Click, wire, vanish: The face of today’s real estate fraud

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Published Date 1/3/2025

Ever heard the old adage: “There’s a sucker born every minute”--? While it can be used in many contexts, the gist is that it’s easy to be scammed if you’re not watching. Unfortunately, real estate fraud has become one of the fastest-growing types of scams in recent years, targeting homebuyers at every stage of the process, according to Realtor.com’s Margaret Heidenry.

“The risks range from simple wire fraud to more elaborate schemes that can result in devastating financial losses,” she reports. She goes on to describe how, in one such scam, a West Virginia couple lost a staggering $255,000 in a sophisticated scheme where the scammers hijacked email communications between the buyers and their real estate agent, then convinced them to wire the down payment to a fraudulent account.

The money? Gone. And the criminals went unpunished. Heidenry warns, however, that this homebuyer’s story is not an isolated one and offers a number of red flags to watch out for to keep your money safe.

In the digital age, wire fraud is among real estate’s most pervasive—and costly—scams, says Heidenry. “This ruse often happens during mortgage transactions, where fraudsters intercept emails containing wiring instructions, manipulate the details, and trick victims into transferring money to accounts they control. The consequences can be financially devastating, as funds often disappear into fake accounts, leaving victims with no recourse to recover their funds.”

Think about it. It’s frightening that anyone with your bank account number and routing number can request a payment. So be wary if you receive an email from someone who appears to be your mortgage broker with revised wiring instructions, especially one that urges you to act quickly. Any change in wiring instructions is a huge red flag, so always confirm details with the office, using a trusted phone number.

Another scam relates to earnest money — the good faith deposit that signals your intent to buy a home. Scammers may misuse these funds as operating capital or funnel them directly into their own pockets rather than depositing them into a secure escrow account. This most often occurs with a new home builder, who uses the deposit as operating capital, but there are also unscrupulous types posing as real estate agents as well, ready to take the money and run. Any reputable agent will offer their state real estate license number so that you can plug it into the real estate department’s database to check them out. Or, you can search by name as well.

If there is an issue with a builder or they go out of business, you are an unsecured creditor and will receive pennies on the dollar rather than your full escrow back, if that, says Heidenry. “A red flag? Being asked to pay earnest money directly to a seller or a questionable account rather than a verified escrow or trust account. Always ensure your deposit is handled by a reputable third party, such as a title company or escrow agent, who will secure the funds properly.”

Another scam is fake listings. A number of online platforms have become rife with fraudulent real estate listings, with scammers copying legitimate listings from trusted sites and posting them at suspiciously low prices to lure victims. Heidenry quotes Los Angeles-based Realtor Cara Ameer: “Buyers and renters should be careful when looking at properties offered by private owners online. Craigslist is a website that many scammers have used to copy/paste listings from popular real estate websites and falsely advertise them for sale or lease.” She suggests researching the property’s address across multiple real estate sites as a precaution, as they are typically syndicated across several hundred websites. “If the information differs from what you are seeing, that tells you all you need to know,” she says, adding that if the information seems incomplete, the price too good to be true, and photos might be altered or copied from a legitimate listing, those are all red flags.

Another warning? Be cautious when someone asks for a deposit before signing a legitimate contract. “They may want to meet and collect a deposit to take the property off the market, whether it is listed for rent or sale,” says Ameer. “That is a huge red flag, and you should never give money to anyone upfront.”

Vacant properties are rife for fraud, says Heidenry, especially in states like Florida, where out-of-state sellers are common. Palm Beach-based agent Jeff Lichtenstein recounts a scam involving a property listing where the seller’s identity was hijacked. His buyer was eager to buy the property, but Lichtenstein put on the brakes. “When talking with the ‘seller’ after the lot went under contract, something in the conversation didn’t seem right,” Lichtenstein explains. “We contacted our title company and started to do a more detailed search. We then looked up the real seller, and sure enough it was a scam.”

Lichtenstein now advises buyers to always verify the seller’s identity before authorizing any transactions. Scammers may use fraudulent seller identities to divert funds or disappear entirely, leaving homebuyers with nothing. And also be wary if the seller is unwilling or unable to provide proof of ownership or if communication feels off, such as missing contact information or vague responses. Being pressed for a quick closing without sufficient documentation is a sign something is amiss.

Realtor, TBWS

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All information furnished has been forwarded to you and is provided by thetbwsgroup only for informational purposes. Forecasting shall be considered as events which may be expected but not guaranteed. Neither the forwarding party and/or company nor thetbwsgroup assume any responsibility to any person who relies on information or forecasting contained in this report and disclaims all liability in respect to decisions or actions, or lack thereof based on any or all of the contents of this report.

Darren Orshoff is a Marketing and Real Estate professional, licensed Realtor with the California Department of Real Estate DRE#01803671 with WSR Real Estate DRE#01977642.  Darren is also a Certified Mortgage Planner, A Certified Financial Literacy Coach, A Dave Ramsey Trained Financial Coach, A Certified Mortgage Advisor, and while Darren is licensed by the NMLS, he is not originating loans but refers lending transactions to Golden Empire Mortgage, Inc. ("GEM") [NMLS ID No. 2427] licensed by the Department of Financial Protection and Innovation pursuant to the California Residential Mortgage Lending Act, for which he represents as the Corporate Marketing Coordinator.

Darren Orshoff

Realtor, Marketing Guru, Sushi Lover, Dad, Ham

License: CalDRE#01803671

The Key To Your Home!™ at WSR

6736 Palm Avenue, Riverside CA

Office: 951-468-8326

Cell: 951-323-2119

Email: darren@darrenorshoff.com

Web: http://sellriverside.com