Never Ignore These Red Flags in Real Estate

Roadside, homemade "Land for Sale" sign on a large empty field.

Unfortunately, the more practices the title industry develops to deter real estate fraud, the more creative the fraudsters become. Vacant land or nonowner-occupied fraud is currently the fastest-growing fraud type in the United States. If you are new to the industry and aren’t sure how this type of fraud works, this is the typical pattern.

The best way to stop this type of real estate fraud is to watch diligently for red flags and put office practices in place to confirm seller identity on all vacant land or nonowner-occupied property.

Red flags that may give away real estate fraudsters include:

What’s the best way to combat real estate fraud on vacant land or nonowner-occupied property?

One of the best ways to combat this scheme is a confirmation/thank-you letter. Send it by regular mail directly from the title agent to the seller at the address for the seller shown in the county’s records (tax office). Do not send it to the subject property address or the seller’s address stated in the sales contract or provided by the open order email.

The letter should include a request that the recipient contact the closing office immediately to confirm the details of the transaction. This will ensure a callback allowing you to confirm that you are dealing with the true owner. Sadly, sometimes the tax office changes their records without confirming it is the true owner making the changes – fraudsters have of course exploited this. That doesn’t mean you should stop sending the letters, it just means you can’t rely solely on them.

Other best practices to combat real estate fraud

Finally, one last thought: Trust your gut. In many fraud claims, someone involved with the transaction will say, “I knew something seemed off.” Never ignore red flags. If you feel like something is “off,” pursue it until you get comfortable.

For more information on real estate fraud prevention, check out these Stewart Virtual Underwriter bulletins:

SLS2021007 CLAIMS AVOIDANCE - Fraudulent Land Sale Scheme
SLS2022004 CLAIMS AVOIDANCE - Fraudulent Land Sale Prevention
SLS2023003 CLAIMS AVOIDANCE - Fraudulent Land Sales and Prevention

Looking for more tips? Contact your local Stewart Title office or agency representative to learn more about our resources to help prevent real estate fraud and check out these Insights articles:

Underwriting for Cash Real Estate Transactions
Staying Ahead of Seller Impersonation Fraud
Eerie Warnings to Heed: A List of Threats Lurking in Real Estate Transactions