I noted in a previous blog post that buyers can bring either a cashier’s check to the escrow company offices when signing your closing documents or complete the bank wire transfer a day or two before – sooner, to avoid any last-minute issues.
Unfortunately, buyers – both young and old, tech savvy and technophobe – are targets of wire fraud and many have lost several thousands of dollars because they failed to follow the established process for paying escrow with the final closing costs. According to one estimate from the FBI, the real estate industry – mostly buyers – lost more than $5 billion between 2015 and 2017 from so-called business email compromise scams.
Fraudsters are smart and sophisticated. They hack email accounts and monitor communications to pounce at the precise moment when buyers are preparing to wire a large amount of money from their bank to escrow. Then, unbeknownst to the email recipient, fraudsters impersonate escrow representatives, a lender or real estate professional and instruct buyers to change wire instructions. End result: The funds are routed to the scammer’s own bank account.
In one scenario, someone posing as a real estate agent wrote an email to a client, saying: “I won’t be available by phone today, please email me if you have questions.” A simple innocuous mail kicks off the stroll down Fraudulent Lane. Don’t answer the mail. Instead, call your broker on the phone number supplied in your stored phone contact list or on printed marketing material from your broker (such as a business card). Don’t call the phone number listed in the mail.
Plain and simple: Do not reply to any communication that, usually urgently, asks you – the buyer – to change previously supplied instructions. Those instructions will not change after issued to you at the beginning of the process. Here’s more from the Washington Realtors ® Association:
Tips for Buyers to Avoid Being Scammed
SECURE YOUR EMAIL
Implement two-factor authentication at login and regularly change your email password.
STAY ALERT TO PHISING EXPEDITIONS
Always call your escrow agent or real estate professional on the phone number supplied to you in original printed marketing or in U.S. Mail materials – not from freshly received emails, calls or text messages.
Ignore out-of-character emails stating your representative is not available on the phone or are available on a new number. Red flags!
CASHIER’S CHECKS ARE SAFER
The safest step to take – and to avoid losing your money through a wire transfer – is to adopt your own policy and hand over to escrow a cashier’s check for the amount owed. [Some escrow companies have limits on the check amount, say $50,000; in that case, get multiple checks drawn that total the amount required at closing.]