Wire Fraud and Real Estate: Why I Won’t Trust an Email With New Wiring Instructions
Buying a house involves some unusually large amounts of money moving around.
It also involves a lot of email.
Criminals have figured out that those two things go very well together.
One of the more serious scams involving real estate is wire fraud. A buyer receives what appears to be a perfectly legitimate email with instructions for wiring money to the title company. The names are right. The property is right. The timing makes sense. The email may even appear to be part of an existing conversation.
The bank account is the only important part that's wrong.
Send the money there and you may have just wired your down payment to a criminal.
This Isn't Usually an Obvious Scam Email
The easy version of phishing is the email telling you that your long-lost uncle has left you $14 million and all you need to do is provide your bank information.
Real estate wire fraud can be considerably more sophisticated.
The FBI classifies many of these schemes as business email compromise, or BEC. Criminals may spoof an email address so that it looks nearly identical to a legitimate one. In other cases, they actually compromise an email account and monitor real conversations.
That second version is particularly nasty.
If someone has access to an email account belonging to a buyer, agent, lender, title company or another person involved in the transaction, they may know that you're buying a house, where you're buying it, who is handling the closing and when the closing is scheduled.
They don't necessarily have to invent a convincing story.
They can wait for the real story and insert themselves into it.
The Last-Minute Change Is a Giant Red Flag
Imagine you're scheduled to close Friday.
On Thursday you receive an email that appears to be from someone you've been working with:
> We had to change banks. Please use these updated wiring instructions for tomorrow's closing.
Maybe the email even says that the previous instructions should be disregarded.
That is precisely the kind of message that should make everything stop.
The FBI recommends independently verifying changes to account numbers or payment procedures. The Consumer Financial Protection Bureau goes further in its mortgage-closing guidance: don't simply follow wiring instructions received by email. Confirm them with a trusted person using contact information you already know is legitimate.
In other words, don't verify a suspicious email by calling the phone number conveniently provided in the suspicious email.
That's not verification. That's asking the possible scammer whether the possible scammer is a scammer.
My Rule Is Simple: Verify Before You Wire
If you're my client and you're preparing to wire money for a real estate transaction, I want you to independently verify the instructions before sending it.
That usually means speaking directly with the title company using a phone number we already know belongs to them.
Not a number from a new email.
Not a number from a text message that suddenly appeared.
Not a number provided by somebody who called you five minutes ago.
Use contact information established through a separate, trusted channel and confirm the important details.
If anything about the instructions has changed, verification becomes even more important.
This isn't because title companies can't change banks or because legitimate instructions can never change. It's because a wire transfer involving tens or hundreds of thousands of dollars is a terrible place to rely on "the email looked legitimate."
Email Addresses Deserve More Than a Quick Glance
A fraudulent address doesn't necessarily look ridiculous.
It might differ from the real address by one character. A letter might be added, removed or substituted. A domain might look close enough that your brain happily fills in what it expects to see.
And phones make this worse.
On a small screen, you may see the sender's display name without paying much attention to the actual address underneath it.
Checking the address is worthwhile.
It just isn't enough.
A message can come from a compromised legitimate account. That's why independent verification of the payment instructions matters even when the email itself appears completely normal.
Protect the Email Account Too
There's another lesson here that isn't specific to wiring money.
Your email account can contain an extraordinary amount of useful information about you.
During a real estate transaction, it may contain conversations about financing, closing dates, documents, title work, inspections and money. If someone gains access to that account, the problem isn't limited to reading your email.
They may be able to use what they learn to impersonate people you already trust.
Use a strong, unique password for your email account and enable multifactor authentication. If your email provider supports newer authentication methods such as passkeys, they're worth considering too.
We'll talk more about protecting your email account in another article, because there's considerably more to the subject than can reasonably be stuffed into a warning about wire transfers.
If You Think You Sent Money to the Wrong Account
Speed matters.
Contact your financial institution immediately and tell them you believe the wire was fraudulent. Ask what they can do to stop or recall the transfer.
Then report the incident to the FBI's Internet Crime Complaint Center at IC3.gov.
Don't wait until tomorrow because you're embarrassed or because you want to investigate it yourself first. Once stolen funds begin moving through additional accounts, recovering them can become considerably more difficult.
And call the legitimate title company and your real estate broker so the people involved in the transaction know what happened.
A Thirty-Second Phone Call Is Cheap Insurance
Real estate transactions have plenty of details worth worrying about.
Whether the bank account in an email actually belongs to the title company shouldn't be one of the things you simply assume.
Before sending a large wire, independently verify the instructions.
And if an email suddenly tells you the wiring instructions have changed, treat that as a reason to slow down rather than speed up.
The money can wait long enough for a phone call.