DOUGLAS KATZ – 05/12/21 – UPDATED 5/17/21
We all know that technology has made it possible for thieves to thrive. With that said, they’ve found new and different ways to steal from you. One scam that has become a huge issues is what I call the interception scam in real estate closings. I call it the “interception scam” because the would be thieves intercept information relevant to your closing. Then, they send an email allegedly from the title company or closing agent with a directive to wire money.
Real estate scams are a particularly insidious scam as it targets people in transactions and during a process about which they may be unfamiliar. From my experience, many buyers are reticent to speak out because they will appear unsophisticated. Additionally, the sums of money involved and the damage that the perpetrators can inflict is substantial. Buyers can lose their savings and the house they are buying because once the money is gone, it is gone. The good news is that vigilance can protect you from real estate scams. Following some important guidelines can protect you and stick it to scumbags with eyes on your hard-earned dollars.
1. Analyze Any Email Directing You To Send Money
Phishing and scam emails are usually easily identified through several common identifiers.
Suspect Email Address and Sender
When looking at an email you need to drill down. Do not just look at the name, look at the email address itself. Generally, email correspondence will come from official emails originating from servers associated with the business. While there may be some exceptions, emails from an account or provider typically associated with personal accounts like Gmail can be a red flag. If you receive one, your mental firewall should go up immediately.
Finding Grammatical and Spelling Errors
This is an easy tip off. Grammatical and spelling errors are usually rampant in these emails. I received one of these emails myself recently and, in just three sentences, the number of errors was significant. It has always struck me as amusing that this of all things is an easy tip off and one that thieves could easily avoid. It would seem that scammers would be more successful if they learned the language better. However, maybe we should thank them for making this part so easy.
Saying “Do Not Call” in the Message
When the email reads “not to call” because the person is unavailable or busy, it is obviously placed in the message to discourage you from checking and verifying. In the message that I received, I called the number and left a message, partly just to see what would happen. I actually got a call and the individual confirmed that he had not sent the email. He was actually very appreciative that I let him know. If you receive a message like this, I recommend doing as I did because you can help prevent further fraud and help others not fall prey to the thieves. Additionally, you help those whose identities are being used by the scammers ensure they are aware of the issues so that they can take the proper precautions in their business.
A Call to Action that Creates Fear
If you’ve received an email that creates fear that the transaction will be jeopardized if you do not act, it’s a scam. This is the part that makes me the angriest because it is the most predatory part of the process. It frightens people into action and sometimes gives the thieves a small crack from which to exploit the buyer. All that I can say with this it that it is rare that professional organizations will use these tactics for you to act. You should suppress your fear or emotion and manage the process deliberately and methodically.
2. Know the Policies of the Closing Entity With Whom You Are Working
During a transaction, you will get a lot of correspondence. The title companies and closing agents will usually have information in the body or signature block of their emails that will tell you how they do business with actions like wiring money. Most are very similar and will say that they will never reach out with wire instructions as many scam emails do. Follow the guidance in these emails. This usually entails you actively engaging the title company and getting the instructions. They will usually be sent in an encrypted message to provide further security.
3. Verify With the Actual Closing Entity Referenced in Any Official Communications
If you receive a suspicious email, call the title company or closing agent. You are not bothering them and it will give you piece of mind to speak directly to them to ensure everything is legitimate. Not only will you be protecting you money, but you can be essential in helping then prevent future issues.
4. When the Wire is Large, Test the Info with Smaller Wire
If you have a large wire and are concerned, you should be. It is a lot of money. I recommend sending a smaller wire a few days before close to ensure that everything is legitimate. You will pay a bit more as most banks do charge for wires, but this gives you an ability to make sure that you are protected without endangering the full amount. This may seem extra cautious, but, unless you are in a position to lose the money, I recommend that there is no such thing.
5. Take Away the Scammers Ability to Take Your Money
Many title companies have a dollar threshold under which they will allow a cashier’s check. If you are under that number, you are well served by not wiring, getting the cashier’s check and bringing the funds to close yourself. While this does introduce the possibility of theft of losing the physical check, you are very well protected against cybercrime and physical security for many is a simpler task then cybersecurity. If you choose this option, never under any circumstances make the check out for cash. The check should be in your name where you can endorse it over to the title company or closing agent or you can make it out directly to them.
6. When in Doubt, Consult Your Real Estate Team About Scams
You hired good people to help with your home purchase and you are paying for their services. They are there to help and want to protect you. Additionally, they do many transactions in a month, so they know the current scam landscape. Many times, they will brief you ahead of time, but, again, do not hesitate to use them to verify both the steps and procedures in the closing process as well as clarification on any sketchy emails.
Protect Yourself Against Real Estate Scams
When you are in the midst of a real estate transaction, you can be vulnerable. Especially in a unprecedented market like we are seeing now, scammers and thieves will gladly exploit the chaos of the market and the emotion of a purchase to take your money. The good news is that by following my four simple steps to not getting scammed, you can avoid being a victim and be sure that you will be enjoying your new home after close.