Get Up to Speed: Updated Guide to AI Fraud in Real Estate Deals

With home values as high as they are now, it’s no wonder swindlers target people involved in deed transactions and mortgages. High-stakes scammers tend to be smooth operators. Smoother than ever, with artificial intelligence (AI). So it’s good to know the warning signs, and investigate concerns when in doubt.

Read on for a quick view of how industry experts are learning about fakes, and best practices to avoid them.  

Now, AI Is Creating People From Scratch

With AI, swindlers can try things that weren’t possible before — like synthetic identity fraud (“SIF”). This is not identity theft — which we’ve covered in the past. It involves 100% AI-generated faces, constructed personal histories, and social media personas for people who’ve never actually existed. With complete digital personalities, these imaginary people are getting through identity verification hoops.

As our readers know, more firms are insisting on biometric proof of identity today. Well, guess what. Studious swindlers have learned to use generative AI to produce synthetic identities that can foil biometric technology.

There are sources and services out there from which fraudsters order data to create the new identity. Websites generate the personal details, including home addresses that check out correctly against U.S. postal lists. Social Security numbers are invented, or ripped off. People whose actual Social Security numbers are traded in the fraud industry can have badly damaged credit profiles and not know it until the next time they need to rely on credit.

Social media accounts, too, become vast mines for the extraction of information — ingredients for creating these phantom people.

The fraud industry offers crisp, editable documents and graphics. Shady customers can use these to falsify pay stubs, tax returns, bills, and statements. Swindlers who tap into this industry are making and distributing realistic mortgage documents, deeds, and ID cards. They can order custom forgeries designed to pass institutional security systems.

According to Nick Iriarte at Proof.com:

Large Language Models (LLMs) can be used to create plausible background narratives, generate fake social media post histories, write scripts to be used in phishing campaigns or customer support interactions, all to further legitimize the synthetic identity.

Is This Who We Think It Is?

Among the cast of “phantom” characters are the deepfakes. Deepfakes are imposters, rather than made-from-scratch personas. Machine learning algorithms can accumulate a large collection of pictures and videos of someone, then let the AI train on the files and replicate a real person’s appearance, gestures, voice, and so forth. They used to replicate real people awkwardly, but today’s tools are refined.

In a deed transaction, deepfake recordings can mimic an actual real estate agent, for example, or a loan officer. The artificial professional can convince a buyer or seller to follow misleading instructions. Imagine picking up the phone. The voice on the line is your agent’s voice. You’re writing down the details of the escrow account, and preparing to send a down payment. Pause. Find out for sure who’s on the line.  

And watch facial expressions carefully in video imagery. Tiny facial responses may be unnaturally delayed in deepfakes. Parts of the person may shimmer or blur.Always verify conversations and instructions in person or over the phone call you yourself initiate!

What to Look Out For When You Buy a Home

Stop and ask questions if:

• The seller hasn’t appeared in person. Sometimes, there’s a completely understandable reason for the seller not being around at closing or in the time leading up to it. Double-check with your agent that nothing is out of the ordinary. If you’re only getting communications by email from the seller, that is a red flag. At some point, you (or your agent) should speak in person or on the phone at the very least. That way you know the person can converse with you at ease about the property and their experience with it.  

• The seller knows a notary. If the seller offers to send you signed documents and their friend will notarize the signatures, this is also a common red flag.

• The seller’s in a rush. Scammers are hoping to get through transactions in a hurry. Sure, we all want to hurry through sales if we can, but not at the expense of a safe deed transfer. Be on the lookout for unrealistic expectations or inconsistent claims. If you’re represented, express any concerns you might have to your agent.

• The seller is eager to take a lowball offer, or quickly agrees to concessions. Real home sellers hesitate to let their property to go at a discount. So, is this person authorizing the sale of their home the legit owner?

• The seller’s asking price is too good to be true. Look out for bargains screaming to be snatched up. Buyers need to ask questions, and know exactly why a home is being sold for a market-beating price.

These days, buyers and their agents have to verify the legitimacy of listings, ask their sellers questions, and listen carefully to the responses.

As Always, Verify — Before You Trust.

In-person meetings are still vital ways to know someone is who they claim to be. Real estate agents know to set up a meeting with the other party at some point before closing, or be absolutely sure why the situation won’t allow for that. If business must be handled remotely, an agent should check for fabricated photos and videos, just to be sure. Carrying out image searches online to check for any other use of identity visuals is an important habit.

Got a request by email? Did someone send a question by text? Check the identity of your  correspondent through other means. Train yourself to be wary of links inside messages. Delete texts, chats, or emails that suggest investing money.

And remember those emails saying a friend is caught in a foreign country with no funds and needs help immediately? Now, scammers are designing believable copies of our friends. There’s no bottom to the low blows fraudsters try to land.

Finally, those of us who are active online must assume scammers can gain familiarity with us, in much the same way our colleagues and friends can.

Don’t find out later what AI can do. Before it happens, learn more about the use of AI in deed fraud.