Real Estate Wire Fraud: What It Is and How to Avoid It

Real estate wire fraud occurs when a scammer tricks you into sending your down payment or closing costs to them instead of the right person. The FBI reports that homeowners lost more than $145 million in 2023 due to real estate fraud.

A scam isn’t always obvious, but there are several ways to avoid real estate wire fraud. These include being wary of last-minute, “emergency” changes in the closing process and double-checking with your trusted real estate agent before sending funds.

Key takeaways

• Real estate wire fraud can come in the form of phishing emails from fraudsters posing as your real estate agent or title company.
• Scammers target homebuyers during the closing process — as it’s typically a stressful time with many moving pieces.
• You can avoid real estate wire fraud by questioning last-minute changes regarding where to send funds.

How does real estate wire fraud work?

Real estate wire fraud schemes can involve different fraudulent activities, including phishing and spoofing. Because several thousand dollars can be gained in one successful transaction, scammers will do their research to get as much information as possible about you and your homebuying or refinancing deal.

When you’re close to signing, scammers know your emotions are running high with excitement and overwhelm, and they may reach out to you, typically through email.

The email address may look legitimate, and could appear to come from your title company, loan officer, or someone else closely involved with your real estate transaction. For example, if your loan officer’s actual email address looks like “[email protected],” the scammers may use “[email protected].” An extra letter in the address is easy to overlook, especially if everything else in the email looks legit.

The “new instructions” will direct you to wire money to the wrong bank account, which the fraudsters own. Scammers prefer wiring, as it’s difficult to cancel or undo a wire transfer.

How to identify and avoid real estate wire fraud

Whatever type of loan you’re getting — conventional loan, FHA loan, VA loan or other — taking precautions early in the mortgage process can help you avoid becoming a victim of real estate wire fraud.

• Beware of last-minute changes. As heart-pounding as it is to receive an “URGENT” email saying that you’ll lose your dream home if you don’t wire money immediately, don’t rush. Take a breath and verify that it’s legitimate before sending funds.
• Call before you send a wire. Always contact your lender or title company to confirm wiring instructions before you wire funds. Don’t use the phone number that’s in a potential scammer email. When you call to confirm, don’t talk with an assistant you’ve never heard of. If possible, talk with your agent or loan officer in person.
• Get contact information on day one. As you start to communicate with your real estate agent, loan officer and others, save their contact details. If one reaches out, make sure it’s coming from the right source.
• Consider setting passcodes. Early on in the process, set up passwords with your contacts. If a lender representative needs to contact you about your down payment, they should call you and provide a passcode.
• Know the closing process. It can be hard to identify that something’s irregular if you don’t know what to expect in the first place. Go over the closing process so you understand when and how you’ll be expected to send your down payment and closing costs.
• Don’t discuss finances via email. Scammers often get data by hacking email accounts. Avoid putting specific financial information in emails.
• Verify the completed transaction. Call the company to confirm receipt of funds the same day you wire them.

What to do if you’ve been scammed

If you think you’ve been duped by a mortgage fraud scheme, it’s important to act quickly.

Request a wire recall immediately. Your bank or the wire transfer company may be able to stop the funds from being transferred. If the transfer already went through, see if the wire company can cancel the transaction and get the funds back. This isn’t always possible, but it’s worth trying.

File a complaint with the FBI. Go to the FBI’s Internet Crime Complaint Center and provide as much information as you can about what happened. The more details you provide, the more likely the FBI is able to help.

File a police report. You can file a report with your local police department and give a copy to your bank, credit union or online lender.

The statute of limitations for wire fraud — in cases where it affects financial institutions — is 10 years, so cybercriminals can be prosecuted long after a crime is committed. A wire fraud felony conviction may come with penalties of up to 20 years in federal prison, as well as fines up to $250,000.