There is a new, frightening scam rocking the real estate world right now that you need to know about. Some victims have lost hundreds of thousands of dollars from it. It involves sophisticated cyber criminals using email phishing technology to steal from unsuspecting victims at the time of closing. The great news is that the way to stop this from ever happening to you is so simple. When you hear the solution, you will be dumbfounded by how easy it is. Watch this quick video to learn what this scam is all about and how to avoid it from ever hurting you.
Scary Real Estate Scam: The Scenario
Just imagine you spent the last 10 years of your life saving everything to become a homeowner. You're working two jobs, sacrificed not going on vacation, and not drinking that Starbucks coffee. You've done everything to pinch pennies, so you have enough money to finally become a homeowner. At last you get enough money and go through that process of finding the perfect home.
Months later, you're making offers and going through that whole experience. Eventually you get a deal under contract and it’s the perfect home. Then you go through the process of getting a mortgage, and how awful that can be. They're asking you for all these documents, and they make little sense. If you've ever secured a loan, you know what I mean.
Finally, it's the day before closing. You’re excited but also nervous. You get the email with the wiring instructions, because they no longer allow you to go get a cashier's check from the bank. They require you to wire the money to the closing company, or the title company, or closing attorney, whichever one you're using for your state. So, you follow the instructions and go to the bank. You wire the money, and voila, you think all is good.
The Day of Closing
The next morning, you get up, you're refreshed and excited because you're finally going to get the keys. The phone rings, or you get an email, and they say that the wire hasn't showed up yet. You think, "Well, that's strange. Maybe there's just a slight delay." Nervously, you contact the bank, and the bank says, "No. No, we wired it yesterday. It's no longer in your account. It's out of our system. It's in their system." And you're like, "Huh." So, you call the title company back, and they say, "Well, send me the instructions and where you sent it." You send it over to them immediately.
Then the shock and horror. You discover that you did wire the money correctly, but you wired it to a professional cyber criminal's account. You are the victim of an email phishing scam. What that cyber criminal did was send you an email that looked like it came from your title company or your closing attorney, but it didn't. You sent the money to a different place, and that money never is coming back. It's untraceable. The FBI can't help you. A lawsuit can't help you. It's gone. Not only is it gone, but you're not buying that house.
This is Really Happening
Do I have your attention now? Good. It's happening. A couple in Washington DC just lost a million dollars that way. A family in Florida just lost $77,000 with this, and a gentleman in Oregon lost $123,000. Thankfully, Fidelity National Title hired this man as their national spokesperson to warn people. This scary real estate scam is becoming more rampant, because as these cyber criminals continue to be successful, they're doing more and more of it.
Meanwhile, I've never experienced this problem and I've done literally thousands of wires. I'm both a hard money lender and a real estate investor and I do tons of deals. I literally have special accounts where I pay less per wire because of all the volume and I've never made a mistake. How is that possible?
Don’t Let it Happen to You
Well, that's the good news. The great news is the way you avoid that absolute catastrophe of wiring your money to a criminal's account instead of the title company's account. You simply call the title company and you verify, over the phone, each digit of the wiring instructions. That's it. That's all you need to do.
You might be saying, "That's so simple. Why doesn't everybody do it?" Great question. I looked at a recent study on communications among millennials, and their least used form of communication is that telephone call. They will text, email, social media chats, and every other form of communication before they'll get on a phone. So, it might be outside your comfort zone, but if you're about to wire $10,000, or $50,000, or $100,000, or $300,000, pick up the phone and verify the wiring instructions.
Make Sure You Do It Right
When people are buying a house, this is what I recommend they do. If they're going to be wiring at the bank, go to the bank, coordinate and make sure that title agent's going to be available, call them up, put them on three-way or put them on speaker phone while you're there with the banker, and make sure that the wiring instructions are absolutely perfect. It's worth the extra three minutes to do it right, because if you do it wrong, you're potentially not getting it back.
I hope I've not only scared you but also inspired you with this public service announcement on this scary real estate scam that is continuing to proliferate. However, all you need to do to stop it is to make sure you verify your wiring instructions with the title company over the phone. Make sure you're talking to the right title company too.
I like to share wisdom with you so that you can be on the know of what's going on in the real estate world. While we're on this topic of negativity, I wrote a book called Real Estate Investing Gone Bad. It's a series of stories of what you can learn, and what not to do in real estate. I have a great video that talks more about this as well.