Most people don't think it could or would happen to them. But wire fraud is one of the fastest growing cybercrime in the US and real estate.
What is wire fraud? Investopedia defines it as a "crime in which a person concocts a scheme to defraud or obtain money based on false representation or promises" and "is a crime in which a person schemes to defraud or obtain money using electronic communications or an interstate communications facility." The is what happens in a real estate transaction.
There is an ever increasing number of closings where buyers get to the closing table and realize that the monies needed for settlement have disappeared. Somehow, someway, scammers received control of their bank accounts through phishing.
These scammers disguise themselves as the client attorney or agent and send the "wiring instructions". The client assumes that this is accurate information as it looks official and goes ahead and wires the money.The problem is they just had their money stolen from them which can start a chain of events that can leave them in a bad spot financially and potentially legally.
Don't let this happen to you. Here are a few ways to protect yourself.
- Educate yourself and make sure your Realtor and closing attorney are educated on wire fraud. Simply, learn the dangers!
- Verify funds and transfer instruction with the financial institution. Make sure you are talking to your financial institution and keeping them updated on the purchasing of a property and that you'll be wiring the funds at time of closing.
- Verify the correct wiring instructions with the closing attorney in a secure manner
- NEVER use a public wi-fi to make the transfer
- Pay attention to any red flags that may appear like receiving a phone call from someone that you do know and them giving you the wiring instructions.
- Be suspicious and on-guard and contact the financial institution immediately if something happens.
- Talk to your Realtor or closing attorney about how to mitigate the wire fraud risk in your transaction.
Recently, we were at a closing with a client. The closing was smooth and without issue but one thing we learned and haven't seen it much is the attorney communicated with the client directly (not the paralegal or office staff, but the attorney) and gave them detailed wiring instructions. This helped to mitigate any risk in the process. It is a simple but effective risk mitigation strategy and we appreciated this attorney's diligence in protecting the client.
The National Association of Realtors is very much engaged in working to solve some of these problems. They are currently working on a wire fraud and money laundering toolkit that other Realtors, consumers and anyone involved in the real estate transaction should and could learn from. We'll be sure to share once complete.
In the meantime, we are not attorney's, however our goal is to protect our clients in this important property-buying process. If you have any questions we are happy to help get those answered and get you in your dream home without issues. Let’s make sure you're protected!