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Rich Hopen is an agent in the Compass Short Hills, New Jersey, office. He worked closely with ALTA to create www.stopwirefraud.org. 

When my wife and I sold our house in 2017, our $239,000 mortgage payoff was stolen. The money was never recovered.

We were victims of real estate wire fraud.

I’m not only a victim, I’m also a real estate agent and lawyer. And shame on me for not knowing about wire fraud when I sold my house. 

Real estate wire fraud is perpetrated by cyber criminals who exploit the trust between homebuyers and sellers and their real estate agents, title companies, lawyers and mortgage lenders.

Criminals steal home deposits, down payments and mortgage payoffs by accessing and monitoring email accounts of the parties in a transaction. When a criminal finds an email with attached wiring instructions, they change the depository account number and email the fraudulent wiring instructions to the person who will wire the funds. If the target is duped, the money will be wired into the criminal’s account.

Accessing email accounts is easy for cybercriminals and opportunities to commit the crime are unlimited. 

According to a 2021 American Land Title Association (ALTA) survey, 1 in 3 real estate transactions are targeted.

Real estate transactions are ripe conditions for thieves. Each transaction involves multiple parties working under pressure to meet the closing deadline. Many of the parties share information over unsecured email accounts that can lead a savvy criminal to the wiring instructions.

Homebuyers and sellers are vulnerable. As a real estate agent, it’s no longer enough for you to include a wire fraud warning on emails or have customers sign wire fraud disclosures. At a minimum, every seller and buyer should know about the risk of real estate wire fraud and how to prevent it. 

I discuss wire fraud when I meet with prospective buyers and sellers. It’s not only the right thing to do, but it also builds trust and sets me apart from other agents.

Here is a wire fraud script for agents when meeting with buyers and sellers.

Wire fraud script for buyers

“There’s one more thing I need to discuss with you, and it’s very important. It’s perhaps the most important thing you’ll hear from me today. It’s about protecting yourself from a problem that buyers and sellers know nothing about, and neither do a lot of real estate agents. I want to talk about real estate wire fraud.

Buyers are at risk of losing their deposit and down payment. Sellers are at risk of losing their proceeds or their mortgage payoff.

Here’s how it happens.

As a buyer, you pay a deposit and down payment. When these funds are wired to the attorney’s office or title company, there’s a risk that the money could be diverted to a criminal’s account if certain precautions aren’t taken.

Here’s how the funds could get stolen.

Criminals may try to hack into an email account of someone in your transaction. It could be the other real estate agent, someone in the lawyer’s office, or even the title company.

If the criminal finds the wiring instructions for your deposit or down payment, they would change the account number where the funds will be deposited. They would then email you revised wiring instructions from a fake email address that is similar to one of the parties in the transaction.

If you didn’t notice the revised wiring instructions were fraudulent and you wired your money into a criminal’s account, the odds of recovering the money are very slim.

When we get close to writing up an offer, I will walk you through some simple procedures to protect your money. Do you have any questions?”

Wire fraud script for sellers

“There’s one more thing I need to discuss with you, and it’s very important. It’s perhaps the most important thing you’ll hear from me today. It’s about protecting yourself from a problem that buyers and sellers know nothing about, and neither do a lot of real estate agents. I want to talk about real estate wire fraud.

Buyers are at risk of losing their deposit and down payment. Sellers are at risk of losing their proceeds or their mortgage payoff.

Here’s how it happens.

As a seller, your proceeds will be wired into your bank account by the title company or settlement agent. Several days before the closing, the title company, settlement agent, or attorney will ask you to provide wiring instructions for your proceeds. If you email this information, you are exposing yourself to wire fraud.

Here’s how your proceeds could get stolen.

Criminals may try to hack into an email account of someone in your transaction. It could be the other real estate agent, someone in the lawyer’s office or even the title company.

If the criminal finds the wiring instructions for your proceeds, they would simply change the account number to where the funds will be deposited. The criminal would then email their revised wiring instructions to the person who will wire the funds. Their email address will be similar to your email.

Not only are your proceeds at risk, but so is your mortgage payoff. Your mortgage balance will be paid at closing. If that payment is wired, it could be stolen.

Before closing, you’ll be asked to contact your mortgage bank and obtain a mortgage payoff letter. The letter will include the mortgage balance and wiring instructions.

If hackers obtain the payoff wiring instructions, they will change the account number from your mortgage account to their bank account. They will then send the wiring instructions to the party who requested it. That may be your attorney, someone at the title company or settlement agent.

Once the money is wired into the wrong account, the odds of recovering it are very slim.

I know this is alarming information. However, after you find a buyer, and we have a firm closing date, I will walk you through several simple procedures you can follow to ensure your money is protected. How does that sound?”

Until real estate agents start educating their clients, unsuspecting homebuyers and sellers will continue to lose their deposits, down payments and mortgage payoffs. It’s time to take real estate wire fraud as seriously as the growing threat demands.

Rich Hopen is an agent at Compass in Short Hills, New Jersey. Follow him on Twitter.