FRAUD ALERT: How to Steal Real Estate and Get Away With It!

By: Hugh Smith, Easton Maryland

This past February, a newer associate of mine at Coldwell Banker Chesapeake Real Estate came to me with concern about an unimproved land listing in Caroline County, Maryland. This listing, received from a Broker-to-Broker referral, raised several red flags. According to the agent, she never met the sellers—they conducted all the business via voice and email. The notional octogenarian sellers were absentee owners.

The Initial Listing:

The agent priced the lots at $150,000 on January 30, assuming both lots had valid “perc” approvals from the Caroline County Health Department.
The “sellers” requested that no FOR SALE sign be placed on the property.

The Sting

A week later, the seller called, now willing to accept the lower offer if the buyer was still interested. The Buyer saw a “DEAL” The contract was submitted to a local title agent for closing ten days later.
The title company reached out to the seller, who claimed to be traveling in Texas and requested a remote settlement. A Notary Public was dispatched, and the signatures were verified.
The Title Company closed the transaction and distributed wired the funds

The Bust:

A Texas bank flagged the large wire deposit as potential fraud, impounding the funds. The real property owners, located in Washington D.C. suburbs, were unaware of the sale. The entire transaction was identity theft and wire fraud.
Thanks to the alert bank, the fraudulent funds were clawed back, and the only loss was the “due diligence” monies expended by the buyer.

New Fraud Attempt:

Four days ago, an associate forwarded a seller lead from Realtor.com to my attention: “Hello Mary, I have a property I’m looking to sell real quick. Here’s the address: XXX River Rd, Chestertown, MD 21620 signed Michael Hovey Michaelhovey4@#######.com”
Checking public records, I found the property was not titled in “Michael’s” name. The real owners, absentee and in their eighties, were warned of the scam.
“Michael” provided a burner phone and ignored my request for a power-of-attorney. He signed and returned the listing agreement instantly, requesting no FOR SALE sign be placed.

Conclusion:

Yesterday, “Michael” inquired if “his” property was on the MLS yet. I informed him that the rightful owners had no intention of selling. I haven’t heard from “Michael” since.
I reported the incident to the local police department, who advised me to try the FBI, though they are often overwhelmed. This advice was confirmed by our company attorney, noting the rampant nature of such scams on the Eastern Shore of Maryland

Key Takeaways:

Red Flags:

Absentee owners, particularly the elderly, are prime targets.
Unimproved lots are prime targets
Sellers who refuse a FOR SALE sign.
Remote settlement requests.
Quick acceptance of significantly lower offers.
Use of burner phones and avoidance of power-of-attorney requests.

A Plea for Vigilance:

I write this as a cautionary tale for fellow real estate agents and the public—especially unimproved lot owners in their seventies and eighties. Verify the bona fides of the people you are dealing with, and look out for red flags. This is also a plea to law enforcement at all levels to more energetically police the real estate sector, particularly wire fraud and identity theft.

About the Author:

Hugh Smith, ABR, SRS, PSA, RENE, has been a licensed real estate broker since 1983, serving the real estate markets of the Eastern Shore of Maryland, Delaware, and Pennsylvania. He is the Broker of Coldwell Banker Chesapeake Real Estate with offices in Easton, Chestertown, and Chesapeake City, Maryland.

A past President of the Mid-Shore Board of Realtors, the Founding and First President of Habitat for Humanity of Talbot County, Maryland, and a recipient of the Maryland Association of Realtors Community Service Award, he currently serves on the Maryland Association of Realtors Grievance Committee and the Housing Opportunity Committee.