How to Ensure Confidence All the Way to Closing
by Andy Bates
Fraud and its impact on the real estate industry remain a topic of interest and particular concern in 2026. This comes after the recent, and now notorious activity of a group of bad actors in the real estate investment space in the Baltimore area in 2025. These players manipulated appraisers, title companies, and real estate agents to falsify property data and push deals to closing that were anything but “above-board” in their execution.
In light of these events and the risk that fraud imposes on the investor and the real estate industry as a whole, many are skeptical and struggle to determine which organizations they can work with reliably.
Despite recent fraudulent activity, and the concerns surrounding it, these incidents should not be construed as a rationale for pulling out of real estate. The fact of the matter is that in all industries, there are bad actors and there is the potential for fraud. Real estate is no exception, but fraud can be addressed and contained or avoided in meaningful and effective ways.
In many ways the current moment has pushed lenders to redouble their efforts in detecting, intercepting, and shutting down fraudulent activity. It can be helpful for investors to know where the conversation is headed and what may become relevant to their business strategy.
Evaluating Valuations
Conversations surrounding fraud prevention have become widespread across the space. In some instances, major conferences serve as venues for all parties active in real estate to have these conversations. At one such event, the NPLA conference in March of 2026, there was much discussion on practices and procedures to prevent fraud.
One potential solution is the application of dual appraisals. With an emphasis on fraud relating to the valuation of a subject property, the approach of requiring two appraisals would certainly seem to address that issue. Lenders would have to synchronize valuations to provide optimum timelines under the new operating procedure, and investors would have to consider both the increased turn time and added cost of these valuations in their business strategy. While this approach may provide assurances when mitigating factors are needed to secure funding, the general consensus of the conference was not to employ this approach across the board.
Even if a dual valuation is not required, some lenders have already elected additional layers of protection at the valuation stage. Investors should expect full appraisals to be preferred over alternate degrees of valuation. While many have their preferences when it comes to ordering an appraisal, with the risk of fraud around engineering these reports, it is safer to go with lenders who have decentralized appraisal options.
Lenders with a large network of appraisal management companies or individual appraisers add an extra layer of detachment and anonymity which can help prevent socially orchestrated fraud like what was seen in Baltimore last year. If an appraisal is ordered in advance, that appraisal may be more widely accepted if the investor ordered it through a third party rather than themselves or their broker.
Approach in Review
To be weathertight against fraud, due diligence doesn’t start or end with appraisal professionals. It is important to work with lenders who have origination staff that are keenly aware of and dialed into contemporary methods of fraud. Alan Johnson, Director of Originations at RCN Capital, says he is doubling down on due diligence for valuations and appraisals. “I’m taking a much deeper dive into the appraisals, looking for things I’ve never looked for before,” he says as he describes his process for catching manipulations in a valuation report.
Corroborating sales dates, leveraging third party data aggregates, and looking deeper into adjustments are now routine checks when reviewing a file. It is about looking into adjustments, understanding their significance and identifying the rationale at play. Often this means connecting with the appraiser to verify adjustments and the reasoning behind them.
Desktop reviews can be a helpful means of verifying the accuracy of an appraisal. However, these reviews have come under increased scrutiny recently for an apparent increase in “rubber stamping,” wherein large numbers of reports come back with little to no scrutiny or stated variances. The lenders addressing desktop appraisal reviews with renewed vigor are set to provide an added layer of protection to investors. When a desktop review leverages multiple relevant comps and accurate market data, the results can provide greater confidence in averting fraud. Investors can benefit from working with brokers and lenders who put in the effort to verify the determinations of the review and can look for lenders with in-house appraisal specialists.
Know Fraud When You See It
Although there is much discussion across the real estate industry about fraud, investors do not need to give into speculation. Instead, they can keep up with best practices and work with real estate professionals who take the risk of fraud seriously and are up to date in their approach to dismantling it.
With much of the recent concern surrounding misshapen valuations, investors seeking funding can work with lenders who have a network of valuation options and an approach to verifying reviews with a fine-tooth comb. Finding lenders with in-house appraisal specialists and brokers with the expertise to verify valuations can spare investors the worry paying and investing on potentially bad information.
With the right professionals at hand and an awareness of current fraud risks, investors can ensure confidence all the way to closing.
