Beware of Real Estate Scam: Protecting Yourself as a Real Estate Agent

As a real estate agent, it’s essential to stay vigilant and informed about potential scams targeting the industry. Recently, the Department of Real Estate (DRE) issued a warning about a criminal scheme that preys on unsuspecting agents and property owners. This blog post aims to raise awareness about the scam and provide actionable steps to protect yourself and your clients from falling victim to it.

The Scam:

In this fraudulent scheme, the criminal searches public records to identify properties without mortgages or liens, with a specific focus on elderly or foreign property owners. They pose as the property owner and approach real estate agents to list the property for sale at a below-market price. The scammer employs various tactics to evade suspicion, such as requesting no “For Sale” sign, preferring cash buyers, and insisting on a swift closing.

To further conceal their identity, the criminal avoids in-person meetings and instead communicates solely through email or text, refusing video calls. They enlist the services of their own notary, who provides falsified documents to the title company or closing attorney. Ultimately, they demand that the proceeds from the sale be wired directly to them.

Preventing the Scam:

As a real estate agent, it is crucial to take proactive measures to protect yourself and your clients from falling victim to this scam. Here are several steps you can follow:

1. Request In-person or Virtual Meetings: Whenever possible, arrange face-to-face meetings with property owners. If an in-person meeting is not feasible, utilize reliable virtual meeting platforms to verify their identity.
2. Verify Identity with Third-Party Services: If an in-person meeting is not possible, require the property owner to use a reputable third-party identity verification service to confirm their identity.
3. Conduct Online Searches: Perform thorough online searches using the property owner’s name. Look for contact information, recent photos, and additional details that can help verify their legitimacy. If you find a contact number, reach out to confirm their identity.
4. Send Confirmation to Property Address: After obtaining an electronically signed listing, send a copy via overnight mail to the property address. Request confirmation from the legitimate owner to validate the listing’s accuracy.
5. Require Essential Documentation: Ask the property owner to provide a copy of a voided check along with a seller’s disbursement authorization form. This helps verify their ownership and financial details.
6. Use Wire Verification Services: Utilize wire verification services or cross-check wire instructions with the information provided on the seller’s disbursement authorization form to ensure accuracy.
7. Establish Written Policies: Develop written policies within your brokerage specifically addressing the listing of properties where the licensee and seller have never met in person. These policies can serve as a guide for ensuring proper due diligence.

Reporting Incidents:

If you encounter suspected cases of this or any other real estate fraud, promptly report them to local law enforcement authorities or the local District Attorney’s office. If another real estate licensee is involved, provide the relevant information to the appropriate regulatory authorities.

Protecting yourself and your clients from real estate scams is of utmost importance. By familiarizing yourself with common fraudulent schemes, staying cautious, and implementing the preventive measures outlined above, you can mitigate the risk of falling victim to these criminals. As a real estate professional, your vigilance and proactive approach play a vital role in safeguarding the industry’s integrity and maintaining the trust of your clients.

https://www.car.org/en/aboutus/mediacenter/news/vacantpropertyscam

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