Real estate fraud hurts everyone but the scammers themselves, including trustworthy home buyers, real estate agencies, and attorney offices. And the problem is continuing to grow. In 2019 the FBI looked into 23,000 complaints related to Business Email Compromise, or types of fraud where legitimate email accounts belonging to businesses are hijacked or impersonated by scammers. These cases resulted in adjusted losses totaling more than $1.7 billion.
While wire fraud may be one of the best-known types of real estate fraud, you’ll also have to keep an eye out for foreclosure relief scams, loan-flipping scams, and more. With a growing number of scams, it’s important to get a full understanding of ways you can prevent real estate fraud.
1. Create a Consistent Process
Many types of real estate fraud–including wire fraud, rental scams, and foreclosure relief scams–focus on gaining the victim’s trust to con them out of their money. Scammers often use seemingly-real email messages, websites, and phone messages to accomplish this goal. With tools like these and others, they can impersonate real estate agencies and other entities with a surprising level of accuracy.
Since stopping scammers from doing this is challenging, you’ll need to put a rock-solid process in place for even the most minor real estate transactions. As part of this, make sure to explain how your employees should verify loan payoffs such as creating an audit trail or real estate prevention software.
While the real estate verification process may be complicated, it’s crucial to ensure everyone involved in a sale understands how they work. Suppose someone on either side of a transaction doesn’t fully comprehend your process due to ambiguous language or a lack of clear guidelines. In that case, they’ll be less likely to follow it correctly–and more likely to get tripped up by nefarious third parties. This is especially true when teams are trying to meet tight deadlines and under pressure to work quickly.
2. Increase Communication
Proactive communication between your company and your clients can seriously lower the likelihood that either party will get scammed. Try to stay in close contact with your customers at every step of the sale process. Before their real estate closing, let them know precisely what will happen, what people they’ll be working with, and when they can expect to hear from you next.
Because emails are especially vulnerable to fraud, you should never rely solely on this method of communication when buying or selling real estate. Instead, make sure every transaction includes face-to-face meetings or phone calls. At the start of a potential sale, it’s also a good idea to send clients a “welcome” letter with information on real estate frauds and advice on how they can avoid these scams.
3. Vet New Contacts
It’s easy to assume that most instances of real estate fraud are caused by untrained members of the public trusting someone they obviously shouldn’t. But that’s not always the case. Your employees also need to pay close attention when dealing with people who claim to be licensed professionals, especially if they contact your office out of nowhere.
One of the best ways to determine the trustworthiness of a new contact is deceptively simple–research their information. Use Google to find a verified website for the company they claim to work for. Then, use the contact information you find to ask whether or not someone from their business just got in touch with you. A website is much harder to fake than a simple email, as a company’s actual site will almost always be one of its top search results. It also can’t hurt to look in other places for evidence that they exist, like LinkedIn.
Meanwhile, never rush a real estate transaction. Instead, take your time while going through the sale process. That way, you’ll have ample time to vet everyone involved with the transaction. (Just know that scammers understand the importance of time, too. If a new contact tries to close a sale as quickly as possible, keep that in mind as a potential red flag.)
4. Utilize Technology to Improve Security and Customer Experience
Technological advances have made wire fraud and other real estate scams more common than ever. The good news is that progress is a two-way street–new technology has not only made things more secure, but it also makes it easier on clients.
When they are just relying on email/phone (old technologies) it creates a lot of confusion and anxiety. Technology that is both secure and easy to use will not only cut down on wire fraud, but it will also give clients a better overall experience and make them more likely to work with you again in the future or recommend you to others.
With that said, numerous software packages have been created with real estate security in mind, but not all of these programs are up to the same standard. Even if a program does its job well, it could require your clients to download apps or go through convoluted registration steps that are confusing to the client and create friction. As a result, you need software that can provide a safe environment for digital transactions and a high-quality customer experience.
ClosingLock is the industry leader in real estate fraud prevention software. With their products, you and your customers will enjoy protection from wire fraud though fake emails, phishing schemes, and legitimate accounts that have been compromised. Never question a loan payoff again as the ClosingLock software verifies account and routing numbers in real time and alerts users about potentially fraudulent ones.
Meanwhile, your customers won’t need to remember a password or even get registered. ClosingLock programs have already protected $50 billion in real estate transactions.
With a seamless user interface and multiple integrations, ClosingLock protects title companies, attorney offices, and their customers ensuring each transaction is legitimate.
To learn more about protecting real estate transactions from wire fraud, contact ClosingLock today at (512) 270-3917.