How Company Leaders Can Mitigate Real Estate Fraud

For leaders within the real estate industry, the topic of mitigating fraud should always be on their minds. Leadership and sustaining positive business performance begin with diligence in regards to investigating those with whom you partner. In this article we will review how information as a commodity can be a highly valued resource to real estate leaders.

While information can be viewed as a commodity, time isn’t always able to be a factored in as commoditized variable. Time has a break even point--you are either able to find a red flag early enough and follow up with an investigation, or you are too late. Being too late, by definition, would probably mean your company has become a victim of real estate fraud.

Leaders Understand the Value of Information:

Leaders know the importance of information and the role that having access to information can have on decision making. They understand the need to associate with people and organizations that are trustworthy and credible, and they focus their efforts around minimizing their company’s exposure to individuals and organizations that have a higher risk potential.

Leaders need to know about those with whom they do business sooner, rather than later. If a fraud is committed that could have been prevented, it is not desirable to be the person in the leadership role that had to the ability to possibility mitigate a fraud if only you had performed proper due diligence.

Leaders Understand the Importance of Due Diligence:

Many leaders achieve their role and status by making a series of good decisions that have positive (and profitable) outcomes. Leaders that are able to sustain a leadership position for long periods of time do so because they continue to make a continued series of good, well-informed decisions that result in continued success of their organization. Few leaders achieve a long term leadership status by ignoring due diligence and having an understanding of those they do business with.

Leaders in real estate performing due diligence and researching those you do business with can help an organization mitigate real estate fraud. Whether you perform a public records search or a court records search, by understanding the individuals you are entrusting in a real estate transaction, you are able to better understand your exposure to fraud based around the report results of the individuals and organizations with whom you are working.

The following two sections are types of verification checks you can perform on an individual or business. Can you think of real estate situations within your organization where such verification checks would be helpful?

What to Look for in an Identity Verification of Individuals:

- Social Security Number
- Name
- Address
- Drivers License
- Phone
- Date of Birth

What to Look for in an Identity Verification of Businesses:

- Name
- Address
- Phone
- Employer Identification Number

Next Steps - Implementing Enhanced Due Diligence:

Fraud can cost an organization deeply, both financially and by the public having a negative association with its brand. When people hear about real estate industry fraud, including mortgage fraud and appraisal fraud, they often are able to think of a few scenarios they have observed in their lives. Whether discussed publically in the news media or privately at an office water cooler, fraud is a topic of human interest

The next time due diligence is discussed in your organization remember the talking points of this article. As a next step, do some research online--you'll notice there are several companies that work in the information industry and offer subscription packages to assist leaders with methods to mitigate fraud.