Wire fraud is a real thing and something for you to be concerned about when buying your home.
According to Inc., real estate is one of the top 2 industries targeted by hackers and email phishers.
Why is wire fraud happening in real estate?
Hackers have found that the real estate business enjoys frequent transactions and more and more often… everything happens online.
Here’s a true story about a case of wire fraud that happened to me recently in a transaction:
I was representing the seller in a transaction. We got to the closing table and signed all of the documents at 11:00 am. The seller was elderly and her daughter is a friend of mine. She asked me to pick up her check for her when I picked up my commission check. I agreed, and the attorney had her sign a document stating that I would be the one picking up a physical check at the office of the buyer’s attorney once the transaction recorded.
I went about my day… and then the phone call came in at 4:30 pm…
It was the buyer’s attorney’s paralegal. She said: “I don’t understand why the seller’s attorney sent me this document about you picking up the seller’s check when you already sent me the wiring instructions.”
She said that I had sent her wiring instructions and they already wired the seller’s money.
I nearly ran my car off the road… this was over $200,000 that was apparently wired to the wrong place!
The paralegal went on to get angry at me since I had no idea what she was talking about. I pointed out that a Realtor would NEVER send wiring instructions; that’s always something an attorney or lender handles.
Since I was driving, I asked her to pull up the email where I allegedly sent the wiring instructions. When she pulled it up, she noticed that the emails were all spelled wrong. The hacker had intercepted our email chain and created new email addresses that matched all of the paralegals, attorneys, and agents in the conversation minus one letter.
So, obviously the busy paralegals thought it was just part of the chain since it was such a subtle change.. I never received the fradulent emails.
The paralegal quickly got off the phone to try to stop the wire. I drove directly to the attorney’s office.
By the time I arrived, the attorney had spoken to the bank and stopped the wire. Because we caught it before end of business, it had not gone through.
Phew… disaster averted.
Despite the fact that the paralegal was trying to pin the blame on me, attorneys have insurance for just these types of issues. She was the one who was guilty of not looking closely enough at the emails. But, to her credit, these hackers were clever and it was easy to miss.
If you are wiring money to your attorney during a real estate transaction, use caution.
ALWAYS double check any wiring instructions that come to you via email. Hackers can intercept email, so call the attorney’s office to confirm with an actual human.
Hackers cannot intercept a fax line (yet), so this is a safe way to receive wiring instructions.
But, always double check with a human. Sometimes, attorneys are not able to catch it like we did in the above story… hundreds of thousands of dollars have been lost in other situations.
Wire fraud is happening… and you CAN protect yourself during your real estate transaction!