An Abundance of Caution

Congratulations, you have found the perfect home.  Your offer was accepted, home inspections are complete, and the loan is cleared to close.  The moving truck is scheduled and you are already placing furniture in your head.   You have a closing date and time and have received a closing statement from the Title Company.  You received an email with wiring instructions telling you to wire tens of thousands of dollars to the specified account to fund your closing.  You review the numbers and they all make sense.  You receive another email informing you of an error and receive a new set of wiring instructions.  You run to the bank, with sweaty palms, transfer the money electronically and head to your closing.  Closing is routine and after signing a multitude of documents, you are ready to grab your new house keys and go to your new home.  Not so fast!  The closing agent informs you that they never received your funds to close.  You reassure they that you wired the money and are able to produce the bank documents of the wire and the wiring instructions you received from the Title company.  The Closing agent leaves the room and returns with an explanation.

It appears you have been the victim of the latest scam where either a real estate agent or title companies email has been hacked.  They hacker monitors the email account until the transaction is ready to close.  They mimic either the real estate agent or the Closing Agent and send out bogus wiring instructions.  When the money is wired it goes to the wrong account which is quickly emptied and the money is gone forever.

Funding real estate transactions has changed over the years.  Prior to 1982, it was not uncommon for a buyer to bring a personal check to closing.  Days later when the check cleared, the keys to the home would be released.  As fraudulent checks became more prevalent, Title Companies changed their procedures.

Title Companies began to require Cashiers Checks for closings and personal checks were generally no longer accepted.  Cashiers checks have numerous security procedures to discourage the creation of fraudulent checks.  As criminals became more sophisticated, fraudulent cashiers checks began to increase in frequency.  Thus came the end of the era of using cashiers checks to fund real estate transactions.

In this current decade, wire transfers gained favor as the preferred means to move money from point to point.  Title Companies and closing attorneys began to require wire transfers to fund real estate closings.  All was well for years until the criminals stepped up their game.

Today, Buyers, Real Estate Agents and Closing Agents must use diligence and an abundance of caution when communicating regarding real estate transactions.   Real estate agents and Title Companies should safeguard the security of their email accounts to minimize security risks from hackers.  Title Companies and closing attorneys now send closing instructions and wire transfer instructions via secure encrypted email communications.

So what can a buyer do to protect themselves.  The first red flag buyers should be aware of is anytime wire instructions are changed.  Buyers should make verbal contact with their real estate agent and the Closing agent whom they are familiar with and know. Have them confirm whether the change is legitimate.  In fact, anytime money is to change hands  via wire transfer, it is a good idea for buyers to speak personally with the Closing Agents to verify the facts.   The amount of the transfer and the account numbers should be verbally confirmed.   This simple step can safeguard against bogus email instructions from scammers hoping to swindle unsuspecting buyers. Wire transfers are still a good way to move funds for real estate transactions but buyers should maintain a high index of suspicion when transferring funds for a real estate purchase.

Call Gulf Shores Realty at 941.488.6644 or visit GulfShoresRealty.com for more information on real estate closing procedures.  Our dedicated REALTORS® will ensure you have a smooth and trouble free transaction.