Avoiding real estate wire fraud is (a lot) easier than brain surgery
Surgeons wash their hands meticulously and don gloves before heading into the operating room. They know that stray germs could mean infection (or even death) for their patient, so they perform this simple act as a precaution. And it works. Now, think of your hard-earned money as that patient on the gurney. Wouldn’t you take a few simple actions to protect that money from criminals as it’s being wired from place to place during your real estate transaction? We’re talking real estate wire fraud today, and how to avoid it. And you don’t even need soap!
We protect the interests and well-being of our clients throughout every step of their transactions, whether they’re buying, selling, or doing both at the same time. This includes educating the people we work with so they understand their choices before making decisions or significant commitments. One lesson we’ve recently added to our process is how to avoid real estate wire fraud, an increasingly common and potentially devastating crime that strikes both buyers and sellers. While many people still use bank checks for their real estate transactions, wiring funds has become much more prevalent because of its simplicity. However, this simplicity leaves an opening for criminals to capitalize upon—literally. Luckily, it’s easy to avoid real estate wire fraud. Just knowing it exists is an important step, so you’re already ahead of the game! Read on to learn what actions you can take to avoid real estate wire fraud.
When buyers wire their deposits and down payments, they’re at risk of losing all that money, most likely for good, if they become victims of real estate wire fraud.
How wire fraud happens to buyers
Criminals will hack into the email account of one of the professionals you’re working with. They will impersonate an agent, attorney’s office, lender, and so on. Their goal: to divert your money into their own account. Once they’re in, they’ll find the wiring instructions for your payment, which include the account number for the receiving party. Once the thieves find the instructions, they simply change the account number to their own, then they email you those changes from a fake email address that’s very similar to one of the parties in your transaction. If you don’t catch this change, the money is wired to the wrong account, and the chances of recovering your money are small (but not impossible–see below for steps to take if you’re the victim of wire fraud).
When sellers have the proceeds from their transaction wired into their bank accounts, they could lose the mortgage payoff or proceeds from the sale to criminals through real estate wire fraud. For the most part, sellers should expect payment via wire from the title company or the settlement agent. A few days before the closing, you’ll hear from your attorney, the title company, or the settlement agent regarding this wire. They’ll ask you to provide information for setting up wire instructions for the proceeds from your sale. If you have a mortgage, you’ll get a similar request from the settlement company to get the payoff information from your lender. In both of these scenarios, this is where the fraudsters step in.
How wire fraud happens to sellers
If you use email to communicate your account or other information to your attorney, title company, or settlement agent, criminals may hack into the email account of one of these parties in your transaction. They then change the account number from yours to theirs, email these “revised” wiring instructions from an email address similar to yours, and hope the person wiring the money doesn’t notice the difference. Remember that not only are you at risk of losing the profit from your transaction, you could lose your mortgage payoff through this scam! However, if you’re vigilant, the hackers won’t get their hands on your money.
Buyers and sellers can prepare for and complete a successful wire transfer.
If you must communicate via email, don’t just hit “reply;” instead, click “forward,” then type in the exact email address you have on file, from an email you’ve already confirmed. This way, you’re always writing to the legitimate party, every time.
Assume that any changes in wiring instructions are fraudulent, especially if they’re coming via email.
Confirm wiring instructions by phone, from a number you have already used, with a person you’ve communicated with before. Don’t use the phone number from your wiring instructions.
Sellers, give your wiring instructions on the phone, to a trusted party, at a phone number you’ve independently verified.
Have a bank employee confirm the name on the receiving account before sending the wire.
Once the wire transfer is complete, call the recipient to confirm that the money has been transferred successfully. If you’re a seller with a mortgage, call your lender ASAP after your closing to confirm that the payoff was received.
What to do if you’re a victim of real estate wire fraud
Hopefully, you’ve followed all of the above preventative steps and thwarted the criminals who want your deposit or settlement cash. But if wire fraud happens to you in any case, here’s what you can do:
The instant you detect that your money isn’t in your account, report this to both the sending and receiving banks.
Initiate a recall on the wire with the sending bank’s fraud department. Be ready to share the wiring details (the actual ones and the fraudulent ones). That bank will alert other financial institutions that may have received your wire so they can “freeze” that money. This way, the funds can’t be withdrawn or transferred out.
Ask the bank to initiate the FBI’s “Financial Fraud Kill Chain.”
Report the fraud to everyone involved in the finances of your transaction: agents, lenders, title insurance carrier, etc.
Preventing wire fraud is possible, and even easy; you just need to be vigilant, detail-oriented, and cool-headed. As your agents, we can help you navigate your wire transfer successfully. Ready to buy, sell, or invest? Contact us. We're here to help.