Real estate agents nationwide need to be on alert for the Vacant Land Scam. A California Department of Real Estate (DRE) advisory issued in July noted what the DRE called “a sharp increase in real estate fraud involving identity theft and the sale of vacant land and unencumbered property.”
Similar vacant land scams have been reported throughout the United States. Do not assume that this warning does not apply if you are not in California. Every real estate agent should understand how the scam works, and how to spot the red flags of a potentially fraudulent transaction.
What Is a Vacant Land Scam?
Vacant land scam is an umbrella term that applies to any attempt to fraudulently sell real estate that the scammer does not own. While undeveloped land is the most common focus of these scams, criminals may attempt to sell residential or commercial buildings, condominiums or homes.
Scammers begin by researching properties through public records. They first look for properties that are free of mortgages and liens. They then look for properties that are likely to be unoccupied; undeveloped land, empty long-term rentals and out-of-season vacation rentals are among the most popular targets.
Criminals will then identify the owner of the property and attempt to assume their identity. Properties owned by the elderly or by foreign nationals are most often targeted. The scammer will pose as the property owner and hire a real estate agent to sell the property, pocketing cash from the transaction.
Vacant Land Scam Red Flags and Responses
The signs of a potential vacant land scam are easy to spot, and this is one of the simpler scams to thwart. Be on the lookout for the following:
The seller refuses to meet in person. This should be a red flag for any transaction. Scammers may claim to be too busy or to be out of the country and will claim that they cannot attend the closing. They will also resist video calls and prefer to communicate solely by text or email. The simple solution is to insist on an in-person or video meeting, or to require the seller to use a third-party identity verification service to prove their identity. Be sure this is a service that you choose, as some scammers may attempt to fake identity verification.
The offering price is well below market value. The scammer will claim that they want a quick sale, in cash, with a fast closing and the money wired to their account. There are legitimate reasons why a client would ask for these conditions, so you will need to balance these requests against other warning signs. One clear red flag is a client who refuses to provide an identifiable mailing address or bank account number and demands a wire transfer to a public location, such as a money transfer office.
The seller refuses to allow a For Sale sign on the property. This is a significant red flag that your agency can address by requiring a sign on any property that it lists. Grant an exception to this rule only on a limited basis, and only after someone else at the agency has reviewed the request and transaction details.
The seller provides their own notary. This is a significant warning sign for document fraud. Require all clients to use your in-house notary or a notary approved by your agency. If a client supplies their own notary, contact that individual directly to confirm they ae who they claim to be.
The vacant land scam is a form of identity theft that relies on real estate agents prioritizing service and convenience for a client over due diligence. When in doubt about a transaction, set those instincts aside and be skeptical. These next two steps will stop nearly any attempt at this scam:
- Have someone else review the property offer. Get a second set of eyes on the situation. Ask a colleague or manager to take a look at the property offer and circumstances and tell you what they think. Be neutral in your approach; if you ask someone if something looks suspicious, they may look for signs of fraud. If you ask someone to give their opinion of a situation, they are likely to evaluate it objectively.
- Contact the property owner of record. You can get access to the name and address of the property owner, which should give you a means of contacting them. In the worst case scenario, the deal is legitimate and the seller will recognize you. Simply tell them that this is an extra step your agency follows to prevent fraudulent real estate sales. If the property owner has no idea who you are or that their property is for sale, you will want to join them in reporting the fraud to law enforcement and your local real estate governing body.
Like all attempts at fraud, a vacant land scam requires you to trust details and situations that seem a little out of the ordinary. Learning to trust your instincts and to identify the common techniques used by scammers will help you identify and avoid most cyber attacks and pretexting attacks. Protect Now offers an in-depth Elearning program, Cyber, Social and Identity Protection Certification (CSI) that will give you the confidence and strategies you need to stop scammers. You can try a free CSI demo online at any time.
Protect Now also provides interactive in-person and virtual CSI cyber security employee training for groups that is CE eligible in many states. To learn more, contact us online or call us at 1-800-658-8311.