While approaching the home stretch of a real estate closing process, homeowners may brace for a rocky road: wire fraud. In this guide, we’ll delve into the hard facts about wire fraud in real estate transactions, how scammers take advantage of homebuyers, and how to prepare yourself for a closing using proven strategies to beef up your defenses. At Title Resources Inc., we are dedicated to arming you with the knowledge needed to safeguard your closing money and the closing process.
Understanding the Anatomy of Wire Fraud in Real Estate
Wire fraud in real estate is a sophisticated scam, often orchestrated through the use of phishing techniques. In this scenario, hackers assume the identity of trusted individuals, such as your real estate agent, manipulating homeowners into diverting their closing funds to fraudulent accounts. This fraudulent activity can manifest through various channels, including fake emails, phone numbers, or websites, creating a convincing façade that can deceive even the most vigilant homeowners.
Scammers’ attempts at impersonation might involve using an email address or phone number that is nearly identical to that of your realtor or lender. The use of real information stolen from you through phishing sites previously makes these communications seem that much more legitimate. Scammers might even use a ‘spoofing’ program that mimics the contact information of your agent or lender, with software that changes the displayed information from whatever was used to contact you in the first place.
The goal of the wire fraud scheme in real estate is to intercept closing funds through wire transfers to an account controlled by the scammer. These scammers will do their best to impede the transaction, falsely claiming at the last minute that some part of the transaction had to be changed or reaffirmed, including providing homeowners with false information that can cost them thousands of dollars or even delay the closing.
The Prevalence of Wire Fraud in Real Estate
Wire fraud in real estate isn’t as rare as you would think. Between 2015 and 2017, reports to the Federal Trade Commission about attempted wire fraud rose a staggering 1,100 percent. In 2017, real estate transaction costs incurred by wire fraud victims exceeded $1 billion, according to the FTC.
Recognizing the Signs of Wire Fraud in Real Estate
Learning how wire fraud happens – and the trick the scammers use over and over again – can help homeowners understand how to recognise the potential for this fraud, and how to stop it before it’s too late. In the most common situation, you might receive an email from someone claiming to be your real estate agent with an urgent request just before closing, instructing you to wire your closing funds to a new account.
These emails will be crafted to look authentic, even signed by your agent and addressed to you by name, explaining that there has been a mistake in the closing process, and, in order to avoid losing your house, you need to use the details of an account – into which the money should be wired – to avoid losing your home. Of course, the account numbers cited will end up in the hands of the con artist rather than your loan officer.
Protecting Yourself Against Wire Fraud
To fortify your defenses against wire fraud in real estate, consider implementing the following precautions:
Create a secure platform for communication:
At Title Resources Inc. we provide the most secure cloud based portal that brings together all parties in your real estate transaction. This provides real time updates from your realtor, lender and title closer in a safe secure system. Look for this type of security within your transaction.
Understand Your Closing Process ahead of time:
Gain a comprehensive understanding of your closing process, engaging in direct communication with your real estate agent either in person or over the phone. Confirm valid payment methods and establish secure communication channels.
Take Note of Contact Information:
Maintain a detailed record of contact information for all parties involved in your closing, including your lender, real estate agent, attorney, and settlement agent. Avoid sharing sensitive information via email, opting for more secure methods of communication.
Be Skeptical of Last-Minute Changes:
Exercise caution when faced with sudden requests to act quickly, especially if received via email. Confirm any changes directly with trusted representatives through secure communication channels.
Call to Confirm Instructions:
Always validate wiring instructions by initiating a call to a trusted representative using known and verified phone numbers. Refrain from using phone numbers provided solely in emails, as scammers can exploit these to deceive homeowners.
Do NOT Email Financial Information:
Steer clear of transmitting financial information via email, as this method is susceptible to phishing attacks. Choose in-person meetings or phone conversations for sharing critical financial details.
Be Cautious of Phone Conversations:
Given the prevalence of spoofing, exercise caution during phone conversations. If a call seems suspicious, trust your instincts, hang up, and contact trusted parties using known phone numbers to confirm specific details.
Taking Action in the Event of Wire Fraud
If you suspect you’ve fallen victim to wire fraud in real estate, swift and decisive action is crucial. Follow these steps:
Contact Your Bank:
Immediately alert your bank and request a wire recall. Acting promptly increases the likelihood of recovering the funds. Provide a detailed explanation of the situation to enhance your chances of resolution.
File a Complaint:
Report the incident to the FBI’s Internet Crime Complaint Center, providing comprehensive information to aid their investigation. The more details you include, the more effectively law enforcement can assist in resolving the matter.
In Conclusion
Wire fraud in real estate is a formidable threat during the closing process, with potentially severe consequences for homeowners. By staying informed, adopting a cautious mindset, and implementing proactive measures, you can effectively protect your closing funds from scammers. At Title Resources Inc., we prioritize your security and aim to equip you with the knowledge needed to navigate the closing process safely.
If you have further questions, you can always reach out to TheTitleGuy.com to discuss further.