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Wire Fraud in Real Estate: Beware of Criminals Targeting Your Down Payment

A New Jersey couple lost nearly $92,000 to scammers — and they’re not alone


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Joyce and Benjamin F., a teacher and school principal in their 60s, were ready to downsize in 2017: They’d lived for almost 25 years in their home in Sparta, New Jersey, and were pleased when they found a smaller townhouse for sale near their two grown children and grandkids where they could enjoy their retirement.

The couple, who asked that their full name not be used to protect their privacy, signed a contract and prepared for the closing — wiring their $91,500 payment to the account number that their real estate attorney had emailed to them. Two days later, they sat down with their attorney and the seller’s rep to close the deal, says Benjamin, who’s now 70. But when they handed over their proof of wire transfer, the seller’s rep said, “That’s not our account.” The attorney asked, “Where’d you get that information?”

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“We said, ‘Well, you sent it to us,’” Benjamin recalls. “He said, ‘I didn’t send you that information.’ And that’s when we knew there was a scam involved.”

They immediately tried to reverse the wire transfer, but it was too late.

All of their savings, as well as money they’d borrowed, was gone.

Now, six years later, he says, “we are still trying to recuperate.”  

It was devastating. But such losses — where criminals intercept and steal money transferred in real estate purchases — are disturbingly common.

Video: 3 Real Estate Scams to Look Out For

A fraud ‘epidemic’

“It’s an epidemic now,” says Diane Tomb, CEO of the American Land Title Association, the national trade association for the title industry. “Four years ago, we heard about this kind of thing a couple times a month. Now it’s multiple times a day.”

These thefts are effected through business email compromise — a crime category that includes real estate wire transfer fraud. Reported losses from business email compromise have grown from more than $676 million in 2017 to more than $2.7 billion in 2022, according to the FBI Internet Crime Complaint Center (IC3) 2022 Internet Crime Report.

The FBI calls this category “one of the fastest growing, most financially damaging internet-enabled crimes” and “a major threat to the global economy.”

While the agency doesn’t break down those statistics to specify the amount lost to real estate–related wire fraud, industry insiders say it’s rampant, with criminals drawn to the big money involved in these transactions.  

“If you were to ask anyone in our industry, ‘What’s the biggest threat?’ They would tell you wire fraud,” Tomb says.

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How real estate wire fraud works

These types of crime often start when cyber perpetrators weaponize open-source information on property owners and public record information relating to real estate. This allows them to send targeted and timely emails to someone involved in a deal — typically a real estate agent, real estate attorney, title agent or, sometimes, a home buyer. This could come by way of a phishing text or email with a link that when clicked downloads malware or obtains login credentials, so the bad actor can take control of someone’s computer or email account.

Once these hackers gain access, they monitor the email account, watching for closing instructions — then intercept them. Armed with the date and amount of an upcoming transfer, they impersonate a trusted party in the transaction and divert wire transfers to bank accounts under the control of the criminal.

“At the 11th hour, the buyer will get an email saying, ‘There's been a change in plans. Send your money here,’” says Tomb, adding that “here” will be a fraudulent account. And the money is moved swiftly to thwart tracing, sometimes bouncing through multiple accounts, with the help of money mules, and finally overseas, according to a recent financial trends analysis of business email compromise in the real estate sector by the U.S. Treasury’s Financial Crimes Enforcement Network.

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“Most buyers learn that their life savings is gone when they show up to the closing table,” says Tom Cronkright, CEO of CertifID, a wire fraud prevention firm. “They’re asked by the notary closer for a check, and the buyer says, ‘What are you talking about? I wired that last week.’ There’s a bad closing experience and there’s that. A crisis.”

Of course, if you’re a home buyer who has never heard of this scam, it may seem unremarkable to receive a professional-looking email from someone claiming to be your title agent Bob — or someone who works with Bob — reaching out to help you transfer the money needed for the closing. ​

​There are so many people involved in a real estate transaction, Tomb notes, “and oftentimes, the buyers don’t meet a title agent until they’re actually sitting at the table.”​​​

Title agents targeted

​​Real estate professionals have also faced big losses from wire fraud. Ask Cronkright, who in 2015 was an owner of a title company in Grand Rapids, Michigan, and handling a large commercial real estate transaction (the sale of a gas station). He and his partner, Lawrence Duthler, received a certified check for $180,000 from the buyer, deposited it, then wired the amount to the (alleged) seller. Days later, the check bounced. ​​

Turns out the criminals were working both ends of the deal. ​​

The stunning crime led Cronkright on a multiyear journey involving civil litigation, and the revelation that this theft was part of an elaborate scheme coordinated by the North American leader of the Nigerian Black Axe — a crime syndicate operating out of West Africa — with the assistance of a network of criminals across the U.S.​​

Cronkright and Duthler managed to recoup $140,000 of the money lost as part of their civil litigation against those who had received the diverted funds, but “we ended up spending more than that on legal fees,” Cronkright says. ​​

Victims typically are only able to get their money back if the crime is caught immediately. CertifID’s other role, along with helping industry professionals prevent wire fraud, is to help people retrieve their cash, when possible. (To hear a wire fraud story with a happy ending, thanks to Cronkright, listen to this episode of AARP’s The Perfect Scam podcast.) ​​​

Financial (and emotional) devastation for victims

​​But the majority of victims are like Joyce and Benjamin: regular people who may be spending their entire savings on a new home. “It’s really just heartbreaking,” says Tomb. “For most people, this is the largest investment they make in their lives, so it’s life-changing” to lose that money.​​

"When you have been victimized by this, it’s a very personal and embarrassing thing,” Cronkright says. “You feel violated, you feel exposed . … It transcends monetary loss.”​​

Benjamin says that when he and his wife discovered the fraud, they felt “immediate disbelief and shock” and were “angry and extremely depressed for a long time.”​​

A fight for justice

​​The couple had taken out a second mortgage on their home to have enough to pay for the new property in cash — the seller’s requirement — and subsequently spent much of the last six years paying down the debt. “We were both going to retire within a couple of years, but all plans were destroyed,” Benjamin says. He is still working full-time as a school principal, and Joyce stayed on the job until last September. ​​

Meanwhile, Benjamin has spent countless hours researching these scams and the intricacies of his own case. The couple is suing their real estate attorney and agent for not warning them about the threat of wire fraud. The agent “neglected to include her agency’s Wire Transfer Warning Form that needed to be signed and returned along with the contract,” he says, and also compromised the security of their interactions by using both her personal and business email accounts to communicate with the couple. And, the couple asserts, the attorney did not notice the lack of warning. ​​

Benjamin says that the only thing they were told “was that it was to be a cash-only deal and to expect an email with wire-transfer information a couple of days before the actual contracted closing date.”​​

The real estate attorney and the agent have claimed that they had no legal responsibility to warn buyers of the scam, and they unsuccessfully attempted to have the case dismissed. The couple has a court date next month.

​​Benjamin is emphatic that there is an easy way to prevent this crime: “Instead of including the wire-transfer scam warning form buried in a contract, the broker and the attorney should each have a simple form that states: ‘Do not wire-transfer/send any money to anyone at any time, even if you think you know the person requesting the money, without first contacting me personally” at a particular phone number.

He suggests having the client and the broker or attorney sign the form, then “make copies for everyone and place the form directly into the hands of the client.”​​​

Preventing wire fraud

​​The good news is that many professionals in the real estate industry now make it part of their practice to be clear about the threat.​

Tricia Messerschmitt, a longtime Washington, D.C., real estate agent, says her company, Compass, protects its agents’ email with two-factor authentication and other security measures. And agents in her region are required to warn home buyers about the threat of wire fraud in two ways, she says. “We tell them verbally,” she says, “and we follow up with them in writing to tell them how this is happening, and what to do to safeguard yourself.”​​

A key point Messerschmitt says she always shares with clients: “Neither Compass nor any of the partners that we have, the settlement companies, will ever email you wiring instructions unsolicited.”​​

The National Association of Realtors advises its members to take similar precautions, suggesting that real estate agents include a note under their email signatures that warns customers about the threat of wire fraud, starting with, “IMPORTANT NOTICE: Never trust wiring instructions sent via email...”​​

How to protect yourself from real estate wire fraud

​​Discuss financial safety with your agent. When you first connect with a real estate agent, ask how money is going to safely move between parties, Cronkright says. He suggests asking, “What title company are you using? How do I safely get money to them, and how will I know that it’s safe?’ The agent should be able to descriptively and succinctly educate the consumer on how funds will be protected through the process. And if you’re working with an agent that cannot do that, you might want to consider finding a different agent.”​​

Confirm all wiring structures in person or by phone. “Never ever email any financial information because it’s not secure,” Tomb says. And call to confirm that information using your contact’s actual number — don’t use a new number listed in the email. It could lead you to the criminal, who, of course, will confirm those fraudulent wiring instructions.​​

Know that your instructions for sending money should not change. “It’s extremely rare for wiring instructions to change at the last minute, or that the instructions will be provided by email,” the National Association of Realtors notes in its online tips for avoiding mortgage closing scams. ​​

Protect your accounts with two-factor authentication. It adds another layer of security: To access your accounts, you are required not only to type in your password but also to enter an authentication code that you receive by text, phone or email. ​​

What to do if you lose money to wire fraud:

  • ​​The faster you can respond, the better. Immediately contact your bank and ask for a recall notice for your wire, the Realtors association suggests. But wires are typically irreversible.​​
  • File a report with the FBI at IC3.gov, as well as your nearest FBI office. 
  • Call the AARP Fraud Watch Network Helpline , 877-908-3360. This free resource has trained fraud specialists who provide support and guidance on what to do next and how to avoid scams in the future. The AARP Fraud Watch Network also offers online group support sessions.​​

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Have you seen this scam?

  • Call the AARP Fraud Watch Network Helpline at 877-908-3360 or report it with the AARP Scam Tracking Map.  
  • Get Watchdog Alerts for tips on avoiding such scams.