Real Estate Fraud Prevention: How Technology is Enhancing Security and Transparency

 

Real estate fraud is a sad reality. Over the last 100 years (and even well before), fraud schemes have cost residential real estate victims untold millions in hard-earned nest eggs. Fraud tactics have damaged businesses and dented investment firms, laying waste to money and credibility along the way. It is a blight on the real estate industry – one that few practitioners could meaningfully address.

But that’s all changing thanks to real estate technology. Advancements in emerging technologies might finally slow or halt the malicious ecosystem of fraudsters, cybercriminals and scam artists surrounding life’s biggest transaction.  

Here is how technology is enhancing security and transparency in the real estate industry.

Artificial Intelligence

In the battle against fraud, AI is at the forefront. Traditionally, significant maneuvers like title fraud required some level of human error to pass unnoticed. A fraudster might falsify documentation or use a false identity in an effort to push their schemes through.

That’s a whole lot harder to do when a powerful analytical tool is watching you. Essentially fraud-detecting AI combs through massive amounts of data to determine the differences between “normal” and “anomalous” transactions. Because the technology works with such high volumes of data, it’s particularly adept at noticing when something is out of place. AI fraud detection in real estate has already saved consumers billions.

Blockchain

Blockchain is a fairly new technology on the block. The immutable, distributed digital ledger began its life as a cryptocurrency facilitator. But recently, experts have applied the robustly secure technology to real estate.

Nobul CEO Regan McGee recently announced that his end-to-end real estate platform would support blockchain contract management, which marks a big win for real estate consumers. Excitingly, “smart contract” adoption by some residential brokerages and CRE companies signals that blockchain could begin playing a major role in future real estate transactions. Because the ledger is transparent and unalterable, it’s incredibly challenging for malicious actors to penetrate.

Secure Client Portals

Your relationship with your broker or agent should fall under the same security and confidentiality rules as your relationships with banks, medical professionals or lawyers. Sadly, in the recent past, client portals at brokerages have been woefully porous and vulnerable.

Consumers often share sensitive banking information and agreements over these portals, leaving them open to external theft and manipulation. More companies are taking serious measures toward ramping up security in these online portals by enforcing stricter security compliances and stronger encryption.

Biometric Authentication

Lastly, biometric authentication is on the bleeding edge of fraud prevention. Some law firms that oversee real estate transactions have started using it, but the technology remains a niche tool in the fight against fraud.

Essentially, biometric authentication involves verifying transactional parties through face-scanning or other unique biological characteristics. (Think of going through a passport check at the airport). As an alternative to “documentary verification” (verifying someone’s identity via their documents), biometric authentication leaves much less opportunity for fraud.

Technology has made gigantic strides in the fight against real estate fraud, and it can only get better from here. With any luck, in the next couple of decades, fraud will be a thing of the past.

Business Finance