The Chicago Real Estate Minute

Dangers of wire fraud: How to avoid being a victim

4 minute read

There have always been some concerns about wire fraud in real estate. But lately it has gotten very real, and the effects can be devastating. 

Who’s Doing It

Those com­mit­ting the fraud are most often hackers, who have become wise to the fact that there are enormous sums of money changing hands, and readily available infor­ma­tion online about prop­er­ties that have recently gone under contract (via well known real estate sites). Once they target a specific trans­ac­tion, they then focus on finding everyone involved in it — the realtors, the attorneys, the mortgage company, the title company, etc.

How They’re Doing It

They start by hacking into the email account of an agent, attorney, lender or even the title rep­re­sen­ta­tive. Without the person’s knowledge, the hacker can then send out emails from the actual email address, or set up filters that can keep responses out of the standard inbox, getting forwarded to the hacker instead.

Then they bide their time, watching and waiting until near the scheduled closing date when it would be most likely to get a legit­i­mate email about a wire transfer. By this time, they often have created a spoofed email address that is off by one letter, so they have complete control as long as the bogus email address isn’t dis­cov­ered. They’ll even copy other bogus email addresses (also off by one letter) and/or list a false phone number (ready to be answered by the hacker if dialed btw), just to make it look more authentic.

What They Ask For

Urgency is key to the hacker’s strategy. Requests they make are often something like “Your funds need to be sent right away to avoid delays or loss of earnest money” — also asking for your exact date and time you plan to send it in order to act swiftly and avoid detection. Hopefully, the entire process has been a smooth and low-pressure one for you. If so, an urgent email demanding a sub­stan­tial amount of your hard-earned money to be sent imme­di­ate­ly should be a huge red flag.

What You Can Do

Fortunately, there are actions you can (and should) take to help avoid you becoming a victim:

  • Triple check email addresses to make sure they match those that you’ve been com­mu­ni­cat­ing with throughout
  • Verify emailed wiring instruc­tions by voice before wiring anything, calling the title company rep on a phone number confirmed from their official website (not from an email sent to you) and the attorney on their same phone number you have called through­out the process
  • Watch for any email or text requests that are different than you have been told verbally by your attorney or lender
  • Beware if your agent appears to be the person giving wire instruc­tions, as they will never ever need that information

The only people sending wire instruc­tions should be the title company, the lender or real estate attorney. Any email with wiring instruc­tions sent to you without the party telling you it was coming should be assumed to be fraud­u­lent. If you have just become a victim, stop every­thing else and contact the FBI to see if they can stop the wire.

Final Word

YOU ARE NOT PROTECTED when you wire money. And once it’s gone, it’s G O N E … There are a lot of different people involved in a real estate trans­ac­tion, so it’s no wonder a buyer or seller might not go to such lengths since the requests the hacker is making seem in line with what a person would expect. But don’t fall prey to it!! 

Buyers are most often the target of wire fraud regarding their down payment, but sellers can be as well when getting a request for their mortgage payoff. It’s always better to be safe than sorry when it comes to your money.

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