Email scams target real estate industry, intercept buyer closing money at last minute
Imagine scrimping and saving for a down payment to buy a home when a scammer swoops in and steals all that money right before you're about to get the keys. Even worse, there's little or nothing you can do to get your money back.
This scam is so big, even the FBI is sounding the alarm as more and more people get hit.
"It is devastating," said Special Agent Ethan Via. "We've had people's life savings wiped out. Their dreams of owning a home gone in an instant."
Email hackers lurk online and track real estate transactions in what's known as the Closing-Cost Scam.
When you're in the final stages of buying property, you get email from people you're already dealing with - or so you think - telling you where to send the money to close. But the location is a scammer's account.
Serenity Isom and her young family lost $12,000 to the scam last February. Just days from closing the loan on their first home in South King County, they received email instructions telling them where to send the closing costs. The email even had the right closing date.
"We were finally gonna own our own home and we just fell for this stupid scam," Isom told KOMO News in tears. "I just don't want this to happen to anybody else."
In spring of 2016, Paul Strohmeier and his wife almost lost tens of thousands of dollars as well as the beach house of their dream in Island County. Strohmeier received last-minute instructions from what appeared to be his title company representative, telling him there'd been a change in where to wire the settlement money.
Home buyers say in all the chaos of buying a home, and with so much communication handled through email, it's easy to get caught in the snare.
"Because you're so excited about the transaction and the future- you fail to look at the details," said Strohmeier.
How do scammers do it?
Agent Via says the real estate industry is a major target, because by nature, real estate industry professionals are easily accessible.
"Companies have an internet presence, so it's easy to find out what's the email address of so-and-so at XYZ company? A lot of times they will access an email server through a phishing scheme, where you receive an email with a link attached."
The money lost to this email interception is staggering. According to the FBI, since October of last year $1.1 billion were lost nationwide and $26 million stolen in Washington state alone.
Your chances of getting the money back? Slim to none.
"It was almost me," said Jon Schuerger who purchased a home with his wife and baby in Snohomish County earlier this year.
With more than $42,000 on the line, Schuerger was ready for the ruse when the bogus closing instructions hit his inbox last spring. He contacted his realtor immediately using the email address on his realtor's business card.
"I just forwarded him the email and said, 'Did you send this? And he said, 'Absolutely not!'"
Schuerger's realtor, Scott Sullivan says his client did exactly what everyone should do when it comes to closing on a mortgage loan.
"If he had sent the money, he would have lost the $42,000 and he wouldn't have had the cash to close," Sullivan explained.
Across the country, real estate brokers, agents, title companies, and lenders are educating themselves, tightening their email security and alerting their clients to call before wiring any money. The Washington Realtors has a special page on its website dedicated to the wire-fraud alert.
As Schuerger and his family settle into their new home, they cringe at how one simple email almost turned their dream into a nightmare.
"It's ruining lives. I mean, It's terrible," Schuerger said.
"If you're going to send money, you need to make sure who you're sending that money to," stressed Agent Via. "If this happens to you we need to know about it immediately."
If you discover you've been duped by a closing cost scam, Via says it's imperative that you and your agent alert your bank immediately and call your local FBI office as soon as possible. You should also report it online so the FBI can track the crime.
The FBI says their window for even trying to get your money back is only about 72 hours.