Real Estate Fraud is Running Rampant in the US

Real estate is an area ripe for fraud and scams: transactions usually involve large sums of money, convoluted paperwork, and messaging back and forth. Criminals can use a wide variety of methods to intercept legitimate communications or launch their own scams in order to deceive their targets.

This type of fraud is on the rise right now in the United States, demanding a wider awareness of the dangers of real estate scams. Florida personal injury law firm Anidjar & Levine published a report analyzing information, including data from the Internet Crime Complaint Center (IC3) on financial losses due to real estate fraud in 2023, highlighting the importance of understanding common real estate fraud tactics and how to protect against them.

Real Estate Fraud Statistics by State

By referring to the data on real estate fraud from the IC3, the report shows which states have the highest victim counts and average financial losses per victim. Even the lowest average loss can present catastrophic risks to any potential targets, but certain states have much higher losses than others.

Some of the most affected states are:

• Alabama: 77 victims with an average loss of $69,441
• North Dakota: 6 victims with an average loss of $67,084
• South Carolina: 130 victims with an average loss of $44,270
• Oregon: 135 victims with an average loss of $42,095
• New Mexico: 55 victims with an average loss of $36,344
• Arizona: 318 victims with an average loss of $29,787
• Washington: 277 victims with an average loss of $27,685
• Oklahoma: 57 victims with an average loss of $26,342
• New Jersey: 233 victims with an average loss of $22,432

Alongside the IC3 data, the report also explores the most searched terms related to real estate fraud and scams in each state. The states whose search volume demonstrate the most concern over mortgage scams include Vermont, Delaware, and Alaska—all states with fairly low average losses to real estate fraud in comparison with other states.

Risks of Falling Victim to Real Estate Fraud

Security in the property industry is a major source of concern in recent years. There is a wide range of potential victims of real estate fraud, from existing and prospective homeowners to companies that own or rent property. Becoming the victim of real estate fraud can have severe impacts on individuals and organizations, even beyond the obvious losses associated with the scam.

The consequences of real estate fraud include:

• Loss of large sums of money, as real estate transactions often involve high prices paid through methods vulnerable to interference.
• Theft of personally identifiable information (PII) and other sensitive data that tends to be exchanged in the course of real estate deals and transactions.
• Complications affecting future real estate endeavors and other large purchases that may be made down the line.
• Loss of licensing or certifications for organizations that fall victim to real estate fraud.
• Hits to an organization’s reputation among industry peers and current and potential customers.
• Penalties for regulatory noncompliance, including potential fines or legal action.

Real estate is an area that is regulated particularly heavily, tied up in legal procedures and requirements in order to protect these large transactions against fraud and error. The real estate sphere is deeply connected to the economy at large, and the consequences of real estate scams can have incredibly complex and far-reaching impacts.

Protecting Against Real Estate Fraud and Scams

In order to avoid becoming the victim of a real estate scam, there are a number of measures and practices that individuals and organizations can use. Protecting against harmful real estate fraud attacks requires caution, vigilance, and awareness of a variety of factors in order to ensure secure communications and transactions.

Effective ways to protect against real estate fraud include the following advice:

• Be wary of deals that appear too good to be true, such as unrealistically low prices.
• Exercise caution if payment is requested via untraceable channels like wire transfers or gift cards.
• Stay informed on the most popular real estate scams, such as wire transfer fraud, predatory lenders, mortgage scams, title fraud, and rental listing scams.
• Verify payment instructions and any changes to the planned transaction by contacting your agent directly.
• Check to be sure whoever you’re dealing with in real estate transactions is licensed, registered, and legitimate.
• Seek counsel from known and trusted authorities or institutions before signing contracts or making large payments.
• Avoid making payments up-front for a service to be rendered at a later time.
• Look into title insurance to prevent deed or title fraud.
• Use good cybersecurity hygiene and best practices to protect your private information.

Conclusion

Real estate fraud presents major risks to its victims, from financial losses to reputational damage. It is vital to follow best practices and exercise caution when entering into any real estate deal or making large payments. Like other kinds of scams, real estate fraud is most effectively combatted with awareness and caution.

Those who do find themselves the target of these attacks are suggested to report the fraud to local law enforcement and register a complaint with the Federal Trade Commission—while ensuring that communications are secure and legitimate, as FTC fraud is also a danger at times.

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Editor’s Note: The opinions expressed in this and other guest author articles are solely those of the contributor and do not necessarily reflect those of Tripwire.