Real estate transactions are a lucrative and growing target of opportunity for fraudsters. Why? The transactions are large, with many players involved, and email is commonly used for providing instructions for the sending of funds at closing. This creates the perfect opportunity for criminals to swoop in on unwary buyers, snatch funds, and disappear. Homebuyers who are aware of these schemes can protect themselves and make sure their purchase goes smoothly.
How Buyers Can Avoid Real Estate Wire Fraud
How Does Wire Fraud in Real Estate Work?
Closing on a house generally requires a wire transfer, and this transaction is usually a large sum. This step in the closing process must be done with care. This is the stage when scammers are most likely to move in. Here’s how real estate wire fraud works.
A scammer gains access to the email of a participant in the transaction, usually the REALTOR® or title agent. Not only does this give the scammer access to the agent’s information—such as the buyers they’re working with—but it also allows the scammer to use the agent’s name and email to deceive buyers.
The fraudsters then forge the agent’s email and other details to make their email appear authentic. This message may look and sound very similar to the agent’s real emails, so this can be difficult to detect.
They monitor the transaction and at the time for the disbursement of funds they send an email to the buyer or financial institution with bogus wiring instructions to their account. This is usually not discovered until the title agency notifies the buyer or financial institution that they did not receive the funds. By this time the criminals have the money and it is rarely recoverable.
How Can This Be Avoided?
All wiring instructions, no matter who they are from or appear to be from, should be confirmed by phone to a previously verified number of the alleged sender. This is one of the best ways to prevent wire fraud in real estate.
Keep in mind that phone numbers in scammers’ emails may also be fraudulent, so do not use the number included in the email. Also, be aware that scammers can call you from seemingly legitimate phone numbers using a technique called “spoofing,” so be sure you make the call to your agent.
It’s best to verify wiring instructions in person with your agent, or discuss over the phone. If these instructions change over email, verify them again over the phone or in person. It is better to slow the closing process and make sure everything goes according to plan rather than lose your hard-earned money.
It should be noted that last-minute changes to wiring instructions are rare, and the mere suggestion should immediately present a red flag. Always be skeptical and cautious in this circumstance.
If I am a Victim, What Should I Do?
If you have been the victim of wire fraud in a real estate transaction, notify your bank and your agent immediately. Your bank will most likely provide instructions about the next steps to take. You may be asked to present evidence to the police or other parties investigating cybercrime and wire fraud.
If you suspect that your agent’s email has been compromised, call them. This way, they can lock their account and prevent the scammer from doing more damage. You may also wish to contact your financial institution and the police to prevent others from falling victim to the scam.
Knowledge of this vulnerability, and a little caution, can make the exciting purchase of a home a safe one. If you suspect something is wrong, it is always better to continue with caution, and double-check any transactions with your real estate agent if you’re unsure.
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