Real estate fraud has always existed and the bad guys are always looking for the lowest hanging fruit. The current focus for many of the fraudsters is vacant land. Why?
Lack of Physical Structures: Vacant land typically lacks physical structures, such as houses or buildings, making it easier for fraudsters to manipulate and misrepresent the property without the need for elaborate schemes.
Limited Surveillance: Vacant land is often not actively monitored or supervised, providing fraudsters with an opportunity to operate discreetly without attracting immediate attention or scrutiny.
Absence of Occupants: Unlike properties with occupants, vacant land transactions do not involve tenants or homeowners who would notice fraudulent activities. This makes it easier for scammers to deceive unsuspecting buyers and agents.
Properties Without Mortgages: It is common for acreage, which is more likely to have been passed down generationally, to be free and clear of any mortgages. This is easily ascertained by reviewing the public title records. These properties provide the opportunity for the biggest payday and also eliminate the issue of providing mortgage payoff information (account number and valid social security number) that the fraudsters do not have.
Vacant properties that are not acreage are also subject to fraud but they are more difficult since there are often nosy neighbors who may notice unusual activity.
How does vacant land fraud work?
Misrepresentation of Ownership and Title: Fraudsters attempt to misrepresent their ownership of vacant land properties by falsifying documents or providing inaccurate information.
Pressure to Act Quickly: One of the most common tactics used by fraudsters is creating a sense of urgency to pressure buyers or agents into making rushed decisions. This pressure can be in the form of lowball offers, limited-time offers, claims of multiple interested parties, or threats of price increases. This may indicate an attempt to conceal illegal activities and profit before anyone becomes aware that someone is trying to buy the property.
Lack of Physical Presence: The person claiming to be the seller never meets anyone in person and does not want to attend closing. They insist that they sign using a notary they select as a “mailaway” transaction.
How can Real Estate Agents Identify and Prevent Vacant Land Fraud?
Look the owner up online and include obituary searches. Almost everyone has some online presence, particularly if they have passed away. The fraudster may not know the record title holder is deceased since title rarely changes until there is a refinance or sale of the property.
Ask the “seller” to meet you at the property to get a lay of the land and ask for photo ID pursuant to your company policies but do NOT go to the property alone.
Be alert to the warning signs above. Ask why the seller is looking to close so quickly. Agents must remain calm and encourage their clients to undertake proper due diligence before committing to any purchase. Any discrepancies or red flags should be investigated further.
Use a closing attorney that you know and trust. Share any concerns you have with the closing attorney.
Vacant land real estate fraud poses significant risks to both agents and potential buyers. It’s crucial for agents to stay vigilant and be aware of the warning signs associated with such fraudulent activities. By conducting thorough research, verifying property details, and involving legal professionals when necessary, agents can protect themselves and their clients from falling victim to vacant land real estate fraud. Ultimately, the key lies in being diligent, knowledgeable, and relying on trustworthy sources throughout the entire real estate transaction process.
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