Real Estate Fraud in The Digital Age: Navigate with Confidence and Security

In the business of real estate, safely navigating the purchase or sale of property is crucial in a world with an ever-increasing risk of fraud. Legacy Properties Sotheby’s International Realty prioritizes client safety, emphasizing the importance of being informed and adopting effective measures to protect you. Understanding the types of fraud and implementing strategic defenses can significantly reduce risks, enabling our clients to conduct transactions with confidence.

In the digital age, the risk of fraud presents itself in a number of ways in our daily lives, but the risk is even greater throughout the process of purchasing real estate. Bad actors often target buyers and sellers of real estate transactions due to the transaction’s nature as a significant financial investment. While there are many types of fraud that exist, the two most important scams to be mindful of in today’s real estate landscape involve wire fraud and land fraud.

Wire Fraud: Wire fraud has become a significant concern in real estate transactions, involving scammers attempting to deceive buyers into sending funds to fraudulent accounts. The criminals often intercept or mimic communication from real estate professionals or title companies, convincing buyers to redirect their payments to fraudulent accounts. Fraudsters are targeting the sending of earnest money to real estate companies and closing funds to title companies and attorneys. There have also been instances of impersonating sellers to attempt to have hundreds of thousands or millions in closing proceeds sent to a fraudulent bank account. According to an ALTA survey, as many as one in three real estate transactions in the United States are targeted for wire fraud. Additionally FBI data cites that in 2022, more than two thousand victims lost over $446 million due to real estate wire fraud. If you think you are being targeted by wire fraud attempt, it is important that you contact your bank and local authorities immediately.

Land Fraud: In recent years, there have been many instances of fraudulent sellers misrepresenting ownership of vacant land. This involves a scammer purporting to be the owner of a piece of land and attempting to sell it to an unknowing buyer. These scammers have become more sophisticated in recent years, leveraging technology and artificial intelligence to deceive victims. Some warning signs include a listing price significantly below market value, no in-person communication, and the requirement for a remote closing. In addition, if you are an owner of vacant land, it is advised that you monitor your property’s status at the registry of deeds and physically visit the property on a regular basis to safeguard your investment.

What can you do to protect yourself from fraud? 

While we will highlight many best practices in this article, the three most important things you can do as a party to a real estate transaction are to always verify wire instructions verbally, conduct due diligence on the parties and property, and work with a trusted real estate professional to guide you through the intricacies of the transaction while protecting you and your interests every step of the way.

1. Always Verify Wire Instructions: It’s crucial to verify all wiring instructions through direct, secure channels, and verbally to a known phone number. Never rely solely on email to conduct any wire transfer, and utilize viable alternatives when appropriate.
2. Be Vigilant: Conduct due diligence, including verifying the seller’s identity and ownership of the property, inspecting the land in person, and confirming zoning laws and land use rights. Licensed real estate agents and attorneys are valuable resources to accomplish this.
3. Work with a Trusted Real Estate Professional: Having an agent work in your best interest isn’t solely about achieving your real estate goals, but it is also a critical step in protecting yourself from fraud. Here are some of the key things they do to help you stay safe and ensure a successful transaction:

• Expert Verification: Agents and agencies have tools to help verify the legitimacy of all parties and documents involved in a transaction, using their experience to spot red flags.
• Secure Processes: They utilize their expertise and best practices with respect to communications and documents, and process transactions through secure, verified channels and systems, protecting your sensitive information.
• Market Knowledge: Agents are trained in the latest scams and fraudulent schemes, keeping you informed and prepared.
• Professional Networking: Working with a reputable agent gives you access to a network of trusted professionals, including title companies, lawyers, inspectors, contractors, and more, further safeguarding your transaction.
• Negotiation and Oversight: They manage negotiations and oversee the transaction process, ensuring transparency.

In addition to having an expert by your side to navigate a real estate transaction, there are other recommended actions you can take to protect yourself from fraud and various forms of cyber crime, including the following:

• Educate Yourself: Stay informed about common and current scam and fraud tactics. Scammers constantly evolve their methods, so keeping abreast of new scams can help you avoid them. Reading this blog article is a good start!
• Strong Passwords: Use strong, unique passwords for all online accounts related to the real estate transaction, and update them regularly. Always use 2-Factor Authentication (2FA) when it is available.
• Limit Sharing of Personal Info: Be judicious about the amount and type of personal information you share online, especially on social media platforms.
• Secure Communication: Use secure channels for discussions and document exchanges to protect you and your personal information. Do not email bank or credit card information and avoid unsecured public networks. 
• Software: Keep operating systems and security software up-to-date.
• Monitor Accounts: Regularly check bank and credit card accounts to catch any unauthorized transactions early.
• Fraud Alerts: Consider setting up fraud alerts with credit reporting agencies to be notified if someone attempts to apply for credit in your name.

• Email Attachments and Links: Approach unsolicited emails with caution, particularly those pressuring you for payments or personal information. 
  • Always verify the sender’s email address.
  • Be wary of opening email attachments or clicking on links from unknown or suspicious sources, as these can contain malware designed to steal personal information.
  • Look out for unusual messages with typos, capitalization of sentences, and language around the urgency of the response.
  • Never send money to unknown recipients.

In the world of real estate, arming yourself with knowledge and partnering with a professional real estate agent are your best defenses against fraud. Legacy Properties Sotheby’s International Realty is dedicated to not only helping you to achieve your real estate goals but also doing so in the safest manner possible. By following these guidelines and leveraging the vast expertise and knowledge of one of our real estate professionals, you can confidently navigate the market knowing that you are well protected.

For more information on the types of fraud and how to protect yourself, read more here.

If you think you are the victim of a fraud attempt, it is recommended that you contact law enforcement and file a complaint at IC3.gov.