Picture this: You’ve been swindled out of your down-payment, it’s too late to get it back, and you lose your house right as you’re passing the finish line of closing escrow.
Surprisingly, situations like this happen all the time as a result of real estate wire frauds.
The first step in preventing escrow wire fraud is knowing how to identify it. We’re giving you the inside scoop on everything you need to know in order to avoid losing your escrow.
But first, let’s define what is wire fraud and how it happens.
What Is Wire Fraud in Real Estate?
Let’s break this down into a scenario to get the full picture.
Usually days before the closing on escrow, the home buyer receives an email from what seems to be the escrow agent. In the email, the scammer pretending to be the escrow agent is telling the home buyer that they need the funds wired ASAP or something might happen.
The email looks legitimate. The scammer probably has the right font, signature, company letterhead, the exact amount due, and probably even got a “secretary” calling to make sure you received the email.
So the home buyer wires the money to the scammers bank account in the email as instructed.
The only caveat? That is real estate wire fraud.
According to the Federal Bureau of Investigation, this scheme is called business email compromise, and it is one of the most financially damaging cyber crimes out there.
Just in 2019, real estate wire frauds resulted in $221 million in losses, an increase from 2018 which had $150 million in losses.
This industry is implementing more digital procedures like virtual real estate tools to help make business deals. However, most people are unaware of the risk of real estate wire fraud, so cyber criminals have more potential victims to steal from.
However, now that we know this is happening, we can prevent escrow scams.
How to Identify and Prevent Real Estate Wire Fraud
Pay Attention to Details
These fraudsters try to imitate everything from your actual escrow or real estate agent to make it seem that it’s actually them, like the company’s letterhead, signature, and font exactly the same.
But it’s the small details you need to pay attention to like:
- Maybe the email address is one character off.
- The emails CC’d are different
- Unusual grammar or phrases
- The timing of the email
- It includes suspicious links or attachments
Make sure to check everything in email for irregularities.
Take It Slow
Hackers use scare tactics to push you into pushing the button on something that should have taken more time. Understand that the real estate process is a steady and calculated one. What they want is for you to act in a moment of desperation and react instantly so that you don’t overthink the ask, even if it sounds ludicrous.
The email might say they need the money as soon as possible. Or they may inform you that the closing date is now sooner than it was before, to get your heart racing.
If you do receive an email like this, reach out to your real estate/escrow agent by phone to confirm. You can also double check the email address to make sure it is the trusted and correct one.
Be Suspicious of Last Minute Changes
Last minute changes almost never happen. So if someone reaches out saying the plan has changed drastically, put your guard up.
Wire scams always happen because someone’s guard is down.
These types of emails almost always happen right when the weekend or vacations come around. Since wire transfers take up to 3 days to be completed, you won’t notice until it’s too late.
Learn your Agent’s Process
Many agents and companies already have their policies, instructions, and steps when closing on a house.
Knowing your escrow agent’s process from the start will help you catch something irregular.
Ask your agent for a list of secure contact information and to explain their escrow process, and always have it as a reference.
Want a Secure Escrow Service?
Having a reliable platform to conduct escrow is the best way to ensure a secure and fraud-free service.
VentureTrac 4.0 allows home buyers, agents, and sellers to come together virtually to communicate and share items as they complete the escrow process in real-time on their personal devices. This app, powered by New Venture Escrow, eliminates the risk of real estate wire fraud, taking all communications through a secure messaging system and eliminating the need to use email, where most fraud occurs
No fake emails or scammers will be able to ruin the process..
Contact a New Venture Agent if you have any questions about the software and discover how we can help you get started on your secure escrow service today.