As a result of this new scam, numerous homeowners have been shocked to not only see their homes listed for sale online, but to find people eager to either buy or rent their properties suddenly showing up to look around inside without their knowledge or consent1. Moreover, the would-be home buyers, convinced that these properties have been legitimately listed for sale, have been turning up with all of the necessary paperwork agreed and signed by the apparent owners.
It has now been unfolded that perpetrators have been stealing the personal information of property owners. Once this information has been obtained, perpetrators have then proceeded to represent themselves to real estate agents as the owner requesting to list their home for sale or rent online. In order to carry this out, scammers are using reputable online services such as Zillow, which real estate agents use to gather leads for buyers and sellers.
How does the scam work?
- A real estate agent acting on a lead reaches out to the scammer who informed them that they want to list a property for sale.
- The agent proceeds by listing the property for sale after the scammer executes a listing agreement as the owner of the property. The scammer of course, not actually owning the property, is likely to accept any reasonable offer from a potential buyer.
- The scammer will have obtained the necessary information (social security number, date of birth etc.) of the property owner so no red flags are raised during title work, and the scammer will execute all closing documents remotely.
- The sale proceeds will be wired to a bank account controlled by the scammer.
What should real estate agents do to protect themselves?
- Be wary of leads received from online sources for sellers of vacation homes, vacant land, and any sale involving an out-of-state/non-local resident that is unable to meet in person. If a seller insists on communicating via text message or email rather than over the phone, consider this a red flag.
- Verify the identity of the seller by in-person meetings, checking photo ID, and running an online search for the property and valid owners.
- Sellers willing to accept offers well below market value should also trigger alarm bells and require due diligence.
Does an Errors & Omissions (E&O) policy cover a claim that may arise from this type of scam?
- It depends on the specific allegations and circumstances of the claim.
- Any potential claim or incident that may give rise to a claim should be reported to your E&O insurance carrier.
