Published by REALTOR.com | February 6, 2025
Real estate bank wire transfer scams are on the rise, with $446 million in annual losses.
Anew homeowner’s dream turned into a nightmare when a six-figure sum needed to close the real estate transaction went to a scammer instead.
The district attorney in Wichita, KS, is still trying to unravel the scam, which saw a massive amount of money for a home closing end up in the wrong bank—not due to a mistake, but to fraud.
Scams like this are known as wire fraud. It’s a federal crime that involves the use of electronic communication, such as the internet or phone, to steal money.
The National Association of Realtors® explains real estate fraud is one of the most prevalent cybercrimes in the U.S.
Cybercriminals identify a pending sale transaction and then build a profile of the parties. This includes the title company, the real estate agency, and the buyer and seller.
NAR says the cybercriminals will hack into the email account of one or more parties and monitor email traffic. They’ll usually send false wire instructions that divert the deposits, closing costs, and even mortgage payoff funds from the intended lawful recipient.
The origin email is either the legitimate email of someone involved in the transaction whose account has been hacked, or a very similar email with usually one digit off (as what happened in the Kansas incident).
The buyer then unwittingly sends the money into the account of the criminal.
“This is not the first time we have seen this particular fact pattern,” District Attorney Marc Bennett told Realtor.com. “It is certainly not the first time that financial transactions have been impacted by way of a fabricated or altered email. I would say the uptick occurred several years back. Now electronic scams involving large sums of money are a regular occurrence.”
Real estate scams are on the rise
Real estate insiders say this sort of scam is not new. With real estate transactions typically requiring large cash bank transfers, homebuyers are perfect high-value targets for criminals—and the scam is on the rise.
“This type of fraud has become very common,” says Richard Redmond of Redmond Mortgage Capital. “Consumers have to be extremely careful before wiring money to escrow to close a real estate transaction.”
A recently released report by wire fraud protection firm CertifID, says that over 1 in 4 consumers are targets of fraud in a real estate transaction, and nearly 1 in 20 become victims.
Real estate wire fraud has grown 50 times in less than a decade, from $9 million to $446 million in annual losses reported to the FBI Internet Crime Complaint Center.
The growth is due to the complexity of real estate transactions (easier for people to get confused), the public availability of transactional data, and the big sums involved as home prices continue to balloon.
