Homebuyers warned against rising threat of real estate wire fraud

A recent incident in Wichita, Kansas has highlighted the ongoing issue of wire fraud in real estate transactions. A homebuyer fell victim to a scam that redirected funds intended for closing costs into a criminal's account. This type of fraud is not new, and it continues to affect many in the United States.

The National Association of Realtors (NAR) notes that real estate fraud is one of the most common cybercrimes in the country. Criminals often hack into email accounts involved in real estate transactions and send false wire instructions to divert funds. District Attorney Marc Bennett remarked, "This is not the first time we have seen this particular fact pattern."

Richard Redmond from Redmond Mortgage Capital warns that "this type of fraud has become very common," urging consumers to be cautious when wiring money for real estate transactions. Fred Goncher from Backyard Mortgage Co. shared an incident where a client's attorney's email was hacked, nearly resulting in a $300,000 loss.

Real estate wire fraud has escalated significantly over the past decade, with losses reported to the FBI Internet Crime Complaint Center rising from $9 million to $446 million annually. The complexity of real estate transactions and large sums involved make them prime targets for scammers.

David Fleck, a real estate fraud attorney, explains that once money is sent to fraudulent accounts, it is difficult to recover: "You send the money to the bad guy’s account...and you never see the money again." First-time homebuyers are particularly vulnerable due to their lack of awareness about such scams.

Experts advise buyers to watch out for red flags like last-minute changes in banking details or requests to wire money overseas. Richard Redmond advises caution with any changes in previously sent wire instructions.

To prevent falling victim to these scams, David Fleck suggests confirming bank information by phone using known contact numbers rather than those provided in emails. Fred Goncher agrees: "All wires must be verbally confirmed with the receiver before sending money."

The CertifID report indicates that only 47% of consumers are informed about these risks by their real estate professionals at the start of their transaction process. It emphasizes the importance of educating homebuyers about potential scams early on.