How to Avoid Getting Scammed When Buying a Home
A home is one of the largest purchases we make in our life. Unfortunately, there are a lot of scammers out there that are not only aware of this fact, but have found a way to scam people out of their hard earned money when buying a home.
It takes most people 5-10 years to save up for the down payment on a home and in an instant these funds can get taken away from you by hackers during the closing process.
According to the FBI, there has been a huge rise in this type of wire fraud as the hackers attack real estate brokers, affiliated licensees, title companies, mortgage lenders, closing attorneys in an effort to obtain logos and the email addresses of the Buyers and sometimes the Sellers. When I bought my first home I had to bring a Cashier’s Check or a Bank Check. However, because criminals found a way to forge these checks many states, including Georgia, passed laws that require that the funds for real estate closings can only be paid via wire transfer.
The way that the scam works is that the criminals will send a “phishing email scam” that allows malware to monitor email and spot potential transactions. Then, when the prospective Buyer is ready to close on their home and the Seller is awaiting the wire transfer from their transaction, the scammers send an email that looks like it is coming from a lender, closing attorney or title company and request the money to be wired through a click-through link or telling them that they have changed bank accounts and giving them a different bank and account number to wire the funds to for their closing. Sometimes they even have a phone number for you to call to verify the bank account number, but of course this is a fraudulent number. Typically the funds are then wired to an offshore account where the money is difficult if not impossible to trace.
There are some steps that Buyers (and Sellers) can take to avoid being a victim of this merciless crime:
- At the beginning of the transaction always get the correct phone number and contact name of the Closing Attorney or Title Company that is handling your transaction.
- Because this type of fraud has become so prevalent in real estate transactions, most Closing Attorneys and Title Companies will send the wire transfer instructions via Encrypted email or have you log into a “closing portal”. If wire instructions come to you via regular email it is most likely not a legitimate email.
- Before your bank wires the funds, call your contact at the Closing Attorney’s office or the Title Company to double verify the bank account number and wire amount. Most of my clients do this while they are at the bank initiating the wire.
- If you are the Seller, you can usually take a check from the Closing Attorneys Trust Account at the closing table for the proceeds related to the sale of your home and just deposit it in your bank account. However, if you prefer to have it wire transferred to your bank at closing then most Closing Attorneys will allow you to provide the ABA Routing Number and Account Number for your bank while you are at the closing table. That way it never goes across email or the telephone.
In any event, it is always best to double check all details over the phone before sending a wire transfer. Buying a home is supposed to be a thrilling and enjoyable experience, and with a little bit of extra caution and a phone call we can keep it that way!
For an FBI news release on at least one real estate wire transfer scam where 74 perpetrators were caught, click here.
Thanks for reading!
Your Friend in Real Estate,