Protecting Yourself from Wire Fraud in Real Estate Transactions

The Growing Threat of Wire Fraud in Real Estate

Wire fraud has become one of the most serious threats facing homebuyers today. According to the FBI's Internet Crime Complaint Center, real estate wire fraud results in hundreds of millions of dollars in losses each year, with the average victim losing their entire down payment—often their life savings. Sophisticated criminals specifically target real estate transactions because they know large sums of money are changing hands on predictable timelines.

The good news is that wire fraud is almost entirely preventable if you understand how these schemes work and follow proper verification procedures. This guide explains the tactics criminals use, provides detailed steps for protecting your funds, and outlines what to do if you believe you've been targeted.

How Real Estate Wire Fraud Schemes Work

Understanding the criminal playbook helps you recognize and avoid falling victim to these schemes. Here's how most real estate wire fraud operations work:

Step 1: Email Compromise

Criminals typically begin by gaining access to email accounts of people involved in real estate transactions. They may hack the accounts of:

• Real estate agents
• Title company employees
• Mortgage brokers
• Attorneys
• Homebuyers themselves

They use various techniques including phishing emails, malware, password attacks, and exploiting security vulnerabilities. Once inside an email system, they can monitor communications without the account holder knowing.

Step 2: Transaction Monitoring

After gaining access, criminals patiently monitor email traffic to identify upcoming transactions. They gather information about:

• Property addresses and closing dates
• Names of all parties involved
• Expected closing amounts
• Communication styles and signatures
• The timing of when wire instructions are typically sent

This reconnaissance phase can last weeks, allowing criminals to perfectly time their attack.

Step 3: The Fraudulent Wire Instructions

Shortly before closing—often the day of or day before—criminals send fraudulent wire instructions to the buyer. These emails appear to come from the title company or attorney and often:

• Use email addresses that look almost identical to legitimate ones (with subtle differences like an extra letter or different domain)
• Match the formatting, signature, and tone of legitimate communications
• Reference accurate transaction details to appear legitimate
• Create urgency by emphasizing tight closing deadlines
• May claim there's been a "last-minute change" to wire instructions

Step 4: Fund Theft

If the buyer sends money to the fraudulent account, the criminals quickly move the funds through multiple accounts, often overseas, making recovery extremely difficult. Within hours, the money may be completely unrecoverable.

Red Flags and Warning Signs

Learning to recognize warning signs can help you avoid becoming a victim:

Email Red Flags

• Last-minute changes: Any change to wire instructions close to closing is extremely suspicious
• Urgency pressure: Messages insisting you must wire immediately without verification
• Slight email variations: Look carefully at email addresses (john@abctitle.com vs. john@abc-title.com)
• Unusual requests: Being asked to keep the wire transfer confidential
• Different communication style: Messages that don't match previous communications

Wire Instruction Red Flags

• Instructions directing funds to a personal account rather than a business account
• Receiving instructions via email only (legitimate companies use multiple verification methods)
• Account names that don't match the title company name
• Pressure to send a wire transfer instead of other payment methods

How to Protect Yourself from Wire Fraud

Following these verification procedures can protect you from wire fraud:

Always Verify Wire Instructions by Phone

This is the single most important step you can take. Before sending any wire transfer:

1. Call the title company to verify the wire instructions
2. Use a phone number you obtained independently (from your original engagement letter, their website, or a business card you received in person)
3. NEVER use a phone number provided in an email—it could be part of the scam
4. Speak to someone you've worked with before if possible
5. Read back the complete wire instructions to verify every detail

Confirm at the Beginning of Your Transaction

Early in the escrow process, ask your title company about their wire procedures. Legitimate title companies will:

• Provide wire instructions on company letterhead, often in person or via secure portal
• Never change wire instructions during a transaction
• Welcome and encourage phone verification
• Have established security protocols they can explain

Protect Your Own Email Security

• Use strong, unique passwords for email accounts
• Enable two-factor authentication
• Be cautious about clicking links or opening attachments
• Consider using a dedicated email address for your real estate transaction

Be Suspicious of Any Changes

Treat any change to wire instructions as a major red flag. Legitimate title companies rarely if ever change wire instructions during a transaction. If you receive changed instructions:

• Stop and verify before taking any action
• Call the title company using a known phone number
• Alert your real estate agent
• Don't let urgency override verification

What Title Companies Do to Protect You

Reputable title companies take wire fraud seriously and implement various security measures:

• Encrypted email communications
• Secure portals for document and wire instruction delivery
• Regular cybersecurity training for employees
• Verification protocols for outgoing communications
• Clear policies communicated to clients at the start of each transaction

At the Ryan Lipsey Team, we understand the severity of wire fraud threats and maintain strict protocols to protect our clients. We encourage every buyer to verify wire instructions by phone before sending funds.

What to Do If You Suspect Fraud or Have Been Victimized

Time is critical if you've sent money to a fraudulent account. Take these steps immediately:

If You've Wired Money to a Fraudulent Account

1. Contact your bank immediately: They may be able to initiate a wire recall. The sooner you act, the better your chances of recovery
2. Request a SWIFT recall: Ask your bank to send a SWIFT recall notice to the receiving bank
3. Contact the receiving bank: If known, directly contact the bank where the fraudulent account is held
4. File a complaint with the FBI's IC3: Report the crime at ic3.gov as quickly as possible
5. Contact local law enforcement: File a police report
6. Notify your title company and real estate agent: They need to know what happened and may be able to assist
7. Document everything: Save all communications related to the fraud

If You Suspect an Attempted Fraud

• Do not send any money
• Contact your title company and real estate agent immediately using known phone numbers
• Save the suspicious email and any related communications
• Report the attempted fraud to IC3.gov even if you weren't victimized
• Consider whether your email account may have been compromised

Additional Security for Your Transaction

Beyond wire fraud prevention, take these additional steps to protect your real estate transaction:

• Work with established, reputable professionals with verifiable credentials
• Be cautious about sharing personal financial information
• Review all documents carefully before signing
• Consider title insurance to protect against other title-related risks (see our guide What Is Title Insurance?)
• Stay engaged and ask questions throughout the process

For a complete understanding of what to expect during closing, read our guide Understanding the Escrow Process and our breakdown of Closing Costs Explained.

The Bottom Line on Wire Fraud Protection

Wire fraud is a serious threat, but it's almost entirely preventable through proper verification. The simple act of calling your title company to verify wire instructions—using a phone number you obtained independently—can protect you from losing your entire down payment.

Remember: legitimate title companies will never pressure you to skip verification steps. Anyone who discourages you from verifying wire instructions is a red flag, not someone you should trust with your money.

Stay vigilant, verify everything, and don't let the excitement of closing on your new home override your security practices. Your diligence is the best protection against becoming a wire fraud victim.