Wire Fraud in Real Estate: 3 Ways Homebuyers Can Protect Their Savings

For new homebuyers, the most nerve-racking part of closing isn’t always the mountain of paperwork, it’s the wire transfer. Not only is a huge amount of money leaving their accounts, but each year, scammers steal billions by tricking buyers into sending their life savings to fraudulent accounts.

Criminals prey on rushed buyers with emails that look legitimate, but a single wrong click can wipe out years of savings. The good news: a few extra precautions can dramatically reduce your risk of becoming a victim.

An American Land Title Association (ALTA) spokesperson gave NewHomeSource the top three tips to consider when trying to avoid wire fraud:

1. Independently verify that the wire instructions are legitimate before sending money

• Call, don’t email: Confirm your wiring instructions by phone using a known number before transferring funds. Don’t use phone numbers or links from an email.

• Forward, don’t reply:

  When responding to an email, hit forward instead of reply and then start typing in the person’s email address. Criminals use email addresses that are very similar to the real one for a company. By typing in email addresses, you will make it easier to discover if a fraudster is after you.

• Confirm everything:

  Ask your bank to confirm the name on the account before sending a wire.

• Verify immediately:

  Call the title company or builder agent to validate that the funds were received. The sooner it is detected that money has been sent to a wrong account, the better chance you have of recovering the money.

2. Be familiar with red flags that signal a scam attempt

New homebuyers need to recognize red flags prior to their wire transfer:

• Watch for small changes to email addresses, such as jane.doe@bank701 instead of jane.doe@bank101, or jane.doe vs janedoe or jdoe.

• Your title company will never change their bank account or wiring instructions during your transaction. This includes new routing numbers or bank accounts, as well as different timing and/or amounts.

• Keep an eye out for suspicious language or heightened emotion in emails: Watch for words such as, "urgent," "secret," or "confidential." These are classic pressure tactics to short-circuit your verification process.

• Finally, watch for additional or follow-up transfers. Are you receiving an additional payment request right after you successfully send funds to an unfamiliar account? Bad actors often use this tactic to double-dip once their scam works.

3. Ask if the builder, lender, or title company offers secure communication tools or a pre-closing security briefing

Homebuyers should ask their builder, lender, or title company what type of secure communications they use. Many title companies use communications portals.

Here’s what you should be looking in terms of protection: ALTA best practices include requirements for wire transfer procedures, Positive Pay, multi-factor authentication, the use of wire transfer verification service providers, procedures to alert consumers about the potential risks of wire fraud, and guidelines to mitigate losses. Keep in mind that new homebuyers have the right to shop around for a title insurance company. You can find an ALTA-member company in your state to assist you with your search.

The Bottom Line: Wire fraud is a growing threat, but it’s also preventable. Confirm instructions by phone, question last-minute changes, and lean on your builder, lender, or title company for secure communication tools. Treat every wire request with suspicion until verified, because once money is sent to a fraudster, it may be gone for good.

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