By Preston Guyton
Wire fraud is a serious concern, and it can happen during a real estate transaction. One of the best things real estate professionals can do for their clients is educate them on how this happens, how common it really is and how clients can protect themselves from the dangers. By doing that, many clients will be safer and the chances of them becoming victims of wire fraud during their transaction will be greatly reduced. Additionally, this builds more trust between clients and real estate professionals, as they work together to complete valuable and important transactions.
How Common is Wire Fraud in Real Estate Transactions?
Wire fraud in real estate transactions is more common than most people think. At the Idea Exchange Council for Brokers, NAR General Counsel Katie Johnson asked a large group of real estate professionals whether they had any clients who had been victims of wire fraud. She also asked whether they knew of other agents who had clients who had been victims. Over one-third of the agents raised their hands indicating that they either had clients who were victims or knew other agents who had clients who were victims.
While the NAR Council was not an extremely large sample size, this indicates that many real estate professionals have had clients who have been affected by wire fraud scams. These scams take millions of dollars from unsuspecting consumers each and every year, and the problem is only becoming larger. Fortunately, a good understanding of how this takes place and strong communication with clients about how to avoid it can reduce the risk. In time, this may become far less of an issue for clients and real estate professionals than it is today. That could save millions of dollars and protect real estate clients, allowing them to safely buy their homes without fear of wire fraud and related scams.
How Does Real Estate Transaction Wire Fraud Happen?
Wire fraud happens in real estate transactions in a way that is deceptively simple. Hackers who are looking to commit this type of fraud break into email accounts. Then they look through messages in those accounts for anything related to a current, ongoing or upcoming real estate transaction. When they find something, they send a message that looks like it comes from the real estate agent, closing company or mortgage company. They provide “new” wire instructions for where the money is supposed to go.
Once the money is sent, there is nothing that can be done about the fraudulent information, because the hackers are very hard to track. (For more on this, you can check out the TitleNews article “Phishing for Wire Transfers”) Not only does this cost buyers a lot of money every year, but it also keeps them from closing on the homes that they had intended to buy. That’s a very unfortunate situation for everyone involved.
What Are the Best Ways to Protect Real Estate Clients From Wire Fraud During Transactions?
To help keep clients safe, industry professionals can:
• Create a standard warning about these scams and build it into the signature line of their email to help raise awareness
• Be clear about communication practices for every transaction
• Call clients immediately before any legitimate wire transfer, so they know it’s going to the right place and people
• Avoid free wi-fi when doing anything sensitive, so information can’t be captured as easily
• Use strong passwords, and make sure those passwords get changed frequently
• Employ someone who handles and monitors security systems for the real estate firm to reduce the risk of being hacked
With the right education and information, real estate professionals and clients can work together to have good transactions that are free from wire fraud and other forms of hacking and theft.
Preston Guyton is broker in charge and managing partner of CRG Companies. He can be reached at www.sellingmyrtlebeach.com/.
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