Fraud in real estate transactions is no longer a rare occurrence. According to Monica Schroeder, President of Verus Title, wire fraud is now attempted in one out of every three to four real estate transactions. The consequences of these schemes can be devastating, not only financially but also emotionally, for everyone involved.

Preventing Wire Fraud: A REALTOR®’s Responsibility

Fraud prevention starts with awareness. Schroeder shared practical tips for agents to safeguard their transactions, beginning with identifying red flags. Vacant properties, particularly those that are not owner-occupied or have no mortgage, are prime targets for fraudsters—additionally, sellers who resist video calls or fail to provide proper identification warrant further scrutiny. Schroeder advised agents to involve their title company partners as soon as suspicion arises. Title companies can verify ownership documents and assist with identification checks.

Know the Red Flags! 

• Property is vacant or non-owner occupied, such as investment, vacation, or rental properties.
• If the seller’s address does not match the property’s owner or tax address.
• If there is no outstanding mortgage on the property.
• If they want to list or sell below market value and/or demand all-cash offers.
• If the seller is unwilling to provide or confirm identification in person.
• If the seller insists on conducting all communication via email or text.
• If the party requests a remote notary or one they prefer to handle closing documents.

Strong password hygiene is another critical layer of defense. Schroeder cited a Verizon data breach report showing that weak or stolen passwords account for 80% of hacking-related breaches. She recommended using passwords of at least 15 characters, enabling multifactor authentication (MFA), and regularly checking if email credentials have been compromised.

A particularly powerful preventive measure is setting clear expectations with clients from the start. Schroeder suggested that agents establish early in the process that all financial communications will come directly from the title company. “Tell your clients, ‘You will never receive an email from me asking about money. If you do, call me immediately,’” she emphasized. This approach removes the agent from the liability chain and reduces the risk of fraudulent activity.

What to Do If Fraud Occurs

Despite best efforts, wire fraud can still happen. If you or your client becomes a victim, immediate action is crucial. Schroeder laid out the following steps:

• Stay Calm: Fraud can feel personal, but it’s essential to remain composed for your client’s sake. Reach out to your managing broker for support and guidance.
• Engage the Title Company: Your title company may have resources and established protocols to assist in halting the fraudulent transfer.
• Report to Authorities: File a report with the FBI’s Internet Crime Complaint Center (IC3) at ic3.gov. The IC3 coordinates with the Secret Service to track and freeze fraudulent transactions. Local law enforcement should also be notified.
• Contact the Bank: Initiate a wire recall immediately. Acting within the first 48 hours significantly increases the likelihood of recovering funds. After this window, the chances drop dramatically.

Schroeder also highlighted additional tools, such as reportafraud.org, which provides immediate assistance in reporting and mitigating wire fraud incidents. Time is of the essence in these situations; the faster you act, the higher the chances of recovering stolen funds.

Educating Clients and Building Trust

Education is a powerful tool in the fight against wire fraud. A recent survey revealed that 51% of real estate consumers were unaware of fraud risks, and 71% believed someone else—most often their real estate agent—should educate them. This presents an opportunity for REALTORS® to demonstrate their value by proactively informing clients about potential risks and preventive measures.

Schroeder concluded by emphasizing the importance of partnering with title companies that are knowledgeable about fraud detection. “Align yourself with professionals who understand the risks and can help you identify fraudulent sellers,” she said.

Wire fraud may be an ever-present threat, but agents can protect their clients and their reputations from these schemes’ devastating impact by being vigilant, taking strong security measures, and taking prompt action.

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Ready to elevate your real estate career? At Fathom Realty, we empower agents with cutting-edge technology, comprehensive training, and unwavering local support to help you succeed. Our culture is built on service and a relentless pursuit of excellence, providing you with the tools and community to thrive. Plus, with Verus Title by your side, your clients will enjoy secure, seamless transactions that reflect your commitment to outstanding service. Come grow with us and take your career to new heights today!