Nightmare stories about real estate scams typically revolve around the rental market, but an increasingly prevalent wire fraud grift is targeting would-be apartment buyers.
That was the message at a recent seminar held by Realty Executives, a Scottsdale, Arizona real estate firm that teamed up last month with Martin Hellmer, an FBI agent working on cyber crime, and Finley Maxson, senior counsel at the National Association of Realtors, to spread the word about the scam, which counts New Yorkers among its victims.
“Real estate is an appealing target because fraudsters know large amounts of money are being moved,” says Alysia Heun, vice president, franchise services at Realty Executives.
The way this particular scam works is that hackers break into email and other online accounts seeking messages relating to real estate, and collect email addresses of people in the process of buying a property. The scammer then spoofs an email to the buyer, often pretending to be an agent or a title company, and directing the buyer about where to wire his or her down payment. Buyers who fall for the scam are typically out the amount of the down payment, with little chance of ever getting it back. Heun said a growing number of buyers are falling for these fake emails
Scammers “target real estate agents, title companies, mortgage companies—anyone who would be involved in a transaction,” Heun says. “As long as the criminal gets access to an email account or system, they know which people are in the middle of a transaction. That is when they can start spoofing emails or phishing by pretending to be someone involved in the transaction.”
Realty Executives recommends three things to avoid falling for this scam:
1) If you're buying an apartment, only accept wire instructions that are secure or encrypted.
2) Before wiring funds to an individual or company, call to verify the instructions independently with your title company or closing agent.
3) Be very wary of changes to the agreed-upon process. If you receive an email with new instructions, be sure to confirm them independently with your agent or title company.
Statistics are not available for this specific scam, but New Yorkers were the victim of 631 real estate and 923 phishing/spam crimes in 2016, according to FBI statistics from the Internet Crime Complaint Center, representing a loss of $3.5 million, and $2.3 million, respectively.
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