In the days of transaction technology, Buyers and Sellers can complete a transaction almost entirely online. While that may be great for efficiency, it poses an increasing threat for fraud. There was an estimated $1,000,000,000 loss in attempted and converted real estate wire fraud last year. What does that mean for you? Someone stole or tried to steal the money you sent to the seller when purchasing your new home. That is an astounding number.
How did they do it? Apparently it is not rocket science. According to SafeChain, a company combatting real estate wire fraud among other things, the scammers are more adept at evaluating a person's psyche then they are at the technology behind the theft. They start by finding the weak link in the transaction, hack their email, and strategically send fake wire instructions pointing the money to their personal account. Surprisingly, the email hack thing is fairly easy as well considering "password" is still one of the most used consumer passwords. So save yourself the stress, headache and tears of getting to the closing table only to find out the funds for the purchase are somewhere in the Bahamas.
Although not totally preventable, help protect your money with these four easy tips:
Ask questions and get involved in the selection of the Title Company. Title companies are big targets for fraud. They control the money during the deal, and IT'S YOUR MONEY, so you want a good one! Here in Central Ohio, the Seller generally pays for title insurance; therefore, selects the title company. Ask you agent for good recommendations. Make sure they have processes in place to combat fraud. Make sure they have a cyber insurance policy.
Password protect your email accounts with a strong password and consider password manager software. This seems simplistic, but research shows there are still unprotected email accounts and weak passwords. If the hackers can't access your email, they can't redirect it for fraudulent purposes.
Be suspicious of urgent emails from your title company urging you to "wire now or the deal won't close." A good title company will not alarm you with surprises, especially when it comes to your money. You will know far in advance how much you must wire for closing and the specific instructions for doing so. In all circumstances, call and talk to a human at the title company immediately before you send the wire to confirm the instructions.
Don't schedule the closing for Friday afternoon or right before a long holiday weekend. The banks are closed on Sundays and holidays and people rush around to get a wire complete. You're stressed and anxious, and your mind is on something other than the closing. Hackers know this and take advantage. Do yourself a favor and avoid these concentration stealing situations. Consider closing on boring old hump day.
Never rely entirely on someone else to protect your money. There are many players in your real estate transaction and human error is... well... human. Knowledge is power, and I hope this gave you a little more of both. Now go buy your dream home!
Cheers to real estate,
Erika