In recent years, a growing number of shocking hacks into Realtors’ and closing agents’ email accounts have led to changes in how sellers and buyers should send wiring instructions for their real estate deals in South Florida. Here’s what’s going on:
• Hundreds of thousands of dollars in proceeds have vanished the moment the closing agent hit send. That’s because the instructions they were sent by email, ostensibly by the seller, were in fact fraudulent. According to law enforcement, savvy hackers can target Realtors and real estate attorneys, and follow the train of email conversations long enough to get the names of the buyers and sellers and amount of the deal. Then they send phony instructions on the bank the proceeds should be sent to—usually offshore accounts that can’t be traced. While this has thankfully never happened to me, I have heard horrifying stories from other real estate attorneys who wired hundreds of thousands of dollars their sellers never received.
• Similar problems can happen on the front end, when a buyer asks in an email where they should wire their hefty down payment or funds for a cash deal. If that email is read by hackers, they can send a reply with wiring instructions to their own offshore accounts. This problem has so concerned the industry that last year the Federal Trade Commission issued a joint warning with the National Association of Realtors about these potential threats to settlement funds.
What can buyers and sellers do? If buyers receive email instructions about where to wire their money, they should take a few moments to call the escrow agent to confirm they have the proper information. (Most closing agents no longer take bank checks, and none take personal checks, so wiring is typically the only way to deposit money.) Sellers can avoid this problem by bringing their wiring instructions with them to the closing rather than sending them by email at all. The closing agent will likely ask the seller to sign the instructions to be sure they are confirmed.