Why does real estate wire fraud happen? Because it can. It is really that simple.
Buying and selling real estate can be exciting – and also very hectic. And while everyone is making plans for the future, scammers are out there just waiting for their moment to shine.
When you aren’t using the right tools, unwanted guests can make their way into your real estate transaction in a stealth-like fashion – and no one will even know until it is too late.
How Wire Fraud Happens
Fraudsters make use of different tactics, such as email phishing, to gain private information about a pending sale. They may know the property address, the buyer’s name, email, and other contact information, etc. And as they gather more, they patiently wait until it is close to the closing day before taking any action.
This is the time of the transaction when the buyer is getting anxious and nervous and just wants it over with. They want the keys to their new place so they can start on this new adventure.
Unfortunately, because of all these emotions, they don’t think twice about an email that comes over asking to verify wire instructions. They just do it.
In a moment’s time, they lose their entire down payment – or their entire purchase amount.
This is one of the many ways real estate wire fraud happens.
What Makes Real Estate a Target?
As evidenced by the FBI’s latest IC3 report, wire fraud within the real estate industry is still showing upward movement. It has been making headlines and those within the industry know just how important it is to stay vigilant when dealing with wiring instructions.
Yet, it still happens. Here are a few reasons that may explain why.
Large Sums of Money
For one thing, the real estate industry is an ideal target because its transactions involve large sums of money. In a single swoop, a scammer can walk away with hundreds of thousands of dollars – or millions of dollars. And, that’s just by interfering in one transaction.
The payout is big.
Wire Transfers are Unstoppable
Unlike fraudulent transactions that involve cash, checks, credit cards, or even gift cards, wire transfers cannot be stopped. These transactions are often reviewed closely before they are fully processed because once they are approved and sent – that’s it. There is no turning back.
A fraudster who just directed your funds into his account can walk away with it and there is nothing you can do.
Too Many People Involved
In every real estate transaction, there are a lot of people handling different aspects. There are title agents, escrow agents, loan officers, real estate agents, and then, of course, the buyer and seller. Sometimes you may even have a real estate attorney, too.
All of these hands in the basket can lead to a lack of clarity when it comes to communication. For instance, getting an email from an outside party concerning the transaction won’t always have the recipient questioning it because there are so many people involved. And if the email looks legit and the sender knows personal information, it has to be real, right?
Phishing happens more than you’d think – and it can work out well for the scammer.
Sometimes real estate wire fraud may happen just because buyers don’t know what to expect. If you have ever purchased a piece of property, then you know how overwhelming the whole process can be when it is your first time.
Those who don’t know what to expect may not think it is out of the norm to switch up wire instructions at the last minute or to verify the numbers via email before a transaction.
These individuals are vulnerable and easy targets.
Protect Your Real Estate Transaction
Education is important in spotting scams, but it is not foolproof. As scammers and fraudsters become more and more savvy with their methods, a stronger layer of protection is needed.
At Closinglock, we provide the software necessary to keep monetary transactions secure – especially when they involve wire transfers.
Contact us today to learn about how to protect your staff and your clients.