For Sale (But Not Really): Potential Real Estate Scams to Watch For

The scam was revealed when the property owner called the listing agent asking why his lot was being marketed. The caller provided different contact information from what the original “seller,” whom the agent had never met, provided. After less than a week on the market, the listing was taken off NorthstarMLS and the situation was documented for authorities.

Happening in MN and WI
Similar scams are happening throughout Minnesota and Wisconsin, where agents receive calls from people who claim to live out of town and are looking to list local properties—often undeveloped land—that have long been in their families.

Earlier this year, there were three instances in one week of people posing as landowners trying to sell properties they didn’t own in the Fergus Falls and Ottertail areas of western Minnesota.

“Fortunately, some local agents knew the property owners, and being surprised to see the listings, contacted them before buyers were engaged,” said Dolly Matten, CEO of Greater Lakes Association of REALTORS®.

What can you do to help prevent fraud like this? Here are six tips to consider:

1. Be wary of “too good to be true.” Properties that are priced below market value and sellers looking for a quick cash sale or who require low or no earnest money should be red flags that cause you to look deeper into verifying you are indeed dealing with the actual property owner.

2. Meet your clients. Whether you can have them come to your office, meet in a public space or join you on a Zoom call where they are visible, arrange a time to meet your clients “in person.” Be wary of those who only want to communicate via text messages or email or claim to be unable to meet because they are traveling or living abroad.

3. Verify clients are who they say they are. Whether it’s asking for a copy of a government ID or using an online verification system, take the time to make sure your clients are who they say they are. Be wary of blurry or questionable identification and signatures or addresses that don’t match and out-of-state or international phone numbers.

   While there can be legitimate reasons for discrepancies with identification or proof of address, follow your broker’s process for thoroughly vetting them.

   We checked with the expert attorneys from the Minnesota Realtors®, the state association with over 22,000 REALTOR® members who noted Minn. Stat. § 82.66, Subd. 1, which requires that licensees “obtain a signed listing agreement, or other written agreement, from the owner of real property or from another person authorized to offer the property for sale before advertising to the general public that the real property is available for sale.”

   “Accordingly, licensees should confirm that the person contacting them to sell the real property is either the owner or authorized to offer the property for sale,” they added.

4. Don’t deviate from your broker’s processes. Buyers or sellers who make excuses, go silent or get angry when asked to follow standard processes like providing identification, delivering paperwork in a timely fashion or following title company procedures can be a cause for concern.

    Stick to your broker’s processes. Talk to them about any red flags you see and look to them for guidance in how to proceed.

5. Leverage your local knowledge. Many real estate scams are exposed by local REALTORS. These crimes are happening in the communities where you live and work.

   You may know the property owners themselves or their neighbors and may be surprised to see a sale sign or be approached to sell the property. Use your local network and good relations with neighbors to alert you to any issues with your listings or showings.

6. Monitor your name and listings online. Make sure fraudsters aren’t pretending to be you or using your listing information to commit their crimes. Taking listing information and repackaging properties as rentals have long been tactics used to deceive people desperate for housing.

   Set up Google Alerts for your name and your listing addresses to make sure they are not popping up on Craigslist, Facebook Marketplace, Airbnb or other places on the internet waiting to engage consumers in fraud.

Staying alert for potential fraud reduces the impact it can have on your real estate business and the clients you serve. Matten agrees: “Our vigilance in keeping an eye out for real estate scams is an added barrier of protection for consumers and our businesses—I don’t want anyone to have to learn the hard way.”

NorthstarMLS Rules Compliance Scams

Agents and listings aren’t the only focus for scammers. NorthstarMLS rules compliance notices have been subject to email scams. These emails look like the ones we send out, but with several key differences. These differences include attachments (which we never include in official NorthstarMLS compliance notices) and a suspicious email address from the sender. Learn more here.