For years you diligently save up to buy your first house. After months of searching through listings, you finally find your dream home and make an offer that gets accepted.
Just days before closing, everything goes smoothly until you get an email from your “real estate agent” instructing you to wire the down payment for the house. Wire transfers should typically only be done after a closing has taken place and all funds have been secured. However, you trust the email and wire the funds anyway.
Avoid falling into this situation and becoming a victim of wire fraud. That’s why we put together this guide so that you can protect your hard-earned money and get the home of your dreams.
What Is Wire Fraud in Real Estate?
Wire fraud is a form of financial scam in which criminals try to steal your money by sending fake emails or impersonating real estate professionals. These criminals usually ask for wire transfers rather than traditional methods of payment such as checks because wire transfers are fast, not easily traceable, and almost always irreversible.
Real estate wire transfer fraud is far too common and can have disastrous consequences. According to the FBI, in 2020, around 13,638 people fell victim to real estate wire fraud. If you’re not careful, it can cost you hundreds of thousands of dollars and derail your home purchase altogether.
How Does Wire Fraud Work?
Criminals use wire fraud in a few different ways. Here are three of the main ways it works:
Fraudsters may pretend to be a real estate agent, escrow officer, or other professional who is working on your behalf and request wire transfers from you to “facilitate” the purchase of your home. However, these funds are never actually used to purchase the house; instead, the criminals wire them to their accounts.
Fraud can also occur when criminals intercept wire transfer instructions from your real estate professional or financial institution. By changing the bank account information and sending it back to you, they can easily divert your funds into their accounts.
This can also be carried out by creating fake websites or phishing emails that look legitimate. These criminals will then send you a request to wire the down payment or closing money to their account.
What You Can Do to Identify Fraud and Avoid It
The key to avoiding this type of real estate fraud is to be aware of the warning signs and never wire money without taking extra precautions. Once you wire the funds, they’re gone and potentially can’t be recovered.
Here are a few tips you can use to make sure your wire transfer is secure:
- Confirm Wire Instructions: Before you wire any funds, make sure the wire instructions are coming from a legitimate and trustworthy source. Telephone the requesting party with your contact information, not that contained in the e-mail and/or text message, to confirm the request emanated from them. Confirm the account numbers and receiving bank information for your wire transfer to be sent. Never wire money to someone you don’t know, or trust, or to a different account number than the one provided by the person you know in the transaction.
- Double Check Contact Information: Double check the contact information for anyone who sends wire transfer instructions with their professional or company email address.
- Verify Receipts: Ask your real estate agent or closing agent for a wire transfer receipt as soon as it is sent.
- Use Secure Payment Methods: If wire transfers are necessary, use secure payment methods such as fraud prevention services when sending funds.
- Be Wary of Last-Minute Changes: Be wary of wire transfer instructions that change at the last minute, especially if everything has already been finalized. If you have any suspicion, contact your real estate agent immediately for further verification.
- Wire Money After Closing: As a general rule, wire transfers should be done only at or right before closing has taken place and all funds have been secured.
- Opt for Traditional Payment Methods: Whenever possible, opt for traditional payment methods such as cashier checks. Checks provide more security and are easier to track or reverse if something goes wrong.
If You Think You’ve Been Scammed, Act Fast and Follow These Steps
If you suspect real estate fraud or you’ve been a victim of wire transfer theft, act fast. The sooner you report it, the more likely authorities will be able to track down and prosecute the criminals responsible.
1. Call the Real Person
If the wire instructions have in fact changed, call the real estate agent or closing professional to confirm the change. If it is a fake wire transfer, they will be able to tell you immediately. Keep records of all your documents to prepare for a possible investigation.
2. Notify Your Financial Institution
Contact your bank’s fraud department to initiate a SWIFT recall as soon as possible. During a SWIFT recall, the bank will attempt to retrieve the wire transfer from the receiving bank. Your bank may also call the FBI Financial Fraud Kill Chain to investigate the incident.
3. Report to Law Enforcement
Contact local law enforcement and file a wire fraud report. Include as much information as possible: wire transfer instructions, bank account numbers, etc.
When you file a report, the FBI will also be notified. They have the resources and expertise needed to investigate these cases and prosecute the criminals responsible. As a note, while the FBI will do what they can to help you recover your money, they don’t have the jurisdiction to recover the money in offshore accounts.
4. Contact the FBI’s Internet Crime Complaint Center (IC3)
The IC3 is a centralized reporting system for fraudulent wire transfers and other types of internet crime. They streamline wire fraud reports between financial institutions and law enforcement to expedite the recovery of your funds.
You can submit a complaint to the IC3 website, and your report will be routed to the appropriate agency for investigation.
5. Get Professional Help
If wire fraud has occurred, you may want to get professional help from an attorney. They can provide legal advice and help you understand your rights.
Take Charge of Your Real Estate with The Mellor Law Firm
At The Mellor Law Firm, we know that wire fraud is a serious threat to the real estate industry. Whether you’re buying or selling property, we can help protect your financial interests and future investments through our services.
We specialize in helping homebuyers and sellers protect their investments. We provide comprehensive legal advice and guidance to help you understand the risks associated with real estate transactions.
Get in touch with a representative to find out how we can help you stay protected during your home buying and selling process.