You have saved up your money for several years, and you have worked to improve your credit score. Now that there's sufficient money in your bank account, interest rates are near all-time lows, and you have a credit score that will allow you to qualify for a mortgage, you have consulted with a Realtor®, chosen one of the lenders that he recommended, and viewed a number of homes in the areas that you like and within the price range that you can afford.
After viewing several properties, you have consulted with your Realtor® and you are finally ready to take the plunge. With your agent's help, you draw up an offer, and you are delighted when the sellers accept it!
You're on your way to your dream of owning your first home!
It's exciting, but a little bit daunting. There's so much to think about: When your lease expires, when the closing date and moving dates will be, packing the things you want to keep, discarding the things you no longer need. . .
And then you receive an email. It is, you believe, from the title company that will be conducting the closing. They are requesting that you wire your down payment, minus the earnest money that you have already paid, to their account prior to closing.
The numbers look right: Your total down payment is $40,000. You have already submitted earnest money in the amount of $5000. There is a balance due of $35,000, which the email says must be wired to a certain account at least two days prior to closing.
You have the money in your account, you think, for precisely this purpose. You follow the instructions in the message and send of $35,000.
Then, the day before closing, your agent calls you. He says to be sure to bring a cashier's check for $35,000 to the closing.
"I already took care of that several days ago," you tell him. "I wired the money already."
As it turns out, your money went to an overseas account and cannot be recovered. You are not going to be able to close after all.
You've lost your chance at your dream home (or any other home for at least several more years. And you've lost $35,000, which is, for you, a small fortune.
What happened?
Hackers got into your title representative's email account, learned enough of the details of your transaction, and created a phony message, which they sent to you. And while this imaginary scenario presents what may seem to be the worst, and unlikeliest, possibility, many people have lost tens and even hundreds of thousands of dollars to such fraud.
And crimes such as these are on the rise.
What can you do?
First of all, choose your agent or Realtor® carefully. A good agent will keep in contact with you and with the title company representative throughout any transaction. He or she will carefully explain exactly how your chosen title company will be conducting the transaction. If wire transfers will be necessary to complete your transaction, he or she will contact you by telephone, or, better yet, in person, to explain the actual wiring instructions to you.
If you are purchasing real estate, never follow wiring instructions that were sent to you by email. It is almost certainly fraud!
In addition, every good buyer's agent will discuss the possibility of wire fraud with their clients in person as soon as an agency agreement is signed. Here is what the Wire Fraud Disclosure that I use looks like:
Why HomeSmart Cherry Creek
Won't Be the Source for Your Wire Instructions
- Criminals/hackers are trying to fake you into wiring money to them
- Criminals hack your email accounts and accounts of title agents, mortgage brokers, real estate agents, lawyers (and others) and send you emails that look like legitimate emails from the proper party, but instruct you to wire money to the accounts of the criminals.
- Do not rely on emailed wiring instructions. We strongly recommend only relying on wiring instructions that come from a more secure source such as in-person communications, a phone call that you initiated, or through secure mail or package services.
- Before you wire any funds to any party, personally call the intended recipient to confirm the accuracy of the ABA routing number, SWIFT code or credit account number.
- When you call the source of wiring instructions in steps 3 & 4, you should call a number that you know is the correct number. You should not get that phone number from a source that can be easily forged (such as the phone number in an email or a phone number from a website).
- MY BROKERAGE FIRM WILL NEVER BE THE SOURCE OF PROVIDING YOU WIRING INSTRUCTIONS TO SEND MONEY TO OTHER COMPANIES. If you receive an email providing wiring instruction that purport to come from us, it is a fraudulent email.
- We strongly recommend that you, your lawyers and others working on a transaction, should refrain from placing any sensitive personal and financial information in an email or an email attachment.
- When you need to share Social Security numbers, bank accounts, credit card numbers, wiring instructions or similar sensitive information, we strongly recommend using more secure means, such as providing the information in person, over the phone, or through secure mail or package services, whenever possible.
All agents have a fiduciary duty to their clients to look out for those clients' best interests. All agents should share this information and take every step possible to ensure that their clients do not fall prey to this sort of fraud.