Exercise extreme caution when dealing with wired funds in a real estate transaction. Wire fraud is very much alive and well, and I’ve been hearing unfortunate stories from my colleagues recounting big money losses due to fraud activity.
When you’re buying or selling a home, you’re dealing with an escrow company that holds transactional funds in a neutral account. Buyers wire deposits (typically 3% of a purchase price) into an escrow account, as well as the balance of their down payment a couple days before the escrow closes. And sellers provide wiring instructions to the title company so the latter can wire the sale proceeds. San Francisco prices being what they are, the sums of money are usually pretty big.
I’ve been hearing tales of buyers receiving emails–allegedly from their escrow officers–instructing them to disregard previous wiring information and requesting that buyers instead wire funds to a new account. That’s a huge red flag, but you may not pick up on it if you’ve never been involved with a purchase.
And hackers are great at creating emails that look exactly like the messages a buyer has been receiving from an escrow company. In one instance, a Bay Area buyer completed the sale of her house and was eager to transfer the proceeds to another title company as part of the down payment on the next home she was purchasing. Hackers intercepted her email chain, and she ended up wiring $600,000 to a fraudulent account. That’s a lot of money to lose.
Here are the basic tips for handling wired funds in a transaction:
– Get phone and account numbers directly from escrow officers at the beginning of the transaction, preferably over the phone.
– Don’t wire money without calling your escrow team first, and use that phone number you got at the beginning of the sale, even if you receive an email that looks legit.
– Confirm the bank routing number, account numbers and other codes on the phone before transferring funds.
– Avoid emailing personal info like social security numbers.