Real Estate Round-Up: Wire fraud – Don't be a victim

Unfortunately, wire fraud is alive and well in real estate. There are not many transactions that involve a larger financial investment than purchasing real estate. All buyers are required to deliver earnest money funds within three days of acceptance on an offer.

In Fallbrook, with the median price being $610,000, that deposit will be somewhere between $6,100 and $18,300. Two to three days prior to the close of escrow, buyers are required to bring in the balance of their funds for the purchase.

Depending on the percentage of the loan to the purchase price, this can be a substantial amount of money. No matter the amount of the funds, if it’s yours and if it’s intended for the purchase of your new home, it should not end up in the hands of a financial predator.

Sellers, upon the close of escrow, receive proceeds, which is the difference between the purchase price, less any outstanding financial liens and costs associated with the sale of their property.

Those proceeds either go directly to the seller or are transferred to the seller's escrow on their new purchase. Either way, the seller's proceeds are generally a very substantial amount of money.

The fact that there are predators lurking on the world wide web, seeking to take advantage of you and me, is unconscionable. But it is a growing trend within the larger issue of cyber crime. Real estate is the second-highest targeted industry for cyber crime, according to the FBI.

From 2015- 2017, there was more than a 1,100 percent rise in the number of email account compromise victims reporting issues related to real estate transactions and an almost 2,200 percent rise in reported monetary loss.

Criminals have figured out the best, most efficient process to execute the crime. Only quick and persistent action might save your money, but all too often, most victims never get their money back.

This is the way it most commonly works in real estate. Criminal hackers gain access to the email accounts of Realtors, escrow officers, title agents and others in the industry via data breaches or phishing and spoofing. Once they’re in, they just wait for the opportunity to unfold.

When buyers receive an email from the escrow company with wiring instructions for the earnest money deposit, scammers are able to find the authentic email and substitute it with a similar email, but with a key difference – the instructions are to wire the funds to an account controlled by the scammer. The scammer opens a bank account at the same bank, but with their personal account number. It looks exactly like a buyer would expect, and we’re off to the races.

Unlike robbing a bank, wire fraud is fairly low risk. It can be very rewarding, with criminals walking away with tens to hundreds of thousands of dollars. The scammers watch and digest the language of the target's email activity. The scammers then use the same type of language and intersperse, when appropriate, personal information to fool the contacts.

They don’t sound like the stereotypical Nigerian Prince emails, we’ve all received, with grammar, spelling and syntax errors. Unless the scam is caught within hours, the money is lost forever. A wire is just like money, so once it hits the scammer's account, the scammer will wire it immediately to another account, so there is no way to retrieve it.

How can you protect yourself? Review the Wire Fraud Advisory with your Realtor. This form is part of every listing and purchase agreement. It warns you to never wire money based on an email. You should always verify the information on the email using a phone number that you received previously from your Realtor.

Scammers are smart, they change the phone number on the fake email, so you call them, and they pretend it is escrow or title. When you speak with your real contact, via the phone number your Realtor provided to you, confirm the specifics of the wiring instructions including the name of the bank, the bank's address and the routing and account numbers.

The future will most likely bring new laws to protect consumers. Until then, work with a Realtor and remember that the “devil is in the details,” so be sure to verify those details. That’s it for today. Stay cool and stay cyber-safe.

Kim Murphy can be reached at [email protected] or (760) 415-9292 or at 130 N Main Avenue, in Fallbrook. Her broker license is #01229921, and she is on the board of directors for the California Association of Realtors.