The Crested Butte News Serving the Gunnison Valley since 1999
Know who owns the property and keep an eye on your vacant land…
By Mark Reaman
A real estate scam that has been used around the country and the state has now been seen in Gunnison County. The scam is targeted at property, particularly vacant land, owned by people without a mortgage and without them ever knowing about it. So-called “seller impersonation scams” are on the rise as people try to sell property they don’t really own. The scam is now active here in the Gunnison Valley and has been successful for the thieves in at least one local instance.
Here is how it works: The scammer can easily find out through public records who owns a piece of vacant land. They set up a fake email using that property owner’s name and set up a bank account using the name or nebulous entity as well. The scammer then contacts a realtor and says they want to sell the lot. They typically tell the realtor they want to do a quick sale and price it under market value.
A listing agreement is then drawn up by the realtor and sent to the scammer for an electronic signature. The realtor then moves to market and gets the property under contract. Because it is vacant land, there is no need to obtain keys to show the property. Most times the scammer targets a vacant piece of property that does not have a loan so there is no need for a payoff document or bank papers.
If the scam is successful, the scammer will sign the closing documents with a fake notary and the money gets wired into the bank account established for this particular purpose. The bank account is then closed, and the scammer disappears. It is possible and likely for the entire scam to happen without the actual owner of the property ever knowing what happened.
Local broker Molly Eldridge with Coldwell Banker Mountain Properties said that in a resort community it is not unusual to communicate and go to a closing without ever dealing face-to-face with a buyer or a seller. This makes such a real estate scam ripe for places like the Crested Butte area. “We have had several of these scams in our office. A couple were discovered before any marketing happened, a few were listed and put under contract, but never closed. One unfortunate deal actually closed, and the money was transferred to the scammers. Title insurance covered the loss and returned the money to the buyer and the ownership of the land to the actual owner. Luckily, it was figured out quickly so the person who bought the land had not started building on it.”
Gunnison County Association of Realtors Association executive director Michelle Gerber said the scam is becoming more common. “I’ve heard of more than ten but only heard of one that made it to closing,” she said. “Because it is becoming more common, I hear the title companies in Houston are sending letters snail mail directly to the person or persons on the deed when it goes under contract.”
The Colorado Association of Realtors sent out a “Scam Alert” over the issue recently. It recommended that realtors in Colorado stay vigilant. “Colorado real estate licensees should be aware that these folks are difficult to identify. If you get a call to list vacant land, be sure to do due diligence and check into the address of the Seller LLC with public records,” the alert recommended. “Similarly, if you or your buyer identify FSBO opportunities matching the foregoing profile, parties should take additional steps to identify ownership.”
The transaction that actually closed in Gunnison County started with a For Sale By Owner listing on Zillow where a realtor represented the buyer.
According to Eldridge, the scam demonstrates the need for title insurance. The title company is then ultimately responsible for straightening things out. “The longer it goes without being discovered, the more complicated it is,” she said. “There is a case in Arizona where a man bought a lot in the 1990s to build his retirement home and recently discovered that it had been sold.
“In the Gunnison County transaction that actually closed, the buyer got his money back and the owner retained the title to the land,” Eldridge continued. “The realtor returned their commission. The title company was the main injured party and that is why they have added several security steps to their process.”
The big warning signs are that the seller communicates only through email or text; the seller wants to list the property below market value and wants to sell only to a buyer willing to pay cash; the seller will accept any terms from the buyer in a rush to close the deal; the seller refuses to attend the closing; wiring instructions are usually to a bank nowhere near the property; and the phone number being used is not tied to the name listed as owner of the property.
Eldridge said property owners can also take some easy steps to protect themselves. “Setting up a Google Alert with your property address is a great way to protect yourself from many types of scams. You will be notified anytime a listing with your address is posted—whether for sale or rent,” she suggested. “There are Craigslist scams for renters where they post actual addresses for rent, collect deposits, but are not the actual owner. Property owners can also periodically check the county records to make sure they are still correct. If you aren’t receiving property tax bills or valuation statements, that is a sure sign that something is up. Having a relationship with a local realtor who would think it was strange that a property owner listed with someone else can be helpful. A couple different scams were stopped because the agent who originally sold the property reached out to their client to ask what was going on when they saw the property listed for sale in the MLS.”
Local title companies did not want to comment on the situation given the sensitive nature of the scam.
