Real estate fraud is not new, it has been happening for decades. However, the past five years have seen a noticeable increase in fraud across the industry.
It is even more prevalent in fast moving markets like Northern Virginia. Homes sell quickly, sometimes before even hitting the market.The stress and short timeframe of this kind of market provides added pressure to buyers and sellers
By Maura Stevens
February 2025
What has caused the rise in real estate fraud?
The pandemic created new economic and operational conditions that scammers were quick to exploit. With limited ability to meet in person and a rapid shift to email, Zoom, and other digital communication, real estate transactions became almost entirely remote.This sudden move to digital processes created a perfect storm.
Nearly overnight, buyers, sellers, and professionals adopted a “new” way of doing business. In the rush to adapt, many people let their guard down, making it easier for fraudsters to impersonate trusted parties and exploit gaps in verification and security.
Fast forward five years and now with the creation of AI, it is even easier for scammers to defraud consumers.
What are the most common types of real estate fraud and what should consumers look out for?
1. Wire Fraud
The most common type of real estate fraud is wire fraud. It occurs when a scammer impersonates a real estate agent, lender or title company and scams buyers into sending money to a fraudulent account.
It works because scammers either hack into email accounts and replicate emails from agents, lenders and title companies to look authentic or create identical accounts. They simply change numbers in the wiring instructions Often buyers are working under stressful deadlines and may not notice the change. Once the funds are transferred to the fraudulent account it is difficult if not impossible to get the funds returned.
Steps to prevent this type of fraud:
- Always verify wire instructions before sending money.
- Call your lender or settlement agent from a known phone number – not one included in an email
- If the request seems to have unrealistic deadlines or applies pressure to send immediately – that is a red flag.
- Transfer funds using a cashier’s check from your bank and have funds received via check.d
2.Title/Deed Fraud
This type of fraud occurs when a scammer forges documents to transfer ownership without the real owner’s knowledge. It is most common with properties that have long term owners and no mortgage and properties that sit vacant such as second homes and vacation homes. Once ownership is transferred the scammer can sell the property, rent it out or take out loans against it. Northern Virginia is particularly susceptible to this type of fraud due to its high number of investment and rental properties, longtime homeowners and military and government families often living abroad.
Steps to prevent this type of fraud:
1.Lock down your email
2.Use a strong, unique password
3.Turn on two-factor authentication
4. Do business with known, reputable partners
5. Avoid clicking links in transaction-related emails
6. Do not use public Wi-Fi during a transaction
7. Always verify wiring instructions by phone
3. Rental Fraud
Rental fraud occurs when a scammer posts a property that they don’t own (often from real listings) and collects security deposits and/or rent before the victim even sees the property and then disappears once funds are paid.
This is most prevalent in tight rental markets and targets renters relocating from out of the area and students.
Steps to prevent this type of fraud
1. Verify the property is real and available. Search the address online and confirm the property is actually for rent—not for sale or already rented
2. Confirm the person advertising owns or manages the property by checking property records to confirm ownership.
3. Ask: “Are you the owner or the property manager?” If they are a manager, ask for the management company name and verify it independently
4. Never send money before seeing the property. If searching remotely, ask for a live video walkthrough.
5. Be suspicious of prices that are too good. Deeply discounted rent is a common bait tactic.
6. Use safe payment methods. Never pay with gift cards, cryptocurrency or cash.
4. Foreclosure Rescue Fraud
Foreclosure rescue fraud is one of the most damaging real estate scams because it targets homeowners at their most vulnerable moment—when they’re behind on payments and afraid of losing their home.
There are several different types of Foreclosure Fraud
1. Equity Stripping
How it works:
The scammer convinces the homeowner to transfer title “temporarily” to the scammer to qualify for refinancing or help. The homeowner signs a deed and the scammer takes out loans or sells the property.
2. Advance Fee Scam
How it works:
The scammer charges upfront fees to negotiate with the lender. Asserts they have a special relationship with the lender and can get guaranteed results as an incentive to “hire” them. Once a scammer gets the upfront fees – they stop responding.
3. Sale-Leaseback Scam
How it works:
The Scammer offers to “buy” the home to stop foreclosure proceedings. Scammer promises the homeowner they can rent it back and repurchase it later. Then they set the rent too high or create terms that are impossible to meet and the homeowner is evicted.
