Fraud Prevention Tactics in Real Estate with Guest Kevin Tolbert, ALC

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Justin Osborn: Welcome to the Realtors Land Institute Podcast, the Voice of Land, the industry's leading land real estate organization. On today's podcast, we're gonna have Kevin Tolbert talk about fraud prevention tactics. Kevin is an accredited land consultant with over 20 years of experience selling land from the smallest of lots to the largest parcels to specializing in assemblage and transition small ranchettes into new subdivisions. The Kevin Tolbert Florida team with Keller Williams is the number one selling team in Central Florida specializing in land. Thank you for coming on board today, Kevin.

Kevin Tolbert: Thank you very much, Justin. Great to be here.

JO: I'm excited to hear what you have to say about fraud prevention. It doesn't matter if you're in Florida, or I'm in Durango, Colorado. We're seeing these circumstances all over the country, and they really seem to be targeting land brokers, and I've been seeing a lot of stuff with absentee owners getting targeted, so I'm excited to kinda see where this goes today.

KT: That's exactly what we're saying is they're picking on a couple of classes, either MCT owners, senior citizens, or even albeit where they found that someone has passed away and they're grabbing those lots to try to sell them before the family finds out.

JO: Well, and I know Florida's got a high population growth right now and significant investments all over the state, how often are you seeing this fraudulent activity in land transactions in your neck of the woods? 

KT: Nearly daily.

JO: Really? Wow.

KT: Yes.

JO: Man.

KT: Our office currently is processing 44 frauds at one time through agents that have gotten into situations involving fraud of some kind, either it's a buyer's side or the listing side.

JO: What are some of the recent examples that you and your team have dealt with? 

KT: As a matter of fact, I shared with Kat earlier, just last week, we had one of these email conversations, and that's one of my huge red flags. The first thing I do, if they're asking me to list their property is we need to meet face-to-face, whether it be electronically or in person, I don't care which. We need to have a face-to-face conversation, and if they're not willing to do that, we're not willing to take a listing any longer, and this person emailed us for almost four days before he finally said, I need to find someone else that's not as rigid.

JO: Not as a rigid, man. I interpret it as not as professional is the way I interpret that. Man, so that's great. I love the way that you've got these requirements and that's something that I hadn't really thought about with technology now, it's so easy for us to just jump on a call, look at each other on a screen, like we're doing now, and for somebody not willing to do that in this day and age, that should be a serious red flag.

KT: Well, and if I'm looking at you on this Zoom call right now, Justin, and I say to you, show me your driver's license, please, and if it's you, that's great. Now, can you show me a second ID from your wallet right now that says it's also you? And if you stumble over that, we got a problem. And then lastly, I will ask you, since you're sitting in your home and I can see your dining room right behind you, do you have a light bill, water bill or something to the address where you're sitting at? And they're shocked by that if they're a fraudster because they know they don't.

JO: Man. It reminds me of the fake buyers that we would see, really I saw a lot of them, I don't know, probably about 10, 12 years ago, the buyers would call and we'd say, Alright, we need proof of funds before we're even gonna go show you some of these high-end ranches and the buyers that were legit, no problem, they'd have their financial guy send over a statement, redact their info and... The account info that is. But the ones that were fake would always start back peddling, would always start getting upset, and this is just a different form of that. People start getting upset if you're asking them to show identification, then obviously they're probably frauds.

KT: Yeah. Now, another one we're seeing is what we call the wholesalers, the guys that are running around making calls trying to play a realtor without a realtors license and get a seller to agree to take a very cheap price for their property. Call me and say, Hey, I got this property under contract. Under assignment, if you will, and if you can find me a buyer for it, or if you are the buyer for it, I'll pass it to you for a few grand, we'll run to the closing, we'll assign it at the closing table from the seller to the new buyer and I'll collect a couple thousand, 3,000, 5,000, whatever is in the middle. That's great, except for one minor detail, the purpose of that run to the closing table is because they've never had permission to sell it from the seller in the first place, and they're rushing because they want that deed to not get back to the seller before they got their wire in their hand, which is the same day.

JO: Man, that's pretty high-level stuff right there. I've got a deal going on right now with another RLI agent out of Montrose, and thankfully, we know everybody, but it's pretty much exactly what you described where they're buying a property from one of my clients. I'm the listing agent, my seller is selling it, they're buying it, and then on the flip side, they're breaking it up into smaller parcels, and I've got a buyer that's gonna buy a 70 acre parcel from them, and we've got an assignability clause in there, and it says, We're able to assign this. We're not under contract, we don't own it yet, we are under contract to purchase it, but we don't own it yet, and thankfully, we personally know every single person that's involved in that transaction, but that's real similar to what you just described.

KT: Well, and I had one this week come to me and I called... I actually tell the wholesalers, until we have a conversation with the real seller, we're not gonna blow up your deal, we're not about describing how much money you're making on them, it's about verifying who really owns the property, and if we can't have that conversation with them, we're not doing business.

JO: Have you seen where the absentee owners... In Florida, I'm assuming you probably have a lot of absentee owners like we do in Colorado, second homes, vacation homes. What we're seeing happen up here is the culprit will pretend like they are the seller, an absentee owner, typically vacant land up in the mountain somewhere, and they'll go as far as getting the listing signed with the listing agent, getting it on board with the title company, and then their buddy has a fake notary, and so it gets as far as to the closing table before it gets caught, and thankfully, we haven't had that actually happen here in Durango where I'm at, but I know that it's happened in other parts of the Rocky Mountains and the buyer thinks they're really buying the lot and poof, money's gone, seller doesn't own the property anymore, and I don't know if it ends up in court or if the title company's at fault, or who ends up there, but that's a situation that I heard happened pretty recently out here in the west.

KT: We had it happen twice. We got caught on the first one, we actually bought it, our investment company bought it, the second one, we knew it was gonna happen again. We had every ambition it was gonna be fake, so we told the guy, if you want the money, you gotta show up at the closing in 10 days flat, when he showed up, he was met by eight deputies and he's currently serving nine years.

JO: Man.

KT: We don't play games with these guys. If we can catch them, we will do everything we can, and in answer to your question, the title insurance reimbursed both owners back to their properties, did the work to reinstate the deeds, void the transfer deeds, reinstate the deeds back to them, and one of them even let us sell it again, the real seller let us sell it again.

JO: Oh, that's great, that's great. Well, you guys, obviously have kinda got it figured out more than most, and that doesn't surprise me, but there's so many new agents in our industry right now, what are you putting in place for some of these newer brokers that are coming on board to work with you so that they're properly educated when these red flags come up? 

KT: On the education part, this is the part I wanna try to clearly state to any new agent or any agent, period, if you take a listing on a house, do you take a physical look at that house, do you physically go to that property, touch it and meet the people that are selling it? Of course you do. Then why should land be treated any differently? If they're not here physically, get on a Zoom call, get them to come into a local real estate office where somebody can look at their ID and talk to them, and secondly, our title companies, bless their hearts. They are totally on board with this. If we tell them we've taken in the listing, they're writing a letter in a FedEx envelope that simply says, I have someone that claims that they're selling your property, if it's you, or even if it's not you, call us immediately and they FedEx it to them, signature required at the seller's house, the seller then calls in and says, yes it's really me or I don't know what your talking about. That letter goes out the same day we hand the listing to them.

JO: And the title company does that just as a courtesy because...

KT: Yeah.

JO: That's great, man, what a testimony for the agents to really get a good relationship with the local title company that can do these favors for you and really separate you from your competition, because I guarantee you, most of the competition is just getting excited about getting a listing, they're not going to the steps that you're talking about.

KT: And that's exactly what I shared with Kat earlier. I understand new agents, this is your first listing, it's exciting, but if it's a piece of fraud, if it's something that's never gonna close, don't get started your career on something like this, please call someone if you don't understand how to find out about it. There are people that are willing to help you. We will walk you through the steps to make sure it's real.

JO: Yeah, that's great, we need to really try to get some of these stories into our ALC classes, our LANDU classes that we're teaching, it doesn't really fall into one particular category, I guess, when it comes to transitional land or land 101 or recreational land, but I think we could spend just half a chapter on every class, especially as hot as this is in our market, and making sure that we've got examples and stories going out for these people that are getting their ALC certification to really get more professional in the industry, 'cause that's what you and I are talking about right here, is things that go way above and beyond what 99.9% of the realtors in America are doing.

KT: Now, I did share earlier with Kat that there's a new thing called deed lock, deed lock, D-E-E-D locks like a property deed, and that is on most of the property appraiser sites now, you can go in and put a deed lock on your own property, and that will send a red flag to them that if they get a deed to record today that it's been sold, they're calling you first to ask you if you really sold it, it's free on most property appraisers, and you should all register your own properties.

JO: And so, deed lock, is that an add-on on the title commitment that the title policy offers, or is this something that...

KT: No, it's a property appraiser to keep them from selling it without the property appraiser recording a new deed on it. They won't record a new deed until they verify with the seller that it was really sold.

JO: Gotcha, and is that something that's available only in Florida or all over the country? 

KT: Actually, we've seen a number of states. We've seen a number of states start implementing, which is awesome. And we've also... In the back end, we've taken the ability to... If we know that there's a fraudulent transaction for sure, because we discovered it, we're telling our title company, our title company is going to underwriting side of the title insurance, and telling the people like the back-end people like Fidelity National, the people that actually write the insurance policy, Lawyers Title, they're putting their code on there that says this was a fraudulent transaction at one point, call the listing agent for more details, and I'll be glad to tell them to please ask questions before you agree to process this deal.

JO: Man, that's great. I love learning new stuff. I'm making notes here as we're talking and that's... I've got real big deed lock, I'm gonna look into that. So I've got to ask the question, I haven't heard of it happening yet, but it's just a matter of time, I think, until we see it, and that is AI. I mean, have you seen anything with AI yet involved in fraud in the real estate world? 

KT: No, but I would say that I can definitely predict it's about to happen simply because AI is now able to do emailing for you, and one of the red flags that we can see with our own eyes, is we could see the logistics problems in the emails, there's just pronunciations or language skills that aren't the same as the US. There's a twang to them. There's an issue with them. AI is gonna solve that because AI is perfect on its language.

JO: Now, we got a lot of RLI listeners in Mississippi and Tennessee and Texas. So be careful talking about twang now.

KT: It's just reality, and if we don't see that grammar mistakes and AI is doing all the talking now, we may never spot it again.

JO: Something I heard recently was the video that AI can sound just like you, just like me, and the way that these guys are doing it is they're going online, they're going on to social media platforms and pulling family videos or little snippets of things that the realtors have been saying online, and then they're turning that into AI, or I should say they have the ability to turn that with their AI software into making it sound just like it's me or you, or a buyer or a seller for that matter, and I'm with you, I hadn't seen the fraud happened yet, but Gali, it's really spooky thinking about how serious this has the potential to get.

KT: Well, there was two attempts of it in Hollywood this month, the Beatles, they had talked about they were going to do a new Beatles video, and AI was going to stand in for the Beatles that had passed.

JO: Really? 

KT: And they said, No, we don't want any part of that. The rest of the living Beatles said, We don't want any part of that. We don't want a fake an AI Beatle standing there singing with us, that's just wrong.

JO: Yeah, yeah, that's crazy. Do you know... Does the ENO providers across the country for the real estate agencies, do they cover this type of fraud? 

KT: I don't know yet. It hasn't been brought up yet, but as I shared with Kat, if there becomes an opportunity where you are walking into a situation that you know is wrong, such as this new law that we're not gonna sell to six particular countries, I'm not gonna even start the listing, I'm not even gonna start the buyer, I'm not gonna get involved in it because there is no guarantees yet as to how the realtor is arms length protected from it. It's not worth getting... It's not a piece of business or energy that I wanna spend until we hammer down what is gonna be protected, covered, excluded and everything else.

JO: Man. Yeah. Saying that, that it's not something you wanna get involved in makes me think, just recently, a podcast I was listening to that was talking about the power of saying no, and I think in our business, we can very easily be sucked into people pleasers. You wanna say yes, you don't wanna disappoint anybody. But there's a lot of power in saying no upfront to a listing, upfront to a client, especially in something that you get a bad feeling about. My wife has a very, very strong intuition and when she has a bad feeling, I certainly listen to it, but I think that a lot of our listeners should keep that in mind.

KT: Well, and I'll tell you this, a very, very strong person in real estate that we all know named Gary Keller says very clearly, when you are a realtor, you don't say no to any transaction, when you're a business owner, you have the ability to say no to whatever transaction you want to. And we are business owners, we don't have to take every single listing, we don't have to work with any buyer we don't want to.

JO: A lot of wisdom there, for sure. Well, anything else Kevin here, wrapping up that you wanna make sure our listeners are educated on when it comes to fraud prevention in our current market? 

KT: I'm gonna give you guys some quick red flags, and I sincerely hope you take this to heart. There are things that stand out that they seem to be targeting, and that is your senior citizen owners, your very long-term owners, your foreign national owners, particularly for some reason in Florida, we like to see it in the Taiwan country, China, and that area for some reason, and I think the biggest reason is because we can't contact them. In 26 years in real estate, we have not found an effective phone number system that gets us a phone number to a Taiwan national or a Chinese national that we can pick up the phone and verify if they are real or not. And I think that's why the fraudsters are doing this, they know it's gonna take four to six weeks for that deed to get in the mail to get back to them, for them to be calling the property appraiser to say, What are you talking about? By that time, that money is wired, gone and spent. So if you see foreign nationals and you can't talk to them, there's a reason why guys, they're picking on them for a reason. If you get an anonymous email that they're not willing to pick up the phone and talk to you or get on a Zoom call with you, there's a reason why.

KT: Obituaries. They seem to be scanning the obituaries and finding the person who is just deceased and trying to sell it before the family figures out that it's been sold and price. If it looks too good to be true, it usually is. If you see a property that you know is worth a half a million dollars and they're willing to sell it in 10 days for cash money for $200,000, ask why. Better yet, tell them I'll meet you at the closing company in 10 days. When they show up, call the deputies.

JO: That's great. I love the old adage, it's just common sense, but if it seems like it's too good of a deal to be true, it probably is. Those are great points, Kevin. Any other additional red flags you can think of for our listeners? 

KT: Yeah, we just had one in the last two weeks, and this one is huge, guys, the seller's name, let's say, was John Smith, the seller is John Smith. Well, the only problem with that was the John Smith that bought the property was in 1973, which was what? 50 something years ago. And add another 20 or so that he probably has to be. So he should be 70s, maybe even 80s by now. Well, the gentleman who had the drivers license in front of me that's John Smith has a 1964 birthday, couldn't be the same person.

JO: But he had the same name and a valid license? 

KT: He was the junior, but he didn't wanna be the junior because dad had passed away and he just wanted to go cleanly without doing probate.

JO: Oh, wow. That's spooky man. So that was the same family, same property, same name, just a junior.

KT: And he didn't use junior because he knew this would not be a quick and easy sale. It would have to go through the proper channels.

JO: Wow, wow.

KT: So it could be another six months to a year.

JO: Man, props to you guys for catching that one. That probably would have flown over my head, man. That's impressive.

KT: You just look up the deed on public records and know that it's a 40, 50-year-old deed, there's no way this 44-year-old guy is sitting here, or 50-year-old guy is sitting here selling it.

JO: Right. Man, that's a great story. Thanks for sharing that. I used to work with a broker here in Durango that he would always say to the new agents coming in, slow down to go fast, we're all just moving, listing appointment, buyer appointment, title company, appraiser, it's just everybody's moving 90 to nothing in this day and age, and his mantra was just slow down to go fast. You're not gonna make as many mistakes, you're gonna have a whole lot less clean up, you're gonna make your clients more happy if you just slow down to go fast, and I think this kind of falls right into that category where let's slow down and ask some questions here. If it's too good of a deal to be true, it probably is.

KT: And I'll be glad to help anyone that wants it, if you wanna call and talk more in detail, Florida Tolbert Team in Orlando, Florida, look us up, we're willing to help you.

JO: Well, that's great, Kevin. I thank you so much for joining us today, and I hope our listeners will use this information you provided to better identify and prevent fraud as land brokers, especially accredit land consultants. We're one of the best resources to watch out for the entrance of our clients when it comes to folks that are buying and selling land. For more expertise on land and real estate topics, be sure to check out the RLI blog, follow us on social media, and of course, tune in for upcoming episodes of the Voices of Land Podcast.

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