The pandemic changed the real estate game, and now scammers are taking advantage and counting their profits
Much of the buying and selling now is being done virtually with Zoom replacing in-person meetings, online home tours and digital signing of documents with states allowing notarizations to be done online. It’s a perfect setup for fraudsters.
The scams come in many guises. It can start with a crook hacking into the email accounts of any of the various people involved in the sale — the buyer, seller, lawyers, title company, real estate agent or mortgage banker. The hacker then monitors the communications regarding the progress of the sale of a particular piece of real estate and when the time is right, generally posing as one of the lawyers, title company or bank mortgage officer, the scammer will email the buyer, telling them that funds necessary to complete the sale need to be wired to the phony lawyer’s, title company’s or banker’s account provided in the email.
“Everything appears normal, so unsuspecting buyers too often are wiring the money to the cyberthieves, who then launder the money by moving the funds from account to account to make it difficult to trace the funds,” said attorney Steven Weisman, who specializes in scams, identity theft and cybersecurity and runs the blog scamicide.com.
Andrew Kolodgie, owner of The House Guys, shares his client’s aborted catastrophe. His clients were relocating and needed to sell their house quickly. They needed the proceeds from the sell-side escrow company to be wired immediately to the buy-side escrow company. The buy-side escrow company sent a PDF of the wire instructions to the buyers. The buyers sent the PDF to the sell-side escrow company.
The sell-side escrow company used the wire information provided by the buyers to create an agreement which they needed to review and sign.
“This is where they noticed the scam,’’ Kolodgie said. “ A hacker had intercepted the document sent from the buyer to the sell-side escrow company and changed the wire instructions. If they didn’t carefully read the contents of the wiring agreement, they could have lost their entire down payment.”
His advice? Slow down and look at every document. Always call title/escrow companies to confirm wire instructions. Do not call the phone number in the PDF/document received via email. Get the phone number from a trusted source. If a hacker can change wire instructions, they could just as easily change phone numbers in a document.
Real estate scams aren’t limited to the homeowners seeing their down payments disappear; renters have been swindled as well. Jonas Bordo is CEO of Dwellsy, a listing service for rental homes and apartments. “Fraud has been a major issue in the rentals space and it’s only gotten worse during the pandemic,” he said.
What kind of plays are being run? In the “fake landlord” scam a scammer takes a legit listing and replicates it, typically just changing contact information and setting the price at a level below market. A prospective renter calls about the listing and gets drawn in by the scammer — in the worst-case scenario, losing first and last months’ rent and a deposit.
Suzanne Pope, COO of Whiterock Locators, an online apartment location service, highlights another common scheme. Someone poses as a rental owner/property manager. They ask for money up front or personally identifiable information. They refuse to do a virtual or live viewing. Some will also use high-pressure sales tactics to get you to rent “before someone else does.”
Never mail a check in hopes of getting a key in the mail.
“We’ve spoken to renters who have gone as far as signing a lease via DocuSign, sending a deposit to hold the place, and then waiting for keys to be mailed back in return,’’ said Sam Radbil, communications manager for ABODO Apartments. “Landlords are feasting on people who are worried about COVID-19 and do not want to meet in person. The landlord will never mail the keys back and you’ll lose your deposit.”
How best to protect yourself?
Do change your security settings to enable multi-factor authentication for accounts that support it. Multi-factor authentication — or MFA — is a second step to verify who you are, like a text with a code. Before you make any transactions, including a wire transfer, remember that there is a high potential for fraud right now.
Maria Deligiorgis, general counsel and compliance officer for Title Alliance, which develops title and settlement joint ventures with real estate and lending professionals, offers advice, “Protect your money and verify everything. Call your trusted professional before sending money, and then check again. Find the title company’s telephone number, email address, and physical address using an independent and reliable source. Always call and don’t email. Confirm all wiring instructions by telephone using a known number before transferring funds and don’t use phone numbers or links from an email.”
Be mindful that criminals take advantage of COVID-19 by using fraudulent websites, phone calls, emails and text messages. The goal is to trick people into providing Social Security numbers, bank account numbers and other valuable details. Do not divulge bank or credit card numbers or other personal information by a return email, or over the phone unless you initiated the conversation with the other party and you know that it is a reputable organization and you obtained the telephone number from an independent and authoritative source.
“I cannot emphasize enough how critical it is to remain on guard against imposters who contact you claiming to be a bank employee, an employee of a title company or a representative of an apartment’s management company and asks for personal financial information or money,’’ Deligiorgis said. “Reject any demands that you act with urgency and immediacy associated with information, including a change in wiring information for the transfer of funds.”