Real estate transactions are a lucrative and growing target of opportunity for fraudsters. Why? The transactions are large, with many players involved, and email is commonly used for providing instructions for the sending of funds at closing. This creates the perfect opportunity for criminals to swoop in on unwary buyers, snatch funds, and disappear. Homebuyers who are aware of these schemes can protect themselves and make sure their purchase goes smoothly.

How Does Wire Fraud in Real Estate Work?
Closing on a house generally requires a wire transfer, and this transaction is usually a large sum. This step in the closing process must be done with care. This is the stage when scammers are most likely to move in. Here’s how real estate wire fraud works.

A scammer gains access to the email of a participant in the transaction, usually the REALTOR® or title agent. Not only does this give the scammer access to the agent’s information—such as the buyers they’re working with—but it also allows the scammer to use the agent’s name and email to deceive buyers.

The fraudsters then forge the agent’s email and other details to make their email appear authentic. This message may look and sound very similar to the agent’s real emails, so this can be difficult to detect.

They monitor the transaction and at the time for the disbursement of funds they send an email to the buyer or financial institution with bogus wiring instructions to their account. This is usually not discovered until the title agency notifies the buyer or financial institution that they did not receive the funds. By this time the criminals have the money and it is rarely recoverable.

How Can This Be Avoided?
All wiring instructions, no matter who they are from or appear to be from, should be confirmed by phone to a previously verified number of the alleged sender. This is one of the best ways to prevent wire fraud in real estate.

Keep in mind that phone numbers in scammers’ emails may also be fraudulent, so do not use the number included in the email. Also, be aware that scammers can call you from seemingly legitimate phone numbers using a technique called “spoofing,” so be sure you make the call to your agent.