As you prepare to close on the purchase of your new home, you receive an email about the down payment. The email instructions appear to come from your real estate agent and include where to deposit your down payment. You transfer the funds only to learn that the account is in no way associated with your lender and you have officially been scammed. Now what? Let's look at how you can avoid getting scammed when buying a home.
When buying a home, you want make sure you sign all of the necessary paperwork and pay the down payment as scheduled. As a first-time home buyer, this process can be overwhelming. A down payment is probably the biggest payment you've ever made, and you want to make sure it lands in the correct account.
According to the Consumer Financial Protection Bureau, "...reports of [phishing scams] have risen 1,100 percent between 2015 and 2017, and in 2017 alone, there was an estimated loss of nearly $1 billion in real estate transaction costs."
Scammers can compromise your real estate agent's email, get information on upcoming closings, pose as the agent, send emails to you, and divert your down payment into a fraudulent account. These emails can easily be mistaken as coming from your agent or legal representative. To avoid paying a scammer, consider the following tips:
- Avoid discussing closing details or funds through email. Instead, focus on phone and in-person.
- Gather contact information from your lender and real estate agent at the beginning of your relationship (ex. email address, phone numbers) to avoid replying to a scammer email.
- Consider utilizing a mortgage closing checklist .
- Only transfer funds after you've confirmed account information with your lender, real estate agent, and/or financial representative.
- Avoid using phone numbers and links contained in an email.
- Do NOT send financial information through email.
- When receiving phone calls, be cautious about sharing or verifying financial information. Best to tell them you'll call them back, then call the phone number provided by your agent or financial representative.
If you discover you've been part of a phishing scam, do the following:
- Contact the wire transfer agency or bank and ask for a wire recall. By doing this immediately, you'll increase your chances of recovering the funds.
- Contact the FBI’s Internet Crime Complaint Center and file a complaint.
Falling for scams is becoming more and more common, but you can stay safe by following the tips in this article. Avoid losing thousands of dollars by haphazardly replying to an email and providing financial information. Gather contact information from your real estate agent, lender, legal representative, etc., early on to avoid collaborating with a scammer. When in doubt about who has contacted you via email or a call, pause and contact your agent or lender through the contact information they originally provided. Remember, just because an email came from your real estate agent's email address, that doesn't mean a scammer hasn't hacked their account and is trying to intercept your down payment. If you do find yourself in the middle of a scam, contact your financial institute immediately then file a complaint with the FBI.
For more information on the financial side of home buying, please visit out financial guide: