What Homeowners and Home Buyers Need to Know About Seller Impersonation Fraud

Someone could try to sell your house without your knowledge. As far-fetched as this might sound, seller impersonation fraud—as it is called—is a growing problem. 

Nearly 30% of title insurance companies reported encountering at least one attempt of seller impersonation fraud over the last year during real estate transactions, according to a study by the American Land Title Association. Not only are homeowners at risk of being targeted by this sort of fraud, but also buyers can find themselves a target of criminals trying to sell a house they don’t actually own.

Here’s what to know about seller impersonation fraud and how to avoid it.

What is seller impersonation fraud?

Vacation homes and rental properties are the most commonly targeted types of residential properties in seller impersonation fraud, according to ATLA. These properties aren’t occupied at all times, making it easier for the fraud to go undetected. For example, snowbirds—retirees who spend the colder months in warmer climates—are at risk because their homes can be vacant for long stretches of time, says Jeremy Yohe, vice president of communications at ALTA.

Criminals pose as homeowners and list properties for sale, typically below market value. Often, they ask for cash-only buyers, push for a quick sale and won’t meet in-person—opting to communicate only by email or text message, according to ALTA. 

When they make a sale, these criminals typically ask to use an online notary of their choosing to avoid showing up in-person to sign documents. Sometimes they conspire with notaries; sometimes they forge legitimate notaries’ signatures. They’ll use the actual owners’ personal information, such as their Social Security numbers, to create falsified documents and complete transactions—with the aim of having funds wired to them before the fraud is detected. 

“The real owner has no idea,” Yohe says.  Sometimes, it can take months or even years for the property owner to discover the fraud.

How homeowners can protect themselves

Property owners can protect themselves from seller impersonation fraud by signing up for title monitoring. Your country recorder’s office might offer this service for free. Or you can use a comprehensive financial safety service such as Carefull, which includes home title monitoring. 

Also, a homeowner’s title insurance policy can provide protections against fraud. In particular, an ALTA Homeowner’s Policy of Title Insurance includes safeguards for property owners if a third party fraudulently transfers their property. Title insurance typically is purchased before closing a real estate transaction but can be purchased by homeowners after closing.

If you discover that the deed to your property has been fraudulently transferred to someone else, contact local law enforcement immediately. If you have a homeowner’s title insurance policy, contact your insurance provider to see if your coverage provides protections against fraud.

How home buyers can protect themselves

According to ALTA, home buyers should look for these red flags of seller impersonation fraud:

• The property listed for sale is vacant or isn’t owner-occupied.
• The listing price is below market value.
• The seller is seeking a cash-only buyer.
• The seller has a different address than the property address.
• The seller wants to close the deal in a matter of weeks.
• The seller makes excuses for not meeting in-person, including at the closing.
• The seller insists on using their own notary and signing documents electronically.
• The seller demands payment for the property to be wired.

If the seller is working with a real estate agent, ask the agent if they verified the seller’s identity. 

Otherwise, check property records to confirm the name of the owner of the property. Your county clerk’s office of property valuation administrator’s office might have a free online database you can use. Then, contact the owner directly to confirm that the property is for sale by mailing a letter to the property address or searching online for a phone number or email address.

If the seller can’t sign closing documents in-person, insist on using a vetted and approved online notary. Do not simply agree to use a notary of the seller’s choosing. Compare the seller’s signature with signatures on previously recorded documents for the property. Do not agree to wire money for the transaction. Insist on sending a certified check. 

Most importantly, if anything seems suspicious, trust your gut. 

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