By: Keith Davis
It’s not often that we send out Public Service Announcement type stories. There just isn’t all that much scamming that takes place in real estate sales. Sure, there are the Craigslist frauds that try to rent homes they don’t own. But, rarely do we see a pure, unadulterated scam that anyone, even the smartest and most sophisticated buyer, might fall for. And when they do, it costs them dearly.
Real estate is an industry where large cash payments being made are an aspect of almost every single transaction. And, unfortunately, that makes buyers an attractive target for scammers and thieves.
When a buyer selects a closing agent, the agent should provide the buyer with detailed instructions of what they will need from you on closing day, including the method(s) by which the closing agent will accept funds for the down payment and closing costs.
Here is where the scammers come in: Attackers are launching ‘phishing scams’ which are a form of fraud in which an attacker tries to learn confidential and financial information by masquerading as a reputable entity or person via email or other communication channels.
Here’s how the process has been playing out: The attacker somehow hacks into a buyer’s email or a Realtors’ email account (either by malware or possibly by stealing a password from another source). They gather information about a specific transaction by reading through emails. This could be the purchaser’s contact information, home price, projected down payment, closing date, attorney information, etc.
The attacker then sends an email directly to the purchaser of the home from a fake email account made to look like the Realtor. So instead of [email protected], the email may come from [email protected]. The new email address is close enough that many purchasers will not notice the difference.
The body of this email is very simple. It claims to be from the Realtor, and informs the Purchaser that the Realtor just spoke to the closing agent (frequently referring to him or her by name) and passes along new bank wiring instructions for the down payment. The purchaser, knowing their agent and that the closing is next week, keeps this new information and provides it to the bank as cited in the email. The next week at closing, the attorney has not received any money, and the client finds that they have sent $60,000, $100,000 or more to an unknown source. Sadly, in these kinds of scams the money is nearly impossible to recover.
Think you are immune? Watch this news broadcast and look at the process. This is sophisticated crime. And it is profitable. Really profitable. And really scary.
Kare 11 Investigates: Email Scam Targets Homebuyers
Takeaways:
- Never ever send money to a wire location other than the one that the closing agent provided initially.
- If you do receive a request for a change, pick up the phone and call your Nest agent and the closing agent to confirm. They are well aware of the scam and will never be bothered by your confirmation call.
We want to make every purchase safe and enjoyable, but buyers must be vigilant. Please be extra attentive to all communication that refers to money or changing of plans regarding money.
It’s scary stuff, indeed. But with a little questioning on the buyer’s part, we can make this scam a lot less frequent.
Photo Credit: Flickr: John Ward
Keith Davis is a Managing Partner and Associate Broker with Nest Realty. With an MBA from UNC (Kenan Flagler Business School) Keith finds himself always looking for empirical evidence to explain the market around us.