When purchasing your next piece of Pittsburgh real estate, paying off a mortgage or receiving and sending money for rental deposits, make sure you are careful to avoid becoming the latest victim of real estate fraud.
The rise of technology has made investing in real estate simpler. You can browse a host of potential properties online and easily list any you want to sell. You do not even need to see a property in person; you could have someone take you on a video walk through. You can negotiate the details via email and arrange the finances and money transfers via your cellphone banking app.You can even close on real estate or execute a lease through my office by video with completely remote online notarization (RON). Anything this quick and easy to do is also easy for a hacker to interrupt
Like buying anything online, buying real estate comes with safety concerns. The internet is not as secure as we like to think. People have worked out ways to hack most things, including your real estate transactions. I helped a real estate broker avoid being the victim of a real estate fraud just a week ago. The offshore buyer, from an oil rig at sea, wanted to place a full price offer on a property the broker had listed. The fraudster wanted to do that sight unseen, and was ready to mail a check or wire from a foreign bank a hundred thousand dollars as a deposit, even though a few thousand dollars would have been enough.
Had the pattern not been all too familiar to me, the money would have been deposited, some would have been spent on inspections and a survey, and the deal would have fallen apart in less than a month. The buyer would have offered the broker a generous amount for his or her trouble, and asked for the rest of the money to be wired back to another offshore account. After the wire went out for most of the hundred thousand dollar deposit, the broker would have received notice that the entire deposit was a fraud, and the full hundred thousand dollars initially deposit would have been pulled from the broker’s account. That would leave the broker holding the bag for a full hundred thousand dollars.
Online fraudsters stole 221 million dollars in 2019 in U.S. real estate frauds, according to the FBI. It is on the increase; in 2018, the total stolen was 149 million dollars. The scam is often similar, and may involve paying rent in full for an upcoming year, then cancelling the lease upon inspection, a fraudster sending an e-mail changing the account into which to deposit a down payment or hand money deposit, or even redirecting the seller’s proceeds from closing. If my office makes a mistake, we carry insurance for wire fraud, but if you make the mistake yourself, you can be on the hook with no insurance to cover your loss.
You can reduce the risks by ensuring you use a separate secure password for each email account and bank account. Check email correspondence from anyone who tells you where to deposit money. Call on a number you had for the landlord, tenant, seller or settlement company before you received the e-mail to change accounts. Read all e-mail account addresses carefully. I hover over the address, and if it is long and confusing, I err on the side of not sending the money as requested. Scammers can set up fake accounts, with almost identical addresses to the person you think you are talking with. If you do not notice, you may pay money into the criminal’s bank account instead.
If you are ever unsure about making a payment, check with your real estate attorney. Picking up the phone and doing some things the old-fashioned way can help keep your money safe.