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A single real estate scam can net a criminal hundreds of thousands of dollars or more. Data from the Federal Bureau of Investigation (FBI) point to boom times for real estate fraud.
In 2022, real estate fraud cost victims $396.9 million, a 13.30 percent rise from 2021 and an 86.18 percent rise from 2020. More than $132 million more was lost to real estate fraud in 2022 than to check and credit card fraud, which get the majority of the headlines.
The promise of that money and little investigation from law enforcement has emboldened scammers in ways many real estate professionals have never experienced. One of the most dangerous new attacks is the vacant land scam, which has become so common in the southwest United States that the California Department of Real Estate issued an advisory about it in July.
As reported by CT Insider, Fairfield, Connecticut, residents were surprised when a $1.5 million house suddenly appeared on a plot of land that had remained empty for decades. The property, located at 51 Sky Top Terrace, had originally been owned by a Long Island man who inherited it from his father’s 1953 purchase.
The news of developers starting construction on the long empty lot caught the neighbors off guard. The property owner, Dr. Daniel Kenigsberg, was equally shocked when he visited the town in May after receiving a call about a sick friend.
During the call, he learned about the ongoing house construction on his land. However, Kenigsberg claimed he had neither sold the property nor approved any development plans.
Town records revealed that Daniel Kenigsberg from Johannesburg, South Africa, had sold the property to a company called 51 Sky Top Partners LLC in October of the previous year. Kenigsberg filed a lawsuit in U.S. District Court in Connecticut against the company and Anthony Monelli, a Trumbull lawyer who had signed documents on behalf of an imposter pretending to be Kenigsberg.
The neighborhood in Fairfield now finds itself in the midst of a lawsuit, with construction at a standstill, leaving the community with an unfinished development.
You can stop this scam with a single email and a little knowledge of how the vacant land scam works. Below, we’ll go through how it works, the red flags you should watch for, and how to protect yourself and your business.
How it works
This scam, also known as seller impersonation fraud, begins when a criminal reaches out to you, asking you to list a property. The criminal will communicate with you as if they are the legitimate owner when they are actually trying to sell someone else’s property. They may even provide you with a phony title.
The goal is to get you to find a buyer. Once the “sale” is complete and funds have been transferred, the criminal moves the money and the buyer is left with a worthless title. The money often cannot be recovered, which could cost your buyer their life savings and cost you the commission on the sale, along with your professional reputation.
The Fairfield, Connecticut, scam used a local attorney, which gave the scam more credibility; that same attorney was likely duped into acting as the notary, too. Scammers seemingly used a “one-stop shop” in the form of a most likely legitimate lawyer/notary scheme to convince the buyer, bank and real estate agent the transaction was on the up and up.
5 red flags to watch for
Here are five signs that you could be about to fall for a vacant land scam:
- The seller refuses to communicate in person. They contact you initially by text or email and then insist on communicating only via text or email. If the scam is rich enough, a criminal may offer to talk by phone, but they will never agree to a video call or in-person meeting.
- The seller wants to list the property well below market value. This is to generate a quick sale. They may offer some tale of woe or urgent need that is forcing them to sell the property.
- The seller refuses to allow a For Sale sign on the property. No showings, inspections or open houses will be allowed. Any of those activities might tip off neighbors or the real property owner.
- The seller insists on using their own notary. While this is not an uncommon practice in real estate, it gives scammers a chance to send you phony documents that appear legitimate.
- The seller insists on a cash transaction, with the money sent as soon as the transaction closes. By the time the buyer discovers fraud, that money will be unrecoverable.
Individually, these factors are red flags that you could be dealing with a scammer. With or without any combination, these red flags warrant an immediate title search. As this scam becomes more prevalent and extremely lucrative, identifying the owner of the property and contacting them directly becomes a necessity.
At a minimum, the town hall will have a record of who historically pays the taxes on the land. It is that person who must be engaged to determine their intentions on selling the property.
Before you get to that point, you may be able to stop all but the most determined criminals with a simple email. You can use this text exactly as it is, or customize it to suit your needs. Make acknowledgment of this email a mandatory part of your listing process, and scammers will flee in search of easier targets.
Subject: Our Transaction Policies
Dear [Client Name],
We are thrilled to work with you to sell your property. Before we can list it, we ask you to review the policies outlined below, and reply with the statement, “I agree.” We are unable to list any property unless you first agree to these terms:
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- We will be conducting an exhaustive title search to confirm the rightful ownership of the property at the cost of the seller.
- We require a copy of the seller’s property tax bill and the most recent proof of payment.
- We require an in-person meeting or video conference with all sellers.
- A For Sale sign with our contact information must be posted on every property we list, including the name of our listing agent and a phone number where we can be reached.
- We require all clients to use one of our approved Notaries Public. If you are located out of our immediate area, we will provide a list of approved Notaries Public for you.
- All transactions are subject to a minimum 48-hour hold before funds will be released. If the 48-hour period ends during a holiday or weekend, funds will be released on the next business day.
Any scammer who receives this email will likely vanish.
Prospective clients may ask questions, such as why you require a title search or a specific notary public or why you must put up a For Sale sign. Inform clients that there may be some flexibility in these policies but that you must discuss them in a face-to-face meeting at the property or via video conference.
There are two simple ways to find a Notary Public local to a seller. If you work for a real estate franchise, call the office nearest the seller and ask which Notaries Public they recommend. If you work at an independent agency, call an independent near the seller.
Most real estate agencies have a Notary on staff or know reputable people in their area. You could also call a bank near the seller and ask them for recommendations.
Should a mysterious seller disappear after receiving this email, immediately notify your local real estate licensing board, professional groups and agents that you know. Provide the property’s address and as much information as you have about the individual who contacted you.
A determined scammer can and will reach out to several real estate agents to attempt this scam. If the property has been flagged, the scammer will have to give up. If enough real estate agents in a given area push back, scammers may move on in search of easier targets.
We know many of Inman’s readers have experience with vacant land scams and even fully developed property deed fraud. Please contact the author, tell us your story and offer advice in the comments section.
Author Robert Siciliano, Head of Training and Security Awareness Expert at Protect Now, No. 1 Best Selling Amazon author, Media Personality & Architect of CSI Protection Certification. While “security” or preventing fraud isn’t the nature of a real estate agent’s business, security is everyone’s business and in you and your clients best interest. Agents becoming competent in all things “CSI” Cyber, Social, Identity and Personal protection should be a priority.
