Real Estate Wire Fraud More Common Than Most People Believe
In 2020, a third of all real estate transactions involved some sort of wire fraud attempt. Today, wire fraud is the single largest threat to real estate transactions.
The goal of mortgage wire fraud is to get buyers to deposit their down payment and closing costs into an account owned and controlled by scammers. Wire fraud can cost victims tens of thousands of dollars and may jeopardize their ability to buy a home. With median home prices above $400,000, it’s not uncommon for homebuyers to wire 20% or more to satisfy their closing obligations.
This type of scam isn’t limited to first-time buyers. It happens to seasoned real estate brokers as well. Recently, we discussed wire fraud with a real estate broker with over 30 years of industry knowledge who wanted to share the shocking experience with us.
Real Estate Wire Fraud Only Happens to Other People…Or Does It? Here Is One Real Estate Broker’s Real Story (Identity Hidden)
“Early Monday morning, my heart sank when I read the email from my attorney that the title company had not received the wire for our closing. I panicked…. hadn’t I been emailing my attorney about the wire?” The victim discovered that they were not communicating with the attorney, because his firewall and email had been hacked by scammers.
“My attorney told me that I needed to immediately call my bank. I felt sick and disoriented all at the same time as I replayed the past events in my mind. I had logged onto the secure website. I received the instructions from the title company and both my attorney and spouse were cc’d on them. How could this be happening? How could I, an experienced real estate broker, be scammed?”
The purchase was scheduled to close on Monday, May 23rd. The wire was sent on Thursday May 19th to be sure of an on-time closing. Due to the out of state transaction, an attorney (rather than escrow) oversaw the legal documents and arranged the closing with a title company. There’s an in-person meeting that takes place the day of closing and the buying parties are normally in attendance. The buyer had been trying to confirm the receipt of the wire with the title company since Friday, but no one was returning calls or responding to emails
“After learning I had been scammed, I realized we missed a crucial step in the wiring process. It was the very thing I had warned others about for years. By going too fast we did not take the time to pick up the phone and directly verify the correct account and routing numbers before sending the wire. Just one phone call, and I could have saved a huge amount of stress and significant financial loss.”
“Please let this be a warning to every home buyer and real estate professional. Wire fraud does not just happen to other people who may be unsavvy about real estate practices. It can happen when we don’t stop and carefully inspect every step of the process. It is my hope that through my example we can help educate others.”
In this case, the bank receiving the wire had flagged it as potential wire fraud. This was only because the wire specifically named the title company as the recipient, so the bank did not allow it to go into the scammer’s account. This was done entirely at the bank’s discretion. There is no law that requires banks to review and match wire and account names.
Understanding Mortgage Wire Fraud
The most common type of real estate fraud involves Business Email Compromise/Email Account Compromise (BEC/EAC). Using spoofing techniques, hackers mimic the email address, phone number or website of trusted people and businesses. The hacker often sends multiple fake emails to gain the victim’s trust. Eventually, the victim is presented with fraudulent wire instructions.
Most people don’t realize they’re communicating with scammers until it’s too late. Once the money is gone, it’s extremely difficult to recover. This is what makes this type of cyber-attack so dangerous.
Preventing Wire Fraud
Always verify wiring information including exact wire account numbers, by calling directly, don’t use the number provided on the instructions. You should call the title or escrow company at the number listed on their official website. Do not use links in emails, only use phone numbers that have been previously verified. It’s also important not to wire money to any account provided by your real estate agent. Real estate agents do not have access to the account information of your settlement agency. These extra steps may take a few minutes of your time, but could save you thousands of dollars and protect your ability to purchase a home.
Buying a home is one of the biggest decisions a person can make. Don’t let mortgage wire fraud ruin your chances of owning a home. Communicate often with your escrow officer or attorney via phone and don’t hesitate to ask questions if anything seems suspicious.
Strategic Sales and Marketing offers a variety of real estate sales and marketing services. Our team has years of experience working with the real estate industry and understands the steps required to identify and connect with potential buyers. Please contact us for more information about our services.