I say this scam is scary because it’s a lot closer to home for me. I’m sure there are worse scams out there, but since I trade in multiple properties with so much of my communication via emails, I can see how anyone of us could have our real estate businesses DESTROYED if we fall victim to this incredibly scary scam.
Thank goodness both the Federal Trade Commission and the National Association of Realtors are aware of these hackers and have issued warnings to the general public, but we really need to be prepared as real estate investors, to watch and warn within out communities.
This is How the Scam Works
Hackers penetrate your email account in some way and take control over your email. Just as you are about to close on a property, the hacker sends updated wiring instructions to the escrow company at the last minute. Those instructions swiftly carry the funds that you were either supposed to send, or receive to some bank that belongs to the hackers.
I know from personal experience that my bank won’t allow ME access to my freshly wired funds until 24 hours after it hits my account. I don’t know if this is a legal requirement or a voluntary procedure for this bank, but if you are expecting funds and don’t receive them on the day you expect to receive them, SCREAM! If the financial institutions can catch it within 24 hours, then you are probably in good shape. This isn’t the case for some, unfortunately.
It’s not unusual for me to deal with several wire transfers a week, and that is a good thing for my business, as timing is critical when it comes to Real Estate transactions. Overnighting certified checks is another option, but very time consuming.
What Should You Do?
If you are in a real estate transaction and you’ve been asked to wire funds, make sure the wiring instructions match the name of the company and the bank account. Also, if you get a “last minute” change to the wiring instructions, verify this with a follow-up phone call, as that is a big red flag that the hacker’s got into that person’s email account.
You can read the announcement from the FTC HERE.
Good warning, Jean. Thank you.
Having a great relationship with your real estate agent, closing attorney, or escrow company may be helpful. Based on our past experience with the teams we work with, the risk of wires being re-routed would be slim, as most all the monies are transferred into our closing attorney’s or our trusted real estate agent’s escrow account. We could probably bypass the real estate agent, but the amount we pay to have peace of mind in knowing all the loose ends are tied up is well worth it. This business is all about building relationships and this type of scam highlights the reasons to know and trust the people you work with.