SLO County sees ‘sharp increase’ in real estate scams, DA warns. What you need to know

Something didn’t feel quite right to San Luis Obispo Realtor Lindsey Harn as she chatted in March with a representative of an online referral company about a vacant lot for sale in Morro Bay.

The first thing that set off alarm bells was the urgency of the person on the other end of the phone, Harn said.

He told Harn the lot needed to be sold in 15 days or less — and it had to be priced at “significantly less” than market value, she said.

The person also refused to provide a business address until the property was in escrow.

“I did a little more digging,” Harn said, and realized that the person was trying sell a property they didn’t own.

“Law enforcement agencies in several California counties have observed a recent sharp increase in reports of real estate fraud associated with the sale of vacant land and unencumbered property,” the San Luis Obispo County District Attorney’s Office said in a May 9 news release. “Criminals are posing as property owners and through a series of impersonations are negotiating the sale of properties which are vacant or lien free.”

Realtor encounters 3 scams in a month

According to the release, the District Attorney’s Office first heard of these scams in mid-April. That’s when the agency’s Real Estate Fraud Unit notified real estate associations, title companies and the San Luis Obispo County Clerk-Recorder’s Office.

So far, the District Attorney’s Office has received a total of seven reports of real estate scams, the release said.

In one case, another San Luis Obispo County real estate agent commissioned professional photos of a vacant lot allegedly for sale before they realized they were being scammed, Harn said, likely costing the Realtor hundreds of dollars.

Harn said her company, Christie’s International Real Estate Sereno, has seen three scam attempts in recent months.

Two additional scams followed in the weeks after the initial scam, she said.

Harn said she nearly fell prey to scammers in April, when she received a $399,000 offer to buy a lot of land in the San Luis Obispo Country Club neighborhood. The market value of the lot at the time was around $1 million.

After doing some research, Harn found the plot of land was owned by a Los Angeles-based broker was not actually for sale. The fake listing ended up devaluing the property, she said.

The third scam Harn encountered in April was the most frustrating, she said.

In that case, a listing agent on real estate website Redfin listed a vacant lot on Flora Street in San Luis Obispo for sale for $550,000, Harn said.

“I wrote it up. We got into escrow. We were in escrow for 10 days, and the listing agent finally said that she filed a police report and that the seller wasn’t who they said they were,” Harn said. “We had to cancel escrow.”

Realtor: Scams hurt property value, endanger buyers

In an era where online document signing and real estate lot purchases are increasingly common, fraud is becoming harder to detect, Harn said.

It’s easier to sell property under a false identity due to the layers of anonymity afforded by the internet, Harn said.

Additionally, it is much easier for scammers to sell a vacant lot than it is to sell an existing home, she said.

“It’s hard to fraudulently sell a house,” Harn explained. “You’ve gotta get a key. You’ve got to let me in there. I’ve got to meet with somebody.

In the case of ”a vacant piece of land,” she added, “Nobody lives there. Nobody’s onsite.”

In addition to the potentially high cost to Realtors, buyers can also see steep financial consequences if they invest in a fraudulently listed piece of land, Harn said.

A buyer can get through the entire process of surveying, planning and designing with no knowledge they’re being scammed, only to see that time and money go to waste when they are denied the right to build on the property, Harn said.

Title insurance companies, which verify the legal right of a seller to sell a property, also can suffer financial consequences and damage to their reputation by verifying a fraudulent property, Harn said.

How can property buyers avoid real estate scams?

Accordng to the District Attorney, there are several ways property buyers can prevent falling victim to real estate scams.

Conducting open source research on the identity of property sellers can be helpful, particularly if the search yields recent photos of the seller, the agency said in the release.

In-person or virtual meetings can also help would-be buyers verify the seller’s identity, particularly by looking at their government-issued identification, the release said.

Offers far below market value, tight closing deadlines and cash-only payments may indicate a potential scam, the release said.

The District Attorney’s Office recommended using trusted title companies and attorneys when exchanging ownership documents.

“My big takeaway is really to trust your gut if it seems too good to be true it probably is,” Harn said. “A lot of time and money could have been saved if these people trusted their gut, because if you just ask some basic questions, you can kind of figure out (the scammers are) not who they say they are.”