Beware! FBI Reports $145M in Real Estate Scam Losses

Quick Look:

Rising Fraud: In 2023, the FBI recorded 9,521 real estate scam complaints, totalling losses of over $145 million.
Common Scams: Include wire fraud at closing and fake property listings; vigilance in verification is crucial.
Prevention Tips: Conduct thorough checks, insist on in-person property visits, and use secure payment methods.

In recent years, an unnerving trend has emerged in the real estate sector. According to the FBI’s Internet Crime Complaint Center (IC3), the real estate sector has significantly increased business email compromise (BEC) schemes. In 2023 alone, the IC3 logged a staggering 9,521 complaints related to real estate scams, resulting in losses of over $145 million—a figure that surpasses losses from many other types of cybercrimes, including identity theft and ransomware.

Scammers Attempt $426K Theft in Stamford

Home closing or wire fraud is one of the most common forms of fraud in the real estate domain. For instance, earlier this year, an unsuspecting homebuyer in Stamford, Connecticut, was nearly defrauded of $426,000 due to a spoofed email believed to be from their attorney. It was only through the swift action of IC3’s recovery asset team that the funds were frozen and returned. This example underscores the importance of verifying financial instructions meticulously during the closing process.

Kandi Wood from RE/MAX Big Country in Abilene, Texas, experienced a different type of scam when she encountered a fraudulent property listing. The supposed seller provided no concrete details about the lot and pressed for a quick sale. Wood’s vigilance and subsequent investigation revealed the true owner of the lot, exposing the scammer’s false identity. This incident is a textbook example of why due diligence is crucial in real estate transactions.

Peak Real Estate Season Sees Increased Scams

Darius Kingsley, head of consumer business practices at Chase, points out that the busiest times for buying and selling real estate, particularly from March to June, coincide with a spike in fraudulent activities. Scammers exploit these peak periods, preying on both inexperienced and seasoned market participants. The allure of quick transactions and the high stakes involved make the real estate market a prime target for these deceptive practices.

Tips to Identify and Avoid Real Estate Scams

Real estate scammers employ a range of tactics. These can range from sophisticated wire fraud schemes to simpler rental scams, which are equally damaging. Often, scammers list properties on credible websites. This strategy lures potential tenants. Subsequently, scammers manage to persuade these tenants to bypass secure payment channels. As a result, the latter face direct financial losses.

To counter these scams, Kingsley advises several precautionary measures. Firstly, he recommends conducting an image search of the property. Additionally, he insists on the importance of seeing the property in person. These steps are crucial to verify the property’s legitimacy.

Home warranty and cleaning or lawn service scams also abound, with fraudsters using well-known company names to appear legitimate. Kingsley recommends investigating the validity of such claims and only paying for services after they are rendered.

High Pressure Tactics: A Scam Red Flag

To protect oneself from falling victim to these scams, it is crucial to remain sceptical of deals that seem too good to be true and high-pressure tactics that create a false sense of urgency. Kingsley suggests verifying the legitimacy of service offers, checking for licensing, and using trackable payment methods.

Communication should stay within the parameters of the booking platforms, and any discrepancies, such as spelling errors in emails, should be taken as immediate red flags. Understanding the operational modes of your bank can also prevent falling prey to impersonators.

Action Plan: Responding to Real Estate Scams

Suppose the worst happens, and you find yourself a victim of a real estate scam. In that case, Kingsley recommends several immediate actions: cease all communications with the scammer, document all interactions, and notify your bank and the authorities, including filing a complaint with the FBI’s IC3. Monitoring your financial activities and changing your online passwords can also help mitigate further damage.

As the real estate market continues to attract attention from scammers, awareness and preparedness are your best defences. Realtors and consumers can protect their investments and personal information from sophisticated fraud schemes by understanding the common types of scams and implementing robust security measures. Remember, in the world of real estate, staying informed and vigilant is just as important as finding the perfect home.

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