You’re finally closing on your dream home and money is ready to change hands.
The wire transfer will concern a large sum of money, and scammers are salivating at the thought of getting their hands on it.
This results? Too often, home buyers fall into dreaded (and sometimes elaborate) phishing scams, and real estate wire fraud strikes again.
Unfortunately, wire fraud isn’t a mythical horror story. The FBI reports billions in wire fraud annually, making cybercrime a real threat that wreaks complete havoc on people’s lives.
The worst part? 52.5% of homeowners are completely unaware of wire fraud in real estate.
Understanding the risks, signs, and procedures in the event of potential fraud can protect you from the worst-case scenario.
What is Wire Fraud in Real Estate?
According to the FBI, nearly $150 million in personal assets were lost to scams in the real estate industry in 2018. The FBI also reports that BEC/EAC scams resulted in losses of $1.3 billion in the same year along with a staggering $2.7 billion due to internet-enabled theft, fraud, and exploitation. But how does wire fraud happen?
It begins on public listing sites and the MLS, where prowling scammers can identify their target – pending home sales. From there, they use their internet sleuthing skills to hone in on details of the involved parties, looking for a way in.
The normal route of attack: hacking an email. There were 11,300 cases of real estate email fraud in 2018 alone.
From there, hackers pretend to be executives (or breach legitimate emails of executives) to send fraudulent wire transfer instruction.
They then successfully collect the money from the home buyer when the buyer follows the directions in the email.
**Beware: Generally, these email scammers will incite a sense of urgency in buyers by threatening the closing date being postponed if the wire transfer isn’t completed soon.
Blinded by urgency, buyers don’t take the time to notice discrepancies in the email. Make sure to check the email address of the sender, as the address will generally be slightly off, potentially by just one letter.
What are the Signs of Real Estate Wire Fraud To Watch Out For?
- Details Don’t Line Up: A last-minute change in wiring instructions
- Solely Online: The fraud email will state “no checks are accepted”
- Urgency: It will be an urgent and sudden request, likely to be sent to a different location
- False Email: The email address will be slightly different from your original contact’s email.
1. Real Estate Wire Fraud is More Common Than You Think
Unfortunately, real estate fraud isn’t just a spooky story. It’s alarmingly common and it’s costing Americans millions each year. The FBI reports of $90 billion in attempted fraud in a time frame of fewer than three years.
Scammers are lurking, they’re just waiting for the right opportunity to open up. This means buyers should be on the lookout for any suspicious activity. Just because someone attempts wire fraud, doesn’t mean it will be successful – stay on the lookout.
2. Buyers Aren’t The Only Party Affected By Wire Fraud
Scammers aren’t just looking for buyers, who are the low-hanging fruit and generally unfamiliar with the real estate home closing process.
Brokers, real estate agents, sellers, law firms, and even title and escrow companies could be targeted by scammers. All parties must be aware of and know how to combat potential fraud.
For example, the current seller demographic is largely made up of baby boomers, a generation not exactly known for being tech-savvy. Their lack of internet know-how could prove to be an easy in for scammers.
No matter who is targeted, falling victim to fraud will be hazardous to all parties associated with them.
3. All the Information Scammers Need Is Readily Available Online
The internet is home to all sorts of information. Unfortunately, this can be used to the detriment of all parties involved in the home sales process.
Scammers can track MLS listings, social media profiles, and conduct simple Google searches to compile all the sensitive information they need to conduct a scam. Clever scammers can even dip into public notary records to find your closing location.
Understanding where scammers can collect potentially sensitive information and limiting access to is a proactive step that parties involved in home buying can take to limit their chances of being duped into fraud.
Case Study: Here’s What It Looks Like When It Happens to Real People
One hopeful first-time homebuyer nearly lost $52,000 in wire fraud when closing on her home in 2017.
Luckily, she realized what was happening only two hours after she initiated the transaction.
Many other victims of wire fraud end up losing the money and the home.
For this first-time homebuyer, however, it took 3 weeks and an open FBI investigation to convince the scammer to work with her and relinquish the stolen money.
After hundreds of phone calls and consultation with a lawyer, she eventually retrieved her money. Though she was, in essence, lucky, it isn’t a situation any home buyer wants to find themselves in.
Fortunately, knowing how to react in the case of suspected fraud can save you thousands in the form of a home and heart attack.
Here’s What You Should Do if Real Estate Wire Fraud Affects You:
- Contact Banks: Get in touch with all banks involved in the transactions to try and stop the wire from going through
- Contact Police & Legal Support: Notify the police and reach out to a lawyer who will help you get your money back
- Change Usernames: Change all usernames and passwords as quickly as possible to avoid further scamming
- Contact Agents: Talk to those involved in your home’s closing to try and work out a deal where you don’t lose the house as well
- Hire a Reliable Escrow Company: Make sure you hire an excellent escrow company with rock-solid privacy measures and a highly-trained team of informed experts who will guide you through the entire process
It’s difficult to recover from wire fraud, so it’s better to take precautions beforehand rather than deal with it in the aftermath.
How to Avoid Wire Fraud in Real Estate: Use an Impenetrable Software
Keeping your documents and private information in one secure platform is the first step to completing your wire transfer without incident.
By using protected software like our VentureTrac app, home buyers, agents, and escrow representatives alike can have full access to their escrow progress in real-time from their personal devices. VentureTrac has it’s own bank-level secure messaging system in the app, which eliminates the need for email communication regarding funds in a transaction and keeps buyers and sellers totally safe. Nothing happens without you knowing about it – putting the power back in your hands.
No phony emails or funny business – just 100% secure communication and worry-free home closing.
Spread the Word About Real Estate Wire Fraud Prevention
Don’t let anyone you know fall victim to wire fraud. Spread the word, stay informed, and don’t stress – always read the fine print.
Contact a New Venture Escrow agent if you have any questions about the escrow process and see how we can help you have a seamless and safe home buying or selling experience today.