Reasons to List With Professional Real Estate Agent (This is the 2nd of a series of 10 real life situations)
Wire fraud is real when it comes to buying and selling real estate. Justin’s client nearly lost over $210k.
Justin Rubinstein, a licensed associate real estate broker at Compass, was working with a buyer to close on a one-bedroom condo on the Williamsburg waterfront in June of 2016. As the deal was being finalized, the client received an email — ostensibly from his lawyer — providing specific instructions about where to wire a $213,500 down payment.
Within moments of sending the money, the client discovered that the wiring instructions had not been sent by his lawyer, but by a scammer, and that he was a victim of wire fraud. But the client got lucky. He alerted his bank immediately and was able to put a freeze on the account before the funds were transferred.
“The criminals operating the scam hacked into the attorney’s email, monitored their account, and closely followed their deals,” Mr. Rubinstein said. “When it came time to send a wire for the down payment, they intercepted the email and sent fraudulent wire instructions to the purchaser.”
Real Estate Wire Fraud
Mr. Rubinstein was lucky. One of the most common cybercrimes in the U.S. is wire fraud in real estate. More than 13,000 people were victims of wire fraud in the real estate and rental sector in 2020, with losses of more than $213 million—an increase of 380% since 2017, according to FBI data.
“There are many players involved in these transactions,” said James Abbott, a supervisory special agent for the F.B.I.’s criminal investigative division “Whether it’s a real estate agent, an escrow company, a real estate lawyer, buyer or seller — there are a lot of potential targets.”
“I see a lot of instances of wire fraud taking place toward the holidays and right before the weekends,” said Mark Hakim, a real estate lawyer at Schwartz Sladkus Reich Greenberg Atlas L.L.P. “As soon as the banks shut down, there’s little recourse.”
Down Payment or Closing Costs
The goal of mortgage wire fraud is to get your closing costs into an account that the scammer owns. The scammer may tell you that there’s been a last-minute change in their banking procedures. They might also tell you that they sent the wrong address the first time.
The truth is that the address the scammer gives you will go straight into their pockets. Once you initiate a wire transfer, it’s very difficult to get your money back. Mortgage wire fraud can leave you thousands of dollars in debt and delay your closing.
What Can I Use To Identify Fraud And Avoid It?
Rocket Mortgage advises to watch out for these red flags to prevent mortgage wire fraud.
Know Your Closing Process
Understanding your closing process before your money is due can help you avoid scams. Speak with your real estate agent in person or over the phone and discuss how you’ll complete the closing process.
Ask about valid payment methods and talk with your lender directly about how you should wire money. You may want to use this opportunity to set up a password that trusted parties can use to confirm their identity when communicating.
Be very hesitant to discuss the closing process via email. Phishers can use this information later to pose as someone you trust.
Write Down Contact Information
You should have a couple of contact methods for everyone involved in your closing transaction. This includes your lender, your real estate agent, your attorney and your settlement agent. Write down each party’s name, phone number, email address and any other form of contact information you have.
You can also use the Consumer Financial Protection Bureau’s Mortgage Closing Checklist to store this information. Don’t email your completed checklist or any outside contact information to anyone.
Beware Of Last-Minute Closing Changes
Scammers cause confusion and panic to convince you to go against your better judgment and wire money to an undisclosed party. Be wary of anyone who urges you to act fast or send money immediately, especially if the request comes over email.
Call To Confirm Any Wiring Instructions
Don’t follow up on any emails with wiring instructions, even if the letter looks legitimate. Contact a trusted representative either in person or over the phone and ask them to confirm the account number and name. Your lender should be able to repeat the name on the account, the amount due and the account number over the phone without prompting.
Only use phone numbers you know and trust. Don’t use phone numbers contained only in the email. Scammers can spoof numbers and create fake phone numbers.
Never Email Your Financial Information
Email is never a safe way to transmit your financial information. Phishers can use this information against you later after a hack, even if you’re emailing someone you trust. Stick to in-person meetings or phone conversations to share important information.
Be Wary Of Phone Conversations
Thanks to spoofing, it can be difficult to distinguish whether a phone call is a scam or legitimate. A scammer might call you and tell you that they have information for you but they need to confirm your identity first.
Trust your gut. If something doesn’t feel right, hang up the phone and contact one of your trusted parties on a phone number you know. They’ll be able to confirm specific wiring instructions or any legitimate changes to the closing process.
Contact Us
Tucker Benner Realty agents advises everyone that if you are ever asked to wire money via email or phone, please call us to confirm authenticity. Tucker Benner Realty or its agents will never ask you to wire funds. Call or text us at 231-730-8781 with any and all wire questions.
Marilyn Tucker
