Imagine saving money for years to buy your first home. Then, in the blink of an eye, your dream of owning a home, and your savings, are gone. Unfortunately, it’s a nightmare scenario that’s becoming all too common.
Real estate wire fraud spiked during the pandemic and continues to haunt homebuyers today. The best way to protect yourself from this type of scam is to familiarize yourself with how it works.
What is Real Estate Wire Fraud?
Real estate wire fraud is when scammers impersonate your real estate agent to trick you into wiring your closing costs or down payment into a fraudulent account. This type of fraud soared in popularity during COVID because more home closings were taking place remotely. Consequently, homebuyers would wire money for closing instead of bringing a certified check to an in-person meeting.
If you’ve ever bought a house before, you know that closing costs and down payments can extend well into the tens of thousands of dollars or more. Understanding how fraudsters pull off this scam is your first line of defense.
How Does Real Estate Wire Fraud Work?
There are many variations of real estate wire fraud; however, the most common version involves your real estate agent. Typically, a few days prior to closing on your new home, you’ll receive an urgent email or text message from your agent.
The message will claim the instructions for wiring your closing costs or down payment changed. Instead, you must follow the newly provided instructions, or you’ll risk losing the house to another bidder.
Unfortunately, many homebuyers fall for this scam because they fear losing out on the home. Also, the message appears legitimate because it came directly from their real estate agent. The message often includes personal information only your agent would know – making it seem authentic.
While real estate agents are targeted most frequently, they are not the only victims. Many parties are involved in closing on a property, including attorneys, title and insurance companies, and escrow agents. Scammers regularly pursue all these organizations and individuals, and the fraudulent message can come from anyone involved in the closing process.
It Can’t Happen to Me!
Everyone feels a scam will never happen to them until they fall victim to one. Real estate wire fraud continues to grow because the messages are convincing and appear authentic. Between the large sums of money being transferred, the high emotions of homebuyers, and the number of people involved in closing, it’s an ideal target for fraudsters.
Real estate agents survive by getting their names and contact information out in their communities. This marketing strategy also provides fraudsters with emails and phone numbers to hack or “spoof” – meaning to mimic.
If a hacker can access any member of the closing party’s email, they can pull personal details about you and your home purchase. They use this information to make the wire request appear genuine.
Tips to Protect Yourself from Real Estate Wire Fraud:
The best way to ensure you don’t fall victim to this scam is to know how it works. Now that you’re familiar with this type of fraud, it’s time to strengthen your defense with a few tips before your closing.
- Understand the Closing Process:
Prior to closing on your new home, review the entire process with your real estate agent. In addition to the date and time, you need to know who will be involved, how everyone will communicate, and how upfront expenses (closing costs and down payment) will be handled.
- Obtain the Contact Information of All Parties:
Before closing, ensure you have accurate phone numbers and email addresses for all individuals and companies involved.
Beware of any sudden changes to the closing, such as payment arrangements or meeting times. Also, keep an eye out for suspicious emails or text messages leading up to your closing date.
- Don’t Give Out Personal Information:
You should always refrain from providing financial details or sensitive personal information in emails. This is especially the case when purchasing a new home. Hackers will seek tidbits of personal information to make their messages appear more authentic.
- Create a Checks & Balances System:
If you receive a message from a member of your closing party with changes or new instructions, contact at least two other members. For example, assume your real estate agent sends a message about changes regarding closing costs. First, call your agent directly to verify the message was from them. Then, contact another member, such as the title company or closing agent, to confirm the change.
- Pay with a Certified Check
If your closing will be handled in person, paying your upfront expenses with a certified check is best. You can ensure the funds are given to the correct party and have more flexibility in recouping your funds should they end up in the wrong hands.
What Happens If You’re a Victim?
If you find yourself a victim of real estate wire fraud, you must act quickly.
- Notify Both Financial Institutions:
First, you want to contact both your financial institution and the place where you wired the money. They might be able to issue a wire recall and cancel the transaction.
Next, file a complaint with the FBI’s Internet Crimes Complaint Center at www.ic3.gov. The FBI has greater authority and reach when stopping fraudulent wire transfers.
Lastly, contact your local police department and file a police report. Having an official police report can help as you try to recover your lost money.
We’re Here to Help!
People often feel embarrassed when they fall victim to a scam and are hesitant to report the crime. Don’t be! If you believe you’re a victim of real estate wire fraud or another financial scam, we’re here to help.
Please contact us immediately by calling 202-479-2270. A team member will be available to answer your questions and help you throughout the process.