Real estate professionals and the FBI have a warning for California homebuyers and sellers: You will be targeted by thieves and hackers.
NBC Bay Area has been investigating the growing threat of real estate wire fraud and the devastating effects it has on victims. Tens or even hundreds of thousands of dollars can be lost in an instant, and by the time the buyer learns of the scam, it’s often too late to recover any money.
The high cost of housing makes Bay Area buyers particularly tempting targets for thieves because so much money is involved in real estate transactions. We spoke with one homebuyer whose losses are in the six-figure range.
“My down payment was about $400,000,” she said.
The homebuyer asked to remain anonymous. But she wanted us to share her story to make sure no one else suffers the same fate she did.
“I found similar stories are happening to people everywhere around the U.S.,” she said.
The homebuyer lives in San Jose, and she is close to retirement. She found a nice home she could afford that meets her needs better than her current residence. Once the seller accepted her offer, she prepared to make the $400,000 down payment.
Online thieves had other ideas. Scammers sent the buyer counterfeit emails, which appeared to come from both the real estate agent and the title company.
“They asked me to wire all the money instead of a cashier’s check,” she said. “He said the seller changed [the purchase agreement].”
She wired the $400,000, as instructed. Then, she went to the real title company for closing. Not long after came terrible news.
“Two hours later, the title company called me and said they didn’t receive the funds,” she said.
Desperate to stop the transaction, she raced to her bank, but it was too late. Her down payment and hopes of buying a new home were long gone.
“I was so shocked,” she said. “The [down payment] saving, it took me 10 years of my life.”
She’s not alone. The FBI says cyber-crime targeting home sales has exploded. The agency reports Americans lost $19 million to real estate wire fraud in 2016; a year later, the total skyrocketed to $969 million, a five-fold increase.
Put another way, that amounts to $2.65 million in real estate funds stolen from homebuyers every day, some $110,000 per hour every hour.
California Association of Realtors president-elect Dave Walsh tells NBC Bay Area the attacks by hackers are nonstop.
“One of the local county managers talked about getting almost 200,000 cyber-attacks a day on their servers,” Walsh said.
Walsh says every California homebuyer, seller and broker is at risk.
“There’s going to be roughly 410,000 [real estate] transactions this year, and my suspicion is all 410,000 are going to be targeted at some point, for some kind of wire fraud,” Walsh said.
The con is so common, the California Association of Realtors now requires agents to include a printed warning in every real estate contract. It includes this language:
DO NOT EVER WIRE OR ELECTRONICALLY TRANSFER FUNDS PRIOR TO CALLING TO CONFIRM THE TRANSFER INSTRUCTIONS. ONLY USE A PHONE NUMBER YOU WERE PROVIDED PREVIOUSLY.
“If you just simply trust the wiring systems, based upon getting a single call or a single email, there could be problems,” Walsh said.
Photo Credit: Getty Images
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Source: NBC Bay Area