Prospective home buyers will spend months to years saving up for their down payment for a home. They’ll spend weeks to months shopping around to find the perfect home to buy and put in hours making sure their finances are up to date, they’re able to be pre-approved, and they’re able to buy the home they love. All of that can be threatened in an instant if they are a victim of a real estate scam like wire fraud during the closing.
Recent studies have shown that around one in 20 people who buy a home are victims of wire fraud. It’s incredibly common today and, unfortunately, can lead to an average of around $70,000 lost because the money sent during the transaction is typically the full down payment.
It can even mean losing out on buying the home, as the contract can be canceled if the money is not sent to the seller at closing. This could mean the buyer has to look for a new home to buy, as the seller may not be willing to wait until everything is fixed, if it can be fixed, to sell the home. It is increasingly crucial for prospective buyers to learn about wire fraud and what they can do to prevent it to help keep them safe.
The most common way wire fraud is done can be incredibly complex. A scammer uses an email address or phone number that looks like the one from a real estate agent, title company, or other person involved in the process. They send an email to the buyer with the instructions for a wire transfer, and it often looks legitimate at first glance. The buyer then follows those directions, but instead of sending the wire transfer to the correct party, they send it to the scammer.
Wire transfers are the preferred way to conduct real estate transactions because they are final, they’re processed fast, and they can be used to send larger amounts of money. Unfortunately, the same benefits of wire transfers in real estate transactions are what makes them perfect for scams.
Once the money is sent, it typically can’t be returned to the sender. In cases where it may be possible to reverse the transaction, it can take a significant amount of time and it involves both banks working together. This may mean pushing back the closing for weeks to months, and it could be seen as a breach of contract, which means the contract to buy the home is canceled and the seller can look for a new buyer.
Email spoofing is a common way scammers will get buyers to send the money to the wrong account. This is a way of changing an email address to look like the one the buyer is expecting to see. In their email inbox, the buyer might see the name of the real estate agent they’re working with, but if they click for more information, they might see that the email address is actually different. It can be incredibly difficult to spot email spoofing for those who don’t know what to look for or that they should check for it.
Scammers are also using text spoofing as a way to contact prospective buyers. They use apps or software to make it look like a text is coming from a specific number, such as the real estate agent, and send information about the wire transfer that way. Since it looks like it’s the real estate agent’s phone number, buyers may not question it and could end up falling victim to the scam.
Buyers can take steps to help protect themselves during property transactions, which will help to prevent wire fraud or other scams. Some of the security measures to take include the following.
• Learn the Closing Process – It is important for buyers to learn more about the closing process and what to expect so they will know when something is different. This helps them spot potential issues or concerns.
• Confirm Payment Details With the Lender – Never send money without confirming the payment details with the lender. Do not reply to emails that seem to be from the lender – get their email address from their website and send a new email.
• Get Verbal Confirmation Before Sending Money – It is always a good idea to get a verbal confirmation before sending any money. Call the lender or the title company to get the confirmation instead of waiting for them to make the call.
• Do Not Rush – Scams often work by making people rush so they don’t have time to stop and think about whether the instructions make sense. Never rush a real estate transaction. Take the time to make sure everything is done properly.
• Work With an Attorney – It is a good idea to consider working with a real estate attorney in Cullman, AL, as they can help to check all details before the money is sent. This helps protect everyone involved in the transaction from fraud.
Though it is difficult to reverse wire transfers and it can take time, it can be done, so the buyer can get their money back in some cases. Someone who is a victim of wire fraud should immediately contact the bank and report the activity. They will want to request a wire transfer recall, as well as file a complaint with the ICCC and the FTC. Though it’s not guaranteed they will get their money back, this gives them the best chance.
Each day, too many people end up falling victim to wire transfer fraud when buying a home. If you’re planning on buying a home, make sure you are careful as the closing date approaches. Take the steps mentioned above to reduce the chance of becoming a victim of wire fraud and to help keep your money secure until the home is purchased.
