Helpful Tips For How To Better Protect Yourself From Real Estate Fraud

A recent report from CertifID, a company that provides security solutions for the banking industry, found that one out of every three real estate transactions may be targeted for some form of real estate fraud. The rising tide of real estate fraud affects purchases and sales in real estate rental markets. Benzinga looks at the issue and gives you some tips that may help you avoid becoming a victim.

Phishing Scams And Wire Fraud In Real Estate Purchase And Sale Transactions

Phishing, where a fraudulent actor sends you an email that looks and appears to be from a financial institution or real estate agent, is an insidious form of real estate fraud. This communication usually includes wire transfer instructions that direct the recipient to wire money to an account that's not connected with the transaction. They often look official and may include logos from the bank in the sender's signature line.

Phishing scams have been known to fool everyone from buyers and sellers to experienced employees at title companies, law offices and real estate agents. Making matters worse, it can be difficult to claw money back after it's been wired to a fraudulent actor. Many unwitting victims don't realize their down payment or earnest money has disappeared into thin air until they arrive at the closing, by which point it's already too late.

Although phishing scams can be difficult to spot, keep your eye out for the following red flags.

Wrong email address: Many phishing emails say they are from a bank or financial institution, but if you look closely at the address line for the sender, it is a randomized email address or an email address with one or two letters out of place in the financial institution's actual name. Read the email address closely. If it doesn't seem right, it probably isn't.

Poor English or grammatical errors: A lot of phishing scams and attempts at real estate wire fraud originate overseas, which means the scammer may not be fluent in written English. Be very wary of emails that have words misspelled or grammatical errors that a native English speaker or writer would be unlikely to make.

Proactive Steps To Take Before Sending Or Wiring Money

You can also take some of the following steps proactively to better protect yourself from the possibility of a fraudulent wire request.

• Do some research: Most title companies, law offices and real estate agencies are small to medium-sized operations that feature all their employees on the company website. Even big banks may have websites for individual branches. If you get an email requesting you to wire funds, check the company website or directory and see if the person requesting the funds works where they say they do.
• Call to confirm wire instructions: Even if you are 100% certain the sender or person requesting the funds is legitimate, it's always a good idea to call and verify wire instructions again before sending funds. Ideally, you will be able to call them at the phone number of the office or branch listed on the website. Be very wary of confirming wire transfers via the requester's mobile phone.
• Keep everyone in the loop: Before wiring money in a real estate transaction, send an email confirming the wire instructions and copy all the concerned parties (your real estate agent, your lawyer, the mortgage broker, the title or escrow company) involved in the transaction and wait until they have all responded in the affirmative. It's highly unlikely a phisher will be able to duplicate all those email addresses. If there is fraud in play, someone in that email chain will speak up and say they never asked for that or that those aren't the right bank account numbers.

Protecting Yourself In Rental Deals

The money required to move into a new rental is less than you may use to buy a house, but the first month's rent and a security deposit can cost you thousands of dollars. Because of this, scammers have moved into rental scams too. Following these steps can help you protect yourself from real estate rental fraud.

• Avoid the too-good-to-be-true rental: If the place you're looking at seems absolutely perfect but it's dramatically less expensive than comparably priced properties, that's a potential red flag.
• If you can't get inside the property, walk away: Some real estate scammers cut and paste photos of luxury properties as their own, then make an excuse about why they can't get you inside, but they'll invite you to drive past the property and look in the window. This tactic is almost always a scam.
•  Look them up before paying any money: Most states require off-site real estate professionals to be licensed. Conduct a license lookup on whoever shows you a property by searching their name with the real estate bureau in your state. If they're not licensed, it's a red flag. If the person who shows you the property claims to be the owner, a title search by address online with the county registrar of deeds will reveal the owner's name. 

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Stay Vigilant

These steps won't protect you 100% of the time but following them can significantly reduce the chances you become a victim of real estate fraud. Be vigilant, ask questions, use common sense and trust your instincts. If something doesn't seem right, don't proceed until it does. You work hard for your money, and an ounce of prevention is worth at least a pound of cure when it comes to real estate transactions.

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