Real Estate Administrators Warn Of Online Scam
The real-estate industry is not immune to online scammers. Agents in Park City recently got a visit from Utah’s top real-estate administrator, who warned about a chronic problem and what they can do about it.
Jonathan Stewart, head of the Utah Division of Real Estate, told KPCW that he was visiting Park City as part of what they call the Spring Caravan.
“For probably 30 plus years the division has sent members around the state,” Stewart explained. “We usually go to nine different locations. This is our way of—I guess a couple of things; we like to meet face to face with our licenses to educate them. To update them on changes with statutes and rules. We like to update them on things that we're seeing in the industry, as far as problems. Also it gives them the chance to meet face to face with us to give us feedback, to ask us questions, so that we can improve our regulation of the industry.”
Stewart said a major national problem comes from hackers who steal loan proceeds or wire transfers from real-estate sales.
“It sounds like something out of a James Bond movie, but it can happen to anybody,” Stewart said. “We've seen an increase just in Utah alone. I've heard recently from the FBI that in 2017 Utah consumers lost $2,000,000 in real estate related transactions in these email scans and in 2018 it increased to 20,000,000. Around the nation it’s somewhere around 1.6 billion lost in business email scams.”
He said that a scam can happen to anyone, even those involved with the high-value real estate of Park City.
“I mean there are a few ways this happens, but the initial transaction starts with a hacker who gain access to either a real estate agent email account, a title, an escrow officers email account, or a lenders email account,” Stewart continued. “What they will do is they will just monitor emails between a buyer or a seller and then this licensee. Then when it's a couple of days prior to settlement of that transaction the scammer will send a fake email to the buyer changing the wiring instructions of where their down payment should go. If this buyer believes the email and send this money more often than not that money is gone. It's usually wired outside of the country. The FBI has had very limited success recovering any of these funds.”
Stewart added there have been occasions when a buyer wired the full amount of the sale.
He said that, fortunately, the Utah Association of Realtors have put out a Wire Fraud Alert Disclosure Notice, and they urge their licensees to share it with their clients. The notice tells how to avoid fraud and what to watch for.
He said during his visit to Park City, he heard about a buyer who dodged a bullet.
“A client did share this wire fraud alert disclosure from the Utah Association of Realtors and two days before settlement—she was buying an $800,000 property and wiring $100,000 down payment, Stewart explained. “Two days before settlement received an email telling her that the wiring instructions had been changed. Because she had received this disclosure the first thing she did was pick up the phone and call the title company. They quickly discovered that it was a fraudulent email and they were able to avert what could have been a disaster.”
One important piece of advice from Stewart was—don’t trust your email.
“Always pick up the phone and talk to your real estate agent, talk to the title, the escrow officer, talk to your lender,” Stewart said. “Don't trust anything in an email. Especially if it's one or two days before your transaction closes and something important is changing. Wiring instructions typically do not change a day or two before you wire funds.”
He said utilize strong passwords, update them frequently and always be vigilant.
“Always communicate with your client so that they know what's going on and what to expect, Stewart continued. “Always alerting your clients so that they know if they received any communication that seems even slightly suspicious, they should pick up the phone. I should clarify they should pick up the phone and call a known phone number. Never call a phone number in the email, always call a phone number that you already know. Somebody that you can communicate with to verify the information.”
Stewart said he has eight investigators in his office to deal with complaints on real-estate transactions, plus two for mortgage issues and one on appraisals.