understanding these vulnerabilities is the first step in recognizing and preventing this type of fraud. 

Recognizing Vacant Land Fraud

Seller impersonation fraud targeting vacant land typically follows a predictable pattern, making it easier to identify warning signs before a transaction progresses to the closing table.

The process often begins with an unexpected listing request. A real estate agent receives contact from an unknown individual asking them to list a piece of vacant land. This initial contact usually comes through a text, email, or phone call rather than an in-person meeting. The proposed transaction appears to be straightforward: no occupants to coordinate with, no showings to schedule, and the property is priced to sell quickly.

Throughout the transaction, the “seller’s” availability follows a distinctive pattern. 

• The seller will be looking for a cash buyer, as they do not want to involve another entity (such as the lender) in a financed transaction. 
• They’re difficult to reach for impromptu conversations, although they may return calls on their own schedule.
• When closing approaches, they indicate that they won’t be available to attend in person. 
• They insist on controlling the document notarization process, often stating that they’ll use their own notary rather than working within the title company’s standard closing procedures.

“You’ll also notice a real sense of urgency during a fraudulent transaction,” Sheshull continues. The fraudster pushes for a simple, streamlined process and prices the property below market value to attract cash buyers. A cash transaction moves quickly without the lender's involvement, and documentation requirements are simplified without lender documents. 

They emphasize the need for a quick closing and specifically request that proceeds be wired – and wired quickly. These sellers often seem more focused on the speed of the transaction than on negotiating the best possible price for the property. 

Tips for Preventing Seller Impersonation Fraud

Real estate agents play a key role in preventing seller impersonation fraud that targets vacant land transactions. 

Recognize the Warning Signs

The first step in prevention is knowing how to recognize the warning signs. Sellers that are chronically unavailable, in a hurry to close, and reluctant to close in person are hallmarks of seller impersonation fraud. Agents should also watch for small details like errors in email communications or unusual requests that seem slightly off. 

Sheshull says, “Any single factor may have an innocent explanation since legitimate sellers do sell vacant, unencumbered land. But multiple warning signs warrant closer attention. Remember that deals that seem too good to be true often are.”

Gather Additional Information

Gathering additional information through basic questions can help verify a seller’s legitimacy. Most experienced agents are already incorporating these practices into their work. Start by asking how the seller found you. While unexpected contacts do happen, most sellers have a specific reason for choosing their agent. A simple, “I’d love to know how you heard about me,” can provide valuable context.

When speaking with sellers, ask questions that aren’t easily answered from public records. Focus on details about the land’s features or the seller’s history with the property, such as, “How long have you owned this land?” or “What made you choose this property originally?” Try to arrange a video call with the seller, since this direct interaction can also help you verify their identity. 

Partner with a Title Company You Trust

If you have concerns about a transaction, contact your closing attorney early in the process. “We know that seller impersonation fraud affects our agent partners, and we want to do everything we can to help prevent fraudulent transactions,” Emily Grant, Attorney at Bluegrass Land Title, explains. 

Your title company can suggest specific questions to ask your client, identify additional warning signs to watch for, or simply provide reassurance if you want to verify that a transaction appears legitimate. They’re there to support you in protecting both your business and your clients from fraud. 

Remember that fraud prevention works best as a collaborative effort between agents, title companies, and other real estate professionals. Open communication about potential concerns helps protect everyone involved in the transaction.

How Bluegrass Land Title Protects Clients from Fraud

At Bluegrass Land Title, we’re dedicated to protecting our clients from all types of real estate fraud, including seller impersonation fraud. We’ve implemented specific policies and procedures to safeguard our transactions.

Document notarization control is a cornerstone of our client protection efforts. We manage the notarization process for all parties involved in a real estate transaction, with particular attention to the seller’s documentation.

If the seller cannot attend closing in person, we offer Remote Online Notarization (RON) through our trusted partner, Notarize. This service includes advanced identity verification technology that confirms the signer’s identity, even in remote settings. This technology has successfully identified attempted fraud in real estate transactions. 

When sellers can attend in person, but not at the set closing time, they’re welcome to come into any Bluegrass Land Title location to sign their documents. Your escrow officer can help you find a time and location that fits your seller’s schedule.

If a seller must work with an outside notary, Bluegrass Land Title will coordinate directly with notary professionals. We maintain relationships with reliable notary partners who can meet sellers at convenient locations. When sellers prefer to use their own notary, we independently verify the notary’s credentials and accreditation before proceeding with the transaction.

Before wiring seller proceeds, we implement additional identify certification measures. Our verification technology confirms that both the seller and their banking information are accurate, ensuring that funds are directed to the intended recipient. These precautions help prevent unauthorized access to transaction proceeds.

The entire team at Bluegrass Land Title is committed to staying educated and informed about emerging fraud schemes, and we adapt our processes and procedures to respond to evolving tactics. 

Additionally, we are working to create a stronger network of fraud prevention throughout the real estate community. We share new information about fraud prevention with our partners and clients, and we are always available to answer questions or present information to brokerages.

Key Things to Remember about Seller Impersonation Fraud

As you work to protect your clients from seller impersonation fraud, keep these key points in mind:

1. Protecting buyers and sellers from all types of real estate fraud, including seller impersonation fraud, requires vigilance and collaboration from all parties involved in real estate transactions.
2. When a deal seems too good to be true, it often is. Trust your gut if something feels off about a transaction. 
3. Vacant, unencumbered land is particularly vulnerable due to minimal face-to-face interaction and simplified requirements for documentation.
4. Be wary of sellers who are reluctant to respond to phone calls or meet in person. Be similarly concerned about sellers who display an unusual urgency to close quickly and below market value.
5. Real estate agents have an important role to play in preventing seller impersonation fraud. 

We’re here to support our agent partners in preventing fraud and protecting legitimate transactions. If you have questions about a transaction or notice potential warning signs, contact us. We’ll work with you to verify the transaction’s legitimacy and ensure that your clients’ interests are protected.