Buyers Beware: Real Estate Scam Cleans Out Your Bank Account

Posted on: December 28, 2016

There’s a new scam in town, and this one is affecting home buyers in horrifying ways. Sometimes, an ounce of prevention is the only cure, so arm yourself with the knowledge to head this one off and warn everyone you know that if they’re in the market to buy a house, this could hit them, too.

Beware The Legitimate-Looking Email

It seems like every time you scan the headlines these days, you’re reading about another email hack, from celebrity accounts to the latest data breach at Yahoo. Those can be damaging, but imagine handing over your entire down payment – quite possibly your entire life savings – to an email hacker instead of to the title company and/or real estate attorney that’s closing on your sale.

That’s exactly what’s been happening in this widespread scam, and why awareness is the only solution.

The way it works is a hacker breaks into a real estate agent’s email account where they can then gain access to the personal information of home buyers and sellers – the names of the title companies, the amounts of the sale and escrow, closing dates and other significant details.

With this knowledge, the hackers not only know the intimate details of your purchase but they know exactly how to “speak real estate” by mimicking the language and style of the prior (legitimate) email exchanges. Gone are the obvious signs of poor grammar, bad spelling or curious phrases to alert you that something is amiss.

With their illegally acquired information and newfound knowledge of your transaction, hackers then send you an otherwise legitimate-sounding email from someone who appears to be involved in the sale. In some cases, they use a fictitious email address that can easily pass for a legitimate one by changing a single letter – for example, you may be used to receiving emails from your real estate agent’s email [email protected], so you may not notice the difference when you receive one from [email protected], especially if the content and tone is otherwise valid.

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Now comes the scam – the email provides you with information about where to wire your closing funds, namely, right into the scammer’s bank account. If you’re already prepared to make a wire transfer and have no reason to suspect anything amiss, chances are you’re going to do exactly as instructed in anticipation of closing the sale and moving into your new home.

In a couple of near-misses, funds have been recovered when someone immediately noticed a problem before the transfer had taken place. But in most cases, the hijacked money was gone forever. Once the funds are wired there is no way to recover them, and that can mean tens or hundreds of thousands of dollars to you, and the loss of your new home. If you’ve already sold your existing home and are ready to move out, the consequences can be catastrophic.

How You Can Avoid The Scam

Knowledge is power, so if you know these types of scams exist you can be more cautious and skeptical during any transaction.

First, never take an email at face value, especially if it involves personal information or money. Hackers and scammers are becoming ever more sophisticated, which means there may be little to no way to discern fact from fiction in the email itself.

Never click on links in an unconfirmed email, which can contain malware or redirect you to a legitimate-looking but fraudulent website.

To best protect yourself, always confirm the contents of an email with your real estate agent or attorney personally. A moment to make a phone call to inquire about wiring instructions can mean the difference between losing your savings or closing on your dream home.

Second, aim to obtain a certified or bank check whenever possible. You have a bigger window to correct for problems when writing a check, and fraud is less likely to attack from that direction.

Finally, never wire money or transfer funds without speaking to your real estate attorney first and confirming the bank name, account number and timing.

Scams exist, and avoiding them can be as simple as knowing that, and taking an extra minute to confirm that you’re following legitimate instructions. Share your knowledge with everyone you know so that they’ll be aware too, whether they’re involved in a real estate transaction now or may be in the future. The scams aren’t going away, so the better informed buyers are, the less likely the fraudsters will get away with stealing someone’s life savings.