Source: Federal Bureau of Investigation FBI Crime News (b)
Cardosi and Sullivan say the fraud scheme usually begins when criminals send out solicitations to dozens of realtors who are listed on the internet or attempt to list the property themselves as for sale by owner. If even around 25% of the realtors respond and only around 5% of those result in an actual sale, the fraudsters can net anywhere from $10,000 to over $1,000,000. The losses add up quickly.
“We’ve had one example of a solicitation going out more than 60 times in an hour. When the realtor responds, the criminal has a fake id, fake documents, with the address of the real owner,” said Cardosi. “They even have fake notary stamps and seals to fraudulently execute settlement documents.”
Sullivan added, “What’s different about this type of fraud—comparing it to others, like romance scams—the criminals know the process for selling a home or land here in the United States.”
They stress that it’s not as odd as it may seem for this type of fraud to take place. Sellers don’t have to do much in the way of paperwork. The land itself is vacant, so there’s no way to go ring someone’s doorbell and ask questions. It’s also an all-cash deal, so there aren’t as many eyeballs on the transaction as there are when mortgage companies and associated underwriting is involved.
Also, COVID-19 changed the way business was and continues to be conducted. Everyone has grown accustomed to doing transactions and deals through email and over the phone. The remote nature of a sale is still commonplace, which benefits the scammers.
“There are several things that should stand out as red flags to anyone taking on a client interested in selling a vacant parcel of land,” said Cardosi. “The fake seller will ask for a quick sale, even accepting offers way below market price. They will also have a pretext to speed up the sale.”
Sullivan added, “The fake seller will always have an excuse for not being able to appear in person or on video, like they’re traveling abroad, don’t have a smart phone, or they’re in the hospital. They want to do everything online, to include electronic signatures.”