In our world today, scammers are everywhere, and you want to be prepared if you find yourself in a tricky situation. Sometimes it can be nearly impossible to prevent a scam, but there are ways to protect yourself. Keep reading to learn from this realtor’s situation.
Situation
A realtor began working with a seller to list a vacant tract of land. The client explained how he obtained the property and provided a detailed story of how the land passed down through his family across generations. After marketing the land successfully, they signed a contract to sell the lot for exactly the price the realtor anticipated, and it was a great success. The buyers paid the due diligence fee and an earnest money deposit immediately. When the realtor asked the seller how the due diligence fee could best be delivered, he asked that his attorney be sent both checks and held in trust for closing.
Problem
While the buyers were out at the property with their surveyor during the due diligence period, they were approached by some confused individuals who asked what they were doing on the property. It turns out that the real owners were passing by the property and had no knowledge of the alleged sale.
Result
The closing attorney, buyers’ agent, and the realtor quickly discovered that the seller was not who he claimed and the buyers were refunded the money that the closing attorney was holding. It’s hard to admit, but we are all at risk of being scammed. And sometimes there is nothing that could have prevented the loss. Unfortunately, some lessons in life are learned the hard way after losing money or feeling betrayed.
Prevention
In this situation, the best way to prevent being scammed by a “seller” is to implement a policy at your firm to always request some form of government-issued identification early in the real estate transaction. This policy should be uniformly followed with all prospective clients. A copy of the ID could be saved or the firm could choose simply to collect the name, address, and date of birth of clients to keep in your file. This information will go a long way to deter most scammers.
While there are still times when a fake ID could be used or title to the real property could be held by a company where the ownership of the entity is not easily determined, simple policies like always checking identification would help satisfy the requirement that agents do what is reasonable to protect the public. This scam is not isolated, and given the prevalence of large due diligence fees in purchase agreements, losses can be significant well before the transaction gets to the closing table. It is important to implement policies at your firm to help avoid becoming the victim of fraud.