Realtors and Title Companies want to Save Buyers from Losing their Life Savings with Safeguards
“I had the seller,” Jen Kespohl, Round Table Realty agent recalls. “The buyer and his agent had everything ready. This was a smooth transaction until the title company informed us the money had not yet been wired to close. The buyer looked so confused. ‘I wired the money yesterday,’ he said. It took about 5 minutes before the buyer’s agent realized her client sent the money to the wrong account. The money was gone. The wire numbers were fake. It was all of his savings.”
It’s happening all over the country. Scammers from other states, even other countries, are intercepting emails from Realtors and Title Companies addressed to unsuspecting buyers. Scammers then create spoofed, or fake, email addresses that appear to be from the Realtor. They send the buyers “new” wiring instructions. The emails look so legitimate, so formal, that no one is the wiser. Following directions, the buyer takes the wire number to their bank and moves the money.
The money is then sent to a bank account in a different state where the scammer is standing by. As soon as the money is funded, the scammer cleans out the account. The money might then go overseas or to another bank, but because it’s a wire, there is no way to track it or retrieve it from there. The money is gone before the buyer even makes it to the closing table.
Round Table Realty agents only use 2-factor authentication email addresses, which means that it would be difficult to hack into any email accounts sent from us. Most Title Companies do the same. But even 2-factor authentication isn’t a firewall. Scammers and hackers around the globe can, with enough time, can hack anyone. Buyers who have been receiving emails from these familiar email addresses all along don’t give it a second thought.
How is it possible that there’s no recourse?
Imagine you set a $100 bill down on a store counter as you’re searching through your bag for something. If you look up and the $100 bill is gone, who do you call? Unless you have a physical description of the thief or a serial number from the bill, there’s nothing anyone can do. Wire fraud is similar. While the FBI is aware of the wire fraud problem, there is truly no way to successfully track down and retrieve this money. Like stolen cash, the money is simply gone.
There are rumors that wire transfer can be reversed. For example, if you wire $40,000 to the wrong account but you realize it quickly, you can go back to your bank and explain the situation to get the money back. However, most of the time, the scammer is waiting for the wired money to hit their account. As soon as it does, they move the money to a different account. Without knowing where the money went or who moved it, it doesn't matter if you try and reverse a wire 10 minutes or 10 days after you've sent it; if the money has already been moved, there's no getting it back.
Preventing Real Estate Wire Fraud
Round Table Realty unveiled a new initiative this week to safeguard their clients against a rampant wave of wire fraud. Both Landmark Title and North American Title are working with brokers Howard Flaschen and Keith Francis to safeguard Round Table Realty’s transactions moving forward. These title companies have agreed to accept cashier’s checks two days before closing to completely eliminate the need for a wire transfer. “We’ve seen people lose everything in a split second with no chance of getting it back because of this issue,” Howard says. “It’s not their fault. They’re being scammed. But we are taking extra steps to ensure it doesn’t happen to any of our clients.”
Years ago, cashier's checks were known for being easily replicated. Cashier’s check fraud was common, hence wiring became the new mainstay of Real Estate transactions. Because wiring money is nearly instantaneous and almost always digital, it is far easier to intercept. As far as we’ve come with technology, it seems that in order to keep our money safe, we need to go back to pen and paper.
Most title companies prefer a wire transfer to fund a contract. It’s quick and can be completed the day of closing. This is especially important because closing dates can change unexpectedly by a day or two, or even a week in extreme circumstances. A wire transfer means that the money can fund the closing the day of closing, no matter how many times that date is changed. But now, of course, in the big scramble to complete everything else that goes into signing on the dotted line, it’s rare that people take the time to check and double check wiring instructions. Title companies don’t like to take the time to approve any other way to fund a purchase, though they can, and so despite the major issues that can arise they still require a wire transfer to close.
However, Round Table Realty is partnering with Landmark Title and North American Title in order to offer a cashiers’ check option for closing to clients. “Cashiers checks do take a few extra steps on behalf of the buyer and the title company. We’ll require that cashiers check 2 business days prior to closing, but we’re willing to go the extra mile if it means the money ends up where it should,” David Heekin, Landmark Title, said.
“All it takes is educating buyers about the benefits of using a cashiers check and our team is glad to partner with these lenders to do the extra work and keep our clients safe,” Howard said.
How to Protect Yourself From Wire Fraud
So what do you do if you're not working with a Round Table Realty agent? Ask your Realtor how they plan to keep your money safe. If they don't have an answer, educate yourself. Do the work and take the extra steps to ensure that you know how to keep your own money safe.
Ask if you can use a cashier's check to close on your property. If you're the seller, ask if the buyer can (so that you're not left at the closing table with a home you intended to sell).
If a cashier's check is not a possibility at closing and you're the buyer, ask for the wiring instructions well ahead of time.
On the day that you close, call the title company and ask them to read the wire numbers to you over the phone.
When you bring the wire numbers to the bank, ask the banker to double check the numbers and the destination if one is listed.
Ask for a receipt and immediately call the recipient of the wire to ensure they receive it. Do not leave the bank until you've confirmed the money is in the right place.
Round Table Realty is a real estate brokerage in Northeast Florida dedicated to teaching their agents and clients about the practice of Single Agency, wherein Realtors can offer confidentiality, loyalty, and full disclosure. Founded in 2010, they can be seen in the top 10 of all northeast Florida brokerages closed sales (according to the MLS).