Lesson 3: Avoiding Fraud

As an investor buying large numbers of properties, it’s likely that at some point you will become the victim of real estate fraud. Over the past 25 years, we have averaged about one fraud per hundred properties purchased.  Most of the fraud involved forged deeds and crooked escrow companies.  Almost without fail, when we tendered a claim to the title company, their response was “read the fine print, you’re not covered.”   In all cases, our lawyer was able to bring the insurance companies in line.  Quiet title action can take many months to come to a global settlement.  As an investor, the best strategy is to put measures in place to minimize the chances of becoming a fraud victim.  Prior to sending over your deposit to escrow, make sure the person selling the property is the same person signing the purchase contract.  Then, take the time to look at the chain of title.  The transactions least likely to be fraudulent are those where the seller has owned the property for many years.  When you see multiple transfers, especially within the last 12 months, be especially careful.  In our experience, fraudsters like to forge a deed and then sell off the property quickly to an unsuspecting buyer.  If your buying from a wholesaler, don’t expect them to do extensive due diligence.  To them, the property is a hot potato and they make their money handing off the property to you.  If I had to offer one piece of advice, take the time to do a simple google search.  In nearly all of our fraud cases, conducting a moderately rigorous Google search would have uncovered news articles, relevant posts from past victims, and data from fraud tracking websites that could have given us the information needed to steer clear of trouble.

3 thoughts on “Lesson 3: Avoiding Fraud”


    Wow! Thanks for sharing that, Robert. Good intel report.

    I have relocated to the Northern California area. I am interested in getting in the real estate market here, working with investors again.

    Let me know if you have any interest in expanding into the market here. I would love to work with you again.


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