Buying a new home or selling your current one can be an exciting but stressful time. 

After balancing costs, completing closing documents, and jumping through lender hoops, the last thing a homeowner wants to find out after signing on the dotted line is that they’ve become the victim of a real estate scam. 

Unfortunately, given the large amounts of cash involved in these transactions, real estate scams are becoming more common, with criminals finding new, unique ways to alter data or processes. In fact, one 2019 report found that real estate firms faced the highest average fraudulent transaction amount of $179,001.

Want to do your part to thwart fraudsters? Want to gain the know-how to prevent real estate scams from affecting your real estate dream? Then read on:

What You Need to Know About Real Estate Scams

Although buyers and sellers already have a lot on their plate when moving through the closing process, it is important to be aware of three key elements in real estate scams:

Types of Real Estate Scams

The first thing a buyer or seller needs to know about real estate scams is how criminals attempt to shift the playing field in their favor by injecting themselves into the usual closing processes.

Although the specific tactics can vary, the most common types of real estate scams include:

• Mortgage Fraud: Mortgage fraud typically involves a party intentionally making false statements or stating false positions to obtain a mortgage loan or ownership of a property.
• Wire Fraud: Wire fraud involves a form of business email compromise (BEC) or other form of phishing where a criminal convinces a victim to wire money to what they believe is a legitimate account.

The Impact of Real Estate Scams

As home prices rise, the impact and frequency of real estate scams are also increasing. In fact, according to the National Association of Realtors and FBI data, over 13,500 people fell victim to wire fraud in the real estate and rental sector in 2020, equating to a 17 percent increase over 2019, with total losses topping $213 million. 

Criminals Are Getting More Creative

Closing communications are increasingly happening through texts, emails, or other digital tools.

Although these new methods are making the process quicker and less paper-driven, using these digital tools without the right security awareness and controls can make your closing more vulnerable to cybercriminals. From BEC to phishing, criminals have multiple methods to trick parties in a real estate transaction in hopes of making a big payout.

How to Avoid Real Estate Scams

While these statistics and trends can feel overwhelming, there are some tried and true steps that you and your representatives can take to reduce the risk of real estate scams affecting your transactions.

Here are some key steps: 

• Ensure you follow cybersecurity best practices, such as using complex, strong passwords, updating your phone and software to the latest available software versions, and not sharing sensitive information with untrusted parties.
• Request the key steps, documents, and information you will need to provide from your lender and title company.
• Ask your title company to use a platform that enables the secure collection of bank account details used for the wire transfer of funds after the closing.

Proactively Protect Your Transaction with CertifID

The thought of falling victim to wire fraud is enough to stop even the most experienced real estate professional in their tracks, especially when it can leave all those involved amid a financial disaster.

Fortunately, knowing the warning signs, protecting your transactions with cybersecurity best practices, and using a platform like CertifID that enables the collection of account information with end-to-end encryption can help prevent you from becoming another statistic.

Want to learn more about how fraudsters attempt to pull off their crimes and the steps professionals take to catch them in the act? Then click here to follow along with CertifID’s To Catch A Fraudster webinar series.