Wire Fraud in Real Estate: The Importance of Vigilance and Awareness

The real estate market is very active right now with title companies handling multiple real estate closings each day. But as the buyers, sellers, lenders, realtors, and title agents all come together to ensure its success — there may be someone lurking out of sight, just waiting to snag the sale proceeds from unsuspecting victims. 

According to the FBI’s Internet Crime Report, nearly $400 million in the real estate industry alone found its way into the hands of fraudsters in 2022, leaving behind over 11,000 victims. 

Vigilance and awareness are of utmost importance for everyone involved in a real estate transaction. Here’s what you need to know about wire fraud in real estate and what you can do to protect yourself. 

The Common Use of Wire Transfers

Wire transfers are routinely used in real estate. They are the easiest way to transfer money from one bank account to another — from buyer’s escrow to seller — without disruption. There is no need for checks to be cut or bags of money to be passed. These transfers are simple, easy, and highly effective. 

Unfortunately, despite a high level of security and bank monitoring, hackers have found them to be a great way to get money delivered straight into their own accounts. And, by the time the victim realizes the mishap, nothing can be done about it. 

Wire transfers cannot be reversed. 

How Wire Fraud in Real Estate Happens

Most wire fraud happens when hackers gain access to communication channels — primarily email. Once they are in, these cybercriminals can gather names, email addresses, and detailed information about upcoming closings. 

Then, posing as the title company, lender, or another party in the transaction, they create a very believable email and send out fake wire instructions. They may provide the initial wire instructions or say that the first account number was incorrect, providing new correct wire instructions. 

Because the email looks legitimate, often having the proper logos and such, it is easy to be fooled into thinking that you are actually talking to the person you think you are. 

Some try to throw out the bait and see if an unsuspecting person catches it. Others have elaborate schemes. For instance, those believing they are doing their diligence may call the phone number listed in their email to confirm wire instructions only to speak directly with the hacker! 

How to Protect Yourself from Wire Fraud in Real Estate

A few things you can do to protect yourself from wire fraud in real estate include: 

Knowing the risks. When you understand that there are people out there who may try to involve themselves in your real estate transaction, you are more likely to catch them than you are to fall for them. 

When you don’t know that there are any risks, you become an easy victim. Education is key.

Verify everything. Never believe anything that comes through to you via email from any party in the transaction until you verify it. Do not call the numbers listed in the email for verification and do not reply to the email either. 

If you receive something you aren’t sure about, call the number you have on file for that particular individual and verify the information. Better yet, if you are local, go in person. 

Work with a trusted title company. Title companies know and understand that buyers and sellers are at risk when it comes to wire transfers. They know that extra precautions have to be taken to ensure that they do not end up in the hands of hackers. 

Title companies should be diligent in their treatment of your transaction, always double-checking and verifying everything. Many also use encrypted emails — or will completely avoid sending wire instructions via email. 

And, of course, if you aren’t sure if the transaction is being handled securely, ask! 

Protect Your Real Estate Transaction At Buchanan Settlement Services

At Buchanan Settlement Services, we go above and beyond to ensure that your real estate transaction is safe and secure. Buying a home is one of the biggest investments you will likely make in your lifetime —- so making sure the transaction goes smoothly is very important. 

That’s what you will find when working with our title experts. 

Contact us today at (717) 762-1415 to learn more.