How Realtors Can Protect Against Seller Impostors

A 13 Step Practical Guide

So, here is how it starts: You, an energetic real estate agent, receive, out of the blue, an email from an owner wishing to sell their property. Here is an opportunity to obtain a listing and the ability to earn a commission regardless of who actually buys the property. You do not need to worry about showing a buyer multiple homes or whether the buyer will pay you a commission – it’s going to be a good day. You email out the listing agreement, and it quickly comes back signed. You go to work immediately, listing the property on your website, MLS, etc.

But, are you really working for the owner of the property you just listed?

Here are some warning signs that you are not working for the owner of that property and what to do to determine if, in fact, the warning signs truly identify a seller impostor.

1. Warning sign: The property is a target property

What is a target property? A property whose owner lives out of town. What is an even greater target property? Vacant land whose owner lives out of town.

What to do: Go to the County Property Appraiser’s website and check whether there are improvements, such as a home or other building, or whether the property is vacant. That website will also give you the owner’s address, which will tell you whether or not the owner lives out of town. If the property is a target property, you need to be more cautious, but those traits are not determinative because these properties are bought and sold every day by their legitimate owners.

2. Warning sign: No identification yet

What to do: Explain to the owner that there is a lot of fraud against sellers occurring and to protect your seller clients from a criminal selling their property, they must send you two forms of governmental photo identification, such as a driver’s license, passport, military ID card, concealed weapons license, etc. Copies of the IDs must be emailed to you within 24 hours. You are asking for two forms of ID because a seller impostor may have one already prepared, but probably not two.

3. Warning sign: Poor IDs

What to do: If you receive one or both of the requested IDs, check and compare them for proper pictures, misspellings, inconsistencies, bad grammar, improper capitalization, poor punctuation, and incompleteness.

4. Warning sign: The owner suggests a listing price much lower than the property’s fair market value

What to do: Perform your comparative price analysis to make sure your first impression is correct. No one offers to sell for less money without a purpose, motive, or motivation. Ask why, and consider whether the answer makes sense.

5. Warning sign: The owner must sell very quickly due to financial problems, family problems, or the need to invest proceeds elsewhere

What to do: Ask questions and analyze the answers for truthfulness and validity. Explain that quick sales usually result in lower prices and ask for details of the problem. Then ask about alternatives such as short term loans, help from friends or relatives, selling securities, or cashing in CDs. Real problems can usually be described with detail.

6. Warning sign: The owner refuses to provide a telephone number and prefers email only

If the owner refuses to give you a telephone number, walk away. If a number is provided but calls are never answered and replies only come via email, walk away.

You can also request a Zoom or Microsoft Teams meeting. If declined without good reason, walk away.

7. Warning sign: Minimal contact information

What to do: Ask for a mailing or street address. If a PO box is given, press for a street address. If the address is the property itself, go knock on the door and ask if you are speaking to the owner.

Compare all addresses to the County Property Appraiser records. Use reverse lookup tools if necessary. Conduct Google searches and call alternative phone numbers if found.

8. Warning sign: The property is unavailable for inspection

What to do: Tell the owner you will not list the property unless you can walk through it. If access continues to be denied, this is a strong warning sign.

Even if denied access, visit the property. If someone is living there, introduce yourself and ask for owner information. Compare what you learn to what you have already been given.

9. Warning sign: The owner requests no for sale sign

What to do: Ask why and do not accept illogical excuses. This is a common tactic to hide the sale from the true owner and neighbors.

10. Warning sign: An above average commission or bonus is offered

What to do: If it is too good to be true, it is not true. Ask why and analyze the response.

11. Warning sign: I am an agent for the owner

What to do: You still must obtain two forms of ID from the owner, the power of attorney, and two forms of ID from the agent.

12. Warning sign: The deal is overly complex

What to do: Question anything that does not make sense. Ask why the transaction cannot be completed in a standard way. Scrutinize wiring instructions, bank information, and request voided checks or statements for verification.

13. Warning sign: You are still unsure

What to do: Send a letter by overnight delivery to the owner at the address on the County Property Appraiser website. Ask them to call you and provide a code word at the beginning of the call.

Conclusion

If you cannot eliminate most of the preceding warning signs, you almost certainly have a seller impostor. Walk away. Do not spend any more time or money on the transaction.

If you are still in doubt, call us. We do not charge for this advice because, as closing and title agents, we also do not want to be pulled into a fraud against a property owner.

Source: Barnes Walker Educational Series, July 2024