Preventing Seller Fraud: Verifying Seller Identity Early in Real Estate Transactions

Seller impersonation fraud is increasingly common in the United States, causing significant financial and operational harm to homeowners, lenders, title agencies, real estate agents, and title underwriters. Fraudsters may sell property they do not own by falsifying deeds, assuming the real owner's identity, or committing notary fraud. These schemes can cost industry stakeholders hundreds of millions of dollars and create complex challenges in unwinding fraudulent real estate transactions.

A key way to prevent seller fraud is to verify the seller's identity at the beginning of the transaction, rather than waiting until closing. Fraudsters have access to various tools, such as forged deeds, tampered notarizations, and even deepfakes to impersonate property owners during video calls or online notarization meetings. However, implementing a seller identity verification process at the time of property listing or when escrow is opened can effectively eliminate seller impersonation fraud.

Traditionally, sellers have not been required to produce identification when initiating a property sale. Listing agents are not obligated to verify a seller’s identity and often work remotely with sellers, especially for non owner-occupied properties like vacant land, vacation homes, and rentals. These properties are frequently owned by individuals living out of state or even abroad, making it difficult to confirm the seller's identity early in the process.

Typically, it is only after a purchase and sale contract is signed and sent to the title and escrow provider that more information is collected about the buyer and seller. Even then, no one has verified that the seller is the legitimate property owner. The first actual identity verification often occurs at the closing table. If a fraudster can deceive the signing agent or notary with a fake ID at this stage, they can successfully complete the fraudulent sale and disappear with the proceeds.

Proof’s Identify solution offers a robust and user-friendly identity verification process. By verifying the seller’s identity at the time of listing or when escrow is opened, seller impersonation fraud can be prevented from the outset. Title companies using Identify early in the process protect themselves, their underwriters, lenders, home buyers, property owners, and real estate agents involved in the transaction.

Identify is a plug-and-play product that can be integrated into a company’s workflow without requiring new code. It provides several verification options, including credential analysis with biometric facial comparison, knowledge-based questions, or a NIST IAL2-compliant workflow with additional identification layers.

In addition to title companies, listing agents can incorporate Identify into their client onboarding process, creating an early opportunity to detect and prevent bad actors before a property is even listed. These early verification touchpoints can help address the growing issue of seller fraud in real estate transactions.

The real estate industry should reconsider its processes and move seller identity verification to the beginning of the transaction timeline. By adding a simple verification tool like Identify to the property listing workflow, seller impersonation fraud could be eradicated.