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The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.
This is an ever-growing scam that happens in real estate transactions involving title companies, escrow companies, and more. A Silicon Valley executive recently lost almost a half-million dollars to cyber criminals. Here’s how it works and how it’s very easy to avoid.
When you buy a house, at some point, you will have to provide funds for the purchase. Typically, these funds are given to a title company or an escrow company. What they do is hold the funds and the deed from the seller. Once both are in their possession, they exchange them: the deed is given to you, and the money is given to the seller. This process ensures that neither party is cheated—similar to the exchange you might see in a movie where goods and payment are exchanged simultaneously to avoid getting ripped off. The escrow company acts as the middleman, holding both the payment and the deed until everything is satisfied, then exchanging them with the other party.
However, scammers often find out about these home sales by hacking into emails or conducting cyber-attacks on title companies, real estate agents, and even home inspectors. They monitor these emails for weeks or months, gathering details about the transaction—who’s buying, who’s selling, the amount involved, and the title company handling the deal. When the time is right, they send a fake email to the buyer, posing as the title company. This email will contain all the correct information: the name of the title company, the logo, the amount, the address, and even the name of the realtor. It looks legitimate, so the buyer wires the money—only to find out later that they’ve wired it to a scammer, and the money is gone.
Usually, there’s no way to get the money back. There is a financial fraud kill chain and some IC3 processes you can pursue, but in most cases, the money is lost. So, how do you avoid this?
First of all, verify wiring instructions directly. Walk into the title company and have them write the instructions on a piece of paper or print them on their letterhead and hand them to you. But even that’s not enough. When you go to your bank to wire the money, first wire a small amount—$10 or $100. Then, go back to the title company to verify they received it and that the information is correct. Get a printout of the receipt. After that, you can return to your bank and wire the full amount.
Sometimes scammers will update their fake wiring instructions, sending a new account number. By conducting a small test transaction, you ensure that the large sum of money is going to the correct account. Yes, it might take extra time—two or three trips to the title or escrow company—but don’t rely on phone verification. Scammers can create fake phone numbers that sound like the title company. Go in person, get a printout of their wiring instructions, send a small amount, verify it, and then send the full amount.
While it may require some effort, it’s worth it to safeguard your entire down payment or hundreds of thousands of dollars if you’re buying a house for cash. You can see the link below for additional instructions and ideas on how to avoid this scam. If you’re a realtor, there are checklists you can use—all free—to prevent such a catastrophe for your buyers.
If you found this video helpful, be sure to check out other videos on our channel that may provide additional information related to this subject or other topics that might assist you in resolving your issue.