Oct 19, 2023
Inventory constraints and hesitant buyers aren’t the only challenges real estate and title agents face today.
The real estate industry is also witnessing an uptick in wire fraud, with an estimated 1 in 3 transactions targeted for fraud. The threats are diverse, from business email compromise enabled by social engineering to the rising danger of seller impersonation fraud, where fraudsters list properties they don’t even own.
So, how do we as an industry navigate these treacherous waters? The answer lies in a collective defense from real estate and title agents.
I was joined recently by industry experts to discuss ways to protect customers and businesses. Jennifer Wauhob, 2023 VP of Association Affairs at the National Association of Realtors®, Matt McBride, co-owner of Continental Title, and Jim Gamble of Keller Williams Realty, spoke on strengthening the bonds between teams. Here are takeaways from our conversation to help you create a tighter culture of fraud prevention across all parties at the virtual closing table.
Rather listen to this discussion? Click above to watch a replay of our To Catch a Fraudster webinar.
Strong partnerships between real estate agents and title companies can help mitigate fraud risks. Fraudsters are less successful when everyone in the transaction is on the same page at every step of the process. Anomalies can then be flagged more readily and shared among all parties.
Keep talking: There is power in consistent communication. When faced with potential wire fraud, Jennifer Wauhob’s title partner didn’t just warn the client, but they looped her in immediately. You can drastically reduce risks by creating a robust partnership that values transparency.
Wauhob emphasizes, “I'm all about communicate, communicate, communicate. It’s almost impossible to share too much. If the consumer or agent needs to know about something, let them know on the spot.”
Leverage the resources around you: Your state and local associations are also working to help everyone stay informed about potential threats.
“[My title company] shared a colorful infographic on fraud that went out to all parties at the very beginning of the transaction,” Wauhob shared, “If I were an agent unaware of fraud, I’d be getting educated along with my consumer.”
Jim Gamble underscored that conferences and trade shows are great moments to bring fraud prevention to the top of everyone’s mind. “We should never miss an opportunity [to share about fraud] when we have an audience,” he says.
Reach out for support: Wahoub also leverages her title partners whenever something seems suspicious. For example, a title agent could help investigate the legitimacy of a vacant property listing, given the growing cases of seller impersonation. “There’s only so much I can do on my end,” she explains, ”And the title agent has more expertise and the right tools to look into it.”
Technology can offer a critical advantage in the fight against fraud. It limits the risks of human error during the transaction and strengthens the connections between you and your colleague’s different operations and systems.
Create layers of protection: The key to fraud prevention is to protect yourself using multiple layers. For title agents, an identity verification solution like CertifID can help create additional security during the transaction. Real estate agents increasingly use phone number verification tools like Forewarn for their safety when meeting a consumer for the first time.
Know the limits of technology: Technology, however, is not foolproof. No tool is immune to the other conversations or interactions that may be happening outside its walls of protection. Be conscious and aware of your “surface area of risk,” especially as you add new technology or teammates into the transaction.
A culture of anti-fraud collaboration between real estate and title agents protects your businesses and, most importantly, the consumer. While many industry professionals might be able to recover from a fraudulent deal, consumers can face financial ruin. There’s a gravity to the situation that highlights the need for industry professionals to be vigilant and proactive. Nevertheless, fraud prevention efforts benefit both you and your consumers.
Show your value by caring for your consumer’s safety: Fraud prevention is an opportunity for REALTORS® to show their true value by educating and guiding their consumers, ensuring their protection throughout the transaction.
Wauhob explains, “When you sit down with your clients, and you can say, here are the things we're going to look out for, here are the steps we're gonna take, here’s what's happening, and here’s how I'm going to help you navigate this and how we'll get you there — that's showing your worth to them.”
Communicate without fear: Wire fraud is a serious issue, and instilling a healthy dose of fear into your consumers is OK. However, the goal is to inform consumers about the risks without scaring them too much. As Matt McBride explained, you should be transparent about the risks and ensure the consumer understands the steps to protect them.
Stand out with your educational approach: Social media is an excellent information dissemination platform and a great opportunity to stand out amongst other real estate and title agents.
Wauhob suggests collaborating with your transaction partners to create video content highlighting the dangers of wire fraud. “Not only are you taking good care of your clients,” she explains, “But it's a good business model.”
In an ideal world, everyone involved in the transaction knows what will happen from the moment the contract is signed until closing. The entire process would be predictable, and everyone would be prepared for each step, reducing the risk of fraud. Unfortunately, that isn’t the case.
Staying ahead of fraud is a never-ending battle. Continuous fraud awareness and education are critical to the outcome of real estate transactions. As industry leaders, we can all do our part by creating stronger connections with our partners.
Luckily, I’ve noticed the conversation increasing around wire fraud. And I’m thrilled to see the significant growth in open communication between real estate agents and title companies.
This webinar originally premiered on October 11, 2023. Click here to watch a replay.
Want to know how to keep fraudsters at bay and protect your business? Attend our monthly “To Catch a Fraudster” webinar series.
Tyler brings a decade of leadership experience developing and launching technology businesses. Before co-founding CertifID, Tyler led new product development at BCG Digital Ventures for Mercedes-Benz, First American Financial, Boston Scientific, and Aflac.