BAM Key Details:
- Realtors and other professionals in the real estate industry need to be aware of a widespread land scam that defrauds buyers of millions of dollars every day
- Austin Realtor Jeremy Knight’s video highlights how these land scammers operate as well as red flags to watch for to protect your clients, colleagues, and community
Austin real estate agent Jeremy Knight doesn’t make a habit of creating videos about property scams. He made an exception for this one.
Fraudulent “sellers” across the U.S. are defrauding buyers of millions of dollars every day. As a real estate professional, you need to know exactly how land scammers operate, what red flags to look for, and how to protect the people in your community from devastating losses.
How land scammers operate
The FBI first issued a warning about “house stealing” back in 2008. Since then, property scams have evolved, and advances in technology have made it easier.
Fortunately, technology can also help agents and other industry professionals, as well as legitimate buyers and sellers, to stop scammers before they cash in.
Per the FBI’s warning, fake property owners will assume the identity of the real property owner, even creating fake IDs and transferring the house or property into their name.
A scammer locates a property through public records, assumes the identity of the property owner, and lists the property for sale—usually as a FSBO (for sale by owner), for a price well below the property’s market value.
Then they flip the property, sell it to an unsuspecting buyer, take the money, and disappear.
How Real Estate Agents Get Involved in Land Scams
One property owner in South Carolina was alerted to the scam when they spotted a “for sale” sign on their property. They contacted the listing agent, who confirmed they’d listed the property with an out-of-area seller and cooperated with the investigation.
Many might wonder: how did the listing agent get involved in the first place?
It starts with vacant land. Scammers typically target vacant land that is already owned outright. No one wants to involve a mortgage lender—who would have ready access to information on the legitimate mortgage holder. Vacant lots are also easier to exploit because there’s no actual home for the owner to live in.
Vacant lot or land parcel listings are an easier target for scammers because often there’s little reason to physically visit the property. Without a building or home to walk through, scammers can post photos and more easily pretend to be the seller.
Once the scammer has information about the land—including the location and owners’ information—they reach out to real estate agents through Zillow, etc., saying,
Hey, I have this land…I want to sell it.
A good number of these fake listings appear on property sites like Zillow, but lately, more are being listed with brokerages to get them on a multiple listing service (MLS).
Even if an agent or a potential buyer visits the property in person, they may find little or no reason to suspect the actual owner is not the person who’s now in a hurry to sell it. As Jeremy Knight explains in his video, there have been many transactions over the past two years where the agents involved never met with the buyer or seller. It’s become a normal way to do business—one scammers are happy to exploit.
On top of that, referrals are often involved, which makes these property sales seem legitimate.
These kinds of scams are particularly harmful because they erode trust in the real estate market at a time when we want to encourage continued engagement in the economy. But this scam shouldn’t deter anyone. It means buyers need to be extra careful with this particular type of listing.
The scam can be even trickier to spot when the fraudulent seller uses a patsy to vouch for their identity and their ownership status. This patsy is, by definition, unaware of the scam (as opposed to an accomplice) and, in many cases, believes the scammer is selling the property to buy a home in closer proximity to them.
That said, even the best scammers leave clues.
Red flags to watch out for
Being aware of how these scammers operate is a good first step, and the above outline provides some of the red flags to watch out for. Agents and local property authorities who have experience with this scam have also shared their own warning signs.
Jeremy Knight spelled them out clearly in a recent YouTube video:
Each of the following five red flags is reason enough to dig deeper and make sure the self-proclaimed property owner is exactly who they claim to be.
Red flag #1: They won’t meet in person or do video calls
Often, the fraudulent seller claims to be traveling on vacation (sometimes abroad) and uses that as the reason why they cannot meet in person. They’ll typically insist on communication by email or text message (or a mix of both).
Since there’s often no house or any kind of building on the property, the scammers can easily argue that they live elsewhere and are unable to meet in person.
Also, the seller will only sign documents remotely, and they’ll push for a quick close, including the use of a remote notary and title service of their own choosing. The notary and title service they use may be in on the scam, or they could be oblivious to it, possibly because the scammer already convinced them with a fake ID.
It doesn’t help that the COVID pandemic normalized real estate deals without in-person meetings or signings. Fake sellers will usually have an excuse to avoid video chat, too:
- They’re self-conscious and prefer not to appear on video
- They don’t know how to use technology for video chat
- They can’t fit a video chat in their busy schedule
Scammers know it’s possible to record a video meeting and turn that recording over to the FBI if you suspect fraud. They won’t want to leave you with anything law enforcement could use to tie the fraudulent transaction to them, especially in an age where face ID exists.
Red flag #2: They push for a fast closing
The fake seller is typically in a big hurry to close, which is why they’ll usually offer the property at a price well below its market value. They want to close on a sale and disappear, preferably without leaving a trail for law enforcement.
They’ll often have excuses ready for this, too:
- A family emergency that requires a quick liquidation of their property
- A need to sell their American assets before leaving the country
- A desire to unload a property they inherited in a place they have no desire to live
In all these cases, the seller is more interested in speed than in getting as much money as possible for the property.
Press them as to why, and they’ll either overshare with a detailed explanation, or they’ll quickly become angry or aloof, threatening to work with someone who won’t pry into their personal life when all they want to do is sell a property as quickly as possible.
Sometimes, they’ll offer an incentive, like a commission bonus or the promise of other opportunities to sell for them.
What they won’t do is require a Due Diligence fee. And if they do ask for Earnest Money, it won’t be a large sum. Speed is essential to avoiding discovery. So, they often react in anger if you don’t move quickly enough for them—or if you ask too many questions.
Red flag #3: There’s no property survey & the seller won’t provide detailed information
Lack of a property survey is fairly common for vacant lots, and the perpetrators of this scam probably know this. They’ll leave that expense to the buyer. After all, they’re saving the buyer loads of money by offering the property for a bargain price.
The least the buyer can do is cover that cost, right?
This seller typically won’t provide detailed information about the property, either. Usually, they’re not able to provide information on things like HOA dues, HOA transfer fees, utility charges, water rights, water shares, or specific landscape features or views.
Red flag #4: They don’t live anywhere near the land they claim to own
The email address or phone number for these sellers are often from another country. Of course, that alone isn’t proof of a scam; there are legitimate buyers and sellers who live overseas or across the border. But this could be a red flag, especially if it accompanies others on this list.
This is often where a patsy comes in to legitimize the scammer by contacting you and acting as the scammer’s representative.
The patsy may act as the fraudulent seller’s proxy, ensuring a smooth transfer of funds from the buyer to the scammer, who then disappears and ghosts the patsy along with everyone else.
Unlike an accomplice, the patsy is unaware of the scammer’s true intentions (and, often enough, of their true identity). But that doesn’t protect them from later being sued by the defrauded buyer.
As the agent, you and your brokerage are also fair game if the buyer sues to recover some of the money they lost.
Red flag #5: They want a lot of information about the title company
Scammers will try to control as much of the translation as they can without raising any eyebrows. They may want to know more about the title company you work with, if they don’t insist on using one of their own choosing—or if you counter-insist on using yours.
They may want to know how your title company does their mail-outs and how they do their mobile notaries. They may even ask you to change title companies because, for whatever reason, they don’t trust the one you’re working with.
If the title company makes it harder for them to carry out their scam (and quickly), they’ll likely grow agitated. Because they know they’re more likely to get caught.
Other red flags to watch out for
Scammers will often resist sending copies of their photo IDs for the same reason they refuse to video chat: they don’t want to show their true faces.
If you push for a copy of their picture ID (driver’s license, passport, etc.), the scammer will either take offense and threaten to find another agent who “respects their time,” or they’ll send something over that’s of such poor quality you can barely identify the face or read the text.
In some cases, though, if you insist on proof of a valid ID that links them to the property they’re trying to sell, they’ll send a fake ID that’s convincing enough to pass for the real thing.
After all, if they’re good at what they do, they can probably afford it.
In that case, because of how widespread this scam has become, if something doesn’t feel right, take extra steps to confirm—
- That their ID is legitimate (look it up with the supposed issuer of the ID)
- That they are indeed the property’s owner, and
- That anyone else you can find connected to the property (a relative or previous owner) is in agreement that this seller has a legal right to it.
Another red flag is a ready supply of excuses for not performing the terms of the contract, for not returning paperwork, or for refusing to provide any proof that they are who they say they are.
How can you protect yourself and your clients?
Aside from watching out for the red flags listed above, share information like Jeremy Knight’s video with your fellow agents and other industry connections.
You don’t know what situations they might be facing right now—and how this information could save them and their clients thousands or even millions of dollars.
If you have a run-in yourself with a seller whose legitimacy you can’t help but question, do your homework and check them out thoroughly before you recommend their property to any interested buyers.
- Research the name of the seller
- Request copies of—and verify—their photo ID
- Ask specific questions about details of the property they’re trying to sell
Arizona real estate broker Doreen Letson says this type of property scam has grown increasingly common. She herself encountered two serious attempts in the space of one week.
I had one deal that actually made it all the way into escrow. I would say we were about a week from closing…It’s going on, and don’t think you’re not susceptible to it, because you are.
The scammer had given the listing agency a fake passport and called the title agency to try to rush the process. The deal collapsed when the title agency uncovered the fraud. The real owner of the property was completely unaware of the attempted sale.
One of the precautions Letson recommends to agents and property owners is to check on the properties in question. Look up the property online and see if it pops up on Zillow or other real estate sites.
Scammers can also target homes—including those occupied by renters (rather than the owner, who may be more difficult to get a hold of). So, if you suspect a scam, look into it.
Trust your gut. Take a step back and do everything you can to confirm the seller is who they say they are. If you start asking questions, scammers will either ghost you or respond with hostility.
If everything looks legit, but you can’t shake the feeling that something is off, dig deeper.
- Look up the property online and see if it’s listed under a different seller—or with a different agent. If so, contact them.
- Look up the seller and see if they have anything else online to verify their identity, as well as anything that ties them to the property they’re trying to sell
- If the property has neighbors, talk to them about who owns the property for sale
- Ask the seller if they have anyone in the area who can vouch for them, especially if they don’t live in the same area
Write up a list of the questions on your mind. And if you’re not willing to risk your reputation and your livelihood on the assumption that the seller is “probably legit,” ask the questions.
The worst that can happen is they get angry and cut you out of the deal.
In any case, if you suspect a property scam, contact the FBI. And be prepared to give them a detailed account of your interactions with the “seller.” Provide everything the seller has given you since first contact, as well as their answers to your questions.
