Fraud in Real Estate: How to Protect Your Clients (And Yourself)
Real estate fraud is a rising problem in the real estate world. Buyers are losing huge down payments due to increasing instances of wire fraud and hackers. While renters, on the other hand, are losing out on entire properties — not to mention associated security deposits — thanks to fake landlords and duplicate listings that aren’t even available in the first place.
And the more real estate transactions occur online or via digital tools? The more these types of fraud are going to keep happening.
Fortunately, as an agent, you have the power to protect your clients (and your business) from these attempts to scam and defraud. Want to make sure your buyers, sellers, and your bottom line are safe from savvy thieves? These tips can help.
Stick to private Wi-Fi connections.
It can be tempting to work from a Starbucks or other public Wi-Fi network when you’re on the go, but these connections leave your activity open to easy hacking. Any emails you send or documents you open can be monitored, stolen, or used in a fraud scheme that costs you and your clients money. Stick to private Wi-Fi connections in your office, at home or, if you have a private hotspot, on your mobile phone.
Make sure your clients know who they’ll be working with.
Give your buyers and sellers a full breakdown of who they’ll be working with on title, escrow, and appraisal issues, and give them a list of email addresses they can trust. Anything that comes to them from email addresses outside this list should send up a red flag — and they should immediately call you before taking any action based on these messages.
Ask them to verify any money requests by phone.
Tell your clients to verify any email requests for funds, wiring, or money directly with you — over the phone — before EVER taking action (even if those emails are from a seemingly trustworthy source.) Wiring money to the wrong person is not a mistake you can take back — and it could cost your clients dearly.
Be watchful for sudden changes.
A sudden change in wiring instructions, totals, or banking information isn’t normal in the closing process — so be on high alert if anything crops up. Always call the title or escrow agent directly and get verbal verification of changes (and the reason for them) before looping your client in.
Use encrypted emails.
There are tools that can encrypt your incoming and outgoing emails, so they can’t be read or understood if hacked. You can even do it through Microsoft Office/Outlook if that’s what your office uses. You might also want to look into additional email security features to prevent phishing and hacking attempts.
Do your due diligence with rentals.
Rental scams are pretty common these days. Unscrupulous landlords post duplicate listings in an attempt to skim extra security deposits and application fees off the top, while other thieves simply list properties they don’t own or have the rights to. The properties might not even be available for rent! Always do your due diligence when helping clients find a rental property — especially if they’re doing it from afar. Verify the landlord and property yourself (ideally in person) and make sure they’re legitimate before letting your client pay any fees or sign a lease.
Involve the bank.
Encourage your customers to call their bank and ask to turn on voice verification for any wire transfers that go through their account. This requires them to call you over the phone before wiring any money — even if the requester is seemingly legitimate or has the right account and routing numbers. It’s an extra line of defense in case your sensitive information is leaked or hacked.
Inform clients about common fraud schemes.
Understanding what’s at risk is half the battle. Always sit your clients down and have a candid discussion about the rising rate of fraud in real estate. Talk to them about common types of fraud schemes, and break down the red flags and warning signs they can look out for. Make sure they know to always come to you if something seems fishy or off.
Don’t act on any peculiar emails.
If you or a client even suspect an email might be an attempt at phishing, hacking, or fraud, do not act on the message. Don’t reply, click a link, or open any attachments, as these could launch attacks or software on your machine. Close the message and alert your loan officer and agent as soon as possible.
Agents, We Have a Problem
The FBI reported a whopping 136-percent increase in email-related fraud in the 18 months between December 2016 and May 2018, and between 2015 and 2017? The sector lost $1.6 million due to fraud alone.
Don’t want your clients or business to fall victim to these schemes, too? Then start taking proactive, preemptive steps today.