Homeownership is a dream in which many people invest a significant amount of their hard-earned money. Whether you’ve been able to save enough to outright purchase property or you’ve gathered a downpayment on your first home, you’re dedicating a large chunk of cash. So, imagine you’ve transferred this sum only to find that it didn’t make it to the title company, but rather it was intercepted by cybercriminals committing real estate wire fraud.
This is undoubtedly a nightmare scenario. Unfortunately, it’s one that is all too common in today’s digital real estate landscape, in which the majority of transactions rely on email communication and wire transfers. We’re going to take a closer look at what real estate wire fraud is, what signs you should be looking out for, and how you can best protect yourself.
What is Wire Fraud in Real Estate?
Real estate wire fraud is a financial crime in which criminals intercept funds sent in a real estate transaction. In most instances, this occurs during the closing phase. While there have been various approaches to this over the decades, at the moment this scam most commonly involves phishing and/or spoofing. Both involve tricking buyers into sending funds while posing as a trusted third party in the real estate transaction.
So, how does this work in practice? Here’s an example.
Step 1: A buyer is closing on a new home and has previously received wiring instructions from the title company.
Step 2: At the last minute, they receive an email from an address whose domain name has been “spoofed” to take the same or similar format to that of the title company. The email provides new transfer instructions, detailing the criminals’ bank account.
Step 3: The fraudster may follow up with a phone call, “confirming” the instructions.
Step 4: After funds have been sent, these may be siphoned through a series of rapid transfers to prevent recovery.
What Makes Florida Real Estate a Target?
Wire fraud is increasingly common in Florida real estate transactions. There are various reasons this market is particularly attractive to cybercriminals, including:
- High value – Transactions in Florida are frequently high-value, particularly in markets like Miami, Tampa, and Orlando. Criminals are attracted to potentially significant sums they can gain.
- Out-of-state purchases – A lot of people buying property in Florida are those relocating from elsewhere or purchasing vacation homes. Therefore, these parties are more reliant on the digital communication methods fraudsters can exploit.
- Rapid closing – Real estate in Florida is highly competitive, often with pressure to close quickly. This urgency can cloud judgment, so fraudsters use this to push scams through.
- Remote closing – Even those living in Florida are increasingly using remote closings and online paperwork completion processes. When buyers aren’t meeting agents or title officers in person, this can make deception easier to achieve.
Key Indicators of Wire Fraud
Vigilance is the primary defense against wire fraud. Some of the red flags to look out for include:
| Red flag | What it looks like |
|---|---|
| Unexpected changes | Receiving changes to wiring instructions without prior warning from a trusted source. |
| Urgency | Receiving emails worded with an uncharacteristic sense of urgency, such as demanding funds be sent within the hour. |
| Spelling or grammar issues | Emails received otherwise look professional yet contain basic spelling or grammar errors. Slight but unusual spelling variations in emails—e.g., closing@titlecompanyy.com—should also raise suspicion. |
| Evening or weekend contact | Receiving emails or calls outside of normal office hours without prior agreement. |
| Links or buttons | Receiving an email with a link or a button directing to an unfamiliar external site that asks for login, verification, or payment details. |
Protective Measures to Take
While wire fraud is increasingly common, it is also preventable. Here are some of the steps you should take to protect yourself in real estate transactions.
- Verify wiring instructions by phone or in person – Do not trust emailed wiring instructions alone. Follow up with the title company or real estate lawyer to confirm any account numbers before proceeding.
- Use secure communication – Wherever possible, prioritize using real estate companies that use secure and encrypted portals for communicating sensitive information. Avoid using regular email for contact.
- Maintain email safety – If you must communicate by email, active security features such as multi-factor authentication to prevent unauthorized access. Installing spam filters can also help identify questionable communications.
- Take your time – Fraudsters often use social engineering tactics that rely on making people feel rushed. Take a moment to think after receiving communications and listen to your instincts if anything feels off.
- Liaise with your attorney – Real estate attorneys will have more experience in transactions than buyers. If anything out of the ordinary happens or you need to verify documents or details, they can provide guidance.
Responsive Measures to Take
Even when you think you’ve been vigilant, there can be times when criminals intercept your transaction. Firstly, don’t devote energy to beating yourself up about it; social engineering fraud is designed to take advantage of natural human behavior, so it can happen to anyone. Nevertheless, an effective response is a speedy one.
As soon as you suspect real estate wire fraud, you should:
- Alert your bank – Immediately request your bank recall the transfer or freeze it. Ask to be transferred to their fraud department so that they can intervene.
- Report to the authorities – File a police report. The sooner this is done, the better chance there may be of tracking the crime or recovering funds. Reporting the incident to the FBI’s Internet Crime Complaint Center is vital, too.
- Inform your attorney – Your real estate lawyer can help you navigate the legal aspects of responding to fraud. Alongside guiding you through interactions with law enforcement, they may also be able to assist with recovery efforts or pursue legal action.
- Notify agent and title company – They may make arrangements to temporarily hold the sale if necessary and can coordinate with banks and law enforcement in investigations.
The key takeaway in any scenario related to real estate wire fraud is buyers need to be proactive in their efforts. Whether it’s staying up-to-date on the latest methods, implementing protective measures, or responding to intercepted transfers; your vigilance is a powerful tool against those who want to derail your property purchases and financial security.
