How to Protect Yourself from Real Estate Scams

Real estate scams can wipe you out financially

Real estate scams are really scary. Especially with how quickly artificial intelligence is being adopted and applied. March 7th was National Slam the Scam Day according to the Social Security Administration. While most people understand that there are ever-more scams perpetrated by extremely clever bad actors, what is not well understood is just how easy it is to be taken in by these scams.

Phishing, vishing, and other cyber-security scams are terrifying. Losing your entire life savings happens every day to unlucky and uncareful people. Less well known are a variety of real estate scams that claim buyers, sellers and homeowners as victims. Being aware of what these scams are, and how they might try to entice you, is the first line of defense.

Mortgage Scam: How to protect your single biggest asset

Let’s start with your financial information. If you’re buying or selling a home, you have to make sure your financial information stays secure. Especially when it comes to how and when you send money to or receive it from a real estate closing.

Buyers must ensure that any information about where closing funds should be sent is real, correct and up-to-date. We can’t emphasize this enough: Be extremely careful when sending your money to the settlement agent. Wire fraud is a growing problem in real estate. We’ll explain why in just a moment.

Loan Scam Red Flags For Homeowners

Sellers also need to take extreme care. You need to make sure that the settlement agent receives the correct information about where to send the closing proceeds. In other words, take it upon yourselves to provide the settlement or closing company with the information. Don’t risk going through a middle person. Upload this information only into a secure form.

From our perspective, buyers and sellers are often unaware that there are impostors and bad actors out there looking for any opportunity to get in the middle of a transaction to scam buyers and sellers out of their money. All of the money sent to pay for a house. All of the proceeds (minus the mortgage) that the seller should receive after closing.

Tricking you isn’t has hard as it sounds. Scammers use fake email addresses that are suspiciously similar to email addresses that buyers and sellers see in their dealings with title companies, settlement agents, real estate companies and lawyers. By impersonating these companies, they try to trick buyers into sending their money to them rather than to the place the money should go.

I Think I’m a Victim of a Scam. Now What?

To avoid being a wire fraud victim, you must always verify the wire information with a trusted source by phone. Call the number that you get from the settlement or closing company in your closing package. Call them to verify account information. Make sure you’re calling the right number, and you talk to someone you trust. Confirm all of the information to make sure you are sending the money to the right place.

You should remember that in a real estate transaction, no one will ever ask you to send your money by using gift cards, actual cash, or other online cash payment systems. No one will tell you to use Paypal or Venmo to send closing fees. Settlement agents in real estate transactions will only take bank checks issued by local banks or wire transfer of funds coming directly from your account directly to the settlement agent’s bank account.

If you’re selling, make sure you work directly with the settlement agent to securely upload your account information. This is the account where the closing agent will deposit the proceeds of the closing (after paying off the mortgage and any liens.) Verify (or have your attorney verify) with the closing company that it has the correct information just before the closing.

Spotting A Scam In Your Inbox

But there are other real estate-related scams to avoid besides wire fraud. Once buyers move into their new home, be aware that scam artists may prey upon your new status. If you receive a suspicious call from someone, hang up. Never give out any of your personal information over the phone unless you have verified the caller. Remember, it’s easy to impersonate someone or a company on the telephone.

If you get a knock at the door unexpectedly, be suspicious. You may have people come to your door once you move in suggesting that they have been called to assist you with your move, the installation of your phone, cable or internet service, gas or electric service. They may offer to perform services for you around your home. Or, replace the roof. If you have not requested these services, don’t let them in your home. Never give them any personal information about yourself.

Utility companies won’t ever randomly stop by. They will set up an appointment with you and then will confirm a window of time when they plan to come to your home. While we’ve all had issues with the reliability and timing of some of these companies, they do show up in marked trucks, wear identifying gear and have identification tied to the utility provider. Don’t be afraid to ask to inspect their corporate identification. They should also already have a work order with your information so you shouldn’t be asked to verify any of your information. If they don’t have this work order, they likely may not be authorized to be out there doing the work.

VIDEO: How Can You Help Better Protect Yourself Against Identity Theft?

As part of National Consumer Protection Week (March 3-9), various consumer agencies and organizations highlight how to stay safe from scammers and imposters. In particular, know that government agencies will never call, email or text consumers. That includes the Internal Revenue Service (IRS).

And, government agencies will never request payment of a fine or an amount owed by the delivery of a gift card or cash. Government agencies reach out to consumers through the United States Postal Service. If you get an email notification that purports to be from the IRS, it’s not real. No matter how real it looks.

This advice also applies to the payment of real estate taxes, any city fines or other amounts that you may owe your municipality for garbage collection, water bills or other municipal services. Any of these agencies will reach out through the post office, not email. You can always call and verify the information.

Stay safe and avoid getting scammed.