The hot home market has created opportunities for homesellers seeking high offers for their houses. Scammers too are taking advantage of the market, as an increase in wire fraud and other losses show. In today’s market, it’s paramount that real estate agents, homebuyers, and homesellers are all aware of scams and schemes they might encounter. Avoiding wire fraud in the coming years may prove more challenging, so we are here with some signs to watch out for.

Incidents of Wire Fraud and Scams Increases

According to the Internet Crime Complaint Center(IC3), fraud is a major problem across all industries. The center received nearly 20,000 business email compromise complaints during 2021, which resulted in adjusted losses of almost $2.4 billion.

This trend is corroborated by other IC3 data that shows the center received almost 850,000 complaints across all forms of computer fraud.

The IC3 data furthermore shows that wire fraud and other schemes are especially problematic within the real estate industry, where scammers often deploy their schemes over email. Real estate-specific numbers registered 11,578 computer fraud complaints across investment and rental property sectors, and still more in the non-investment sector.

Current Housing Market Makes Real Estate Fraud Lucrative

The current housing market is largely responsible for why wire fraud is so prevalent within the real estate industry.

Homebuyers are broadly having trouble getting offers accepted and closing, as the average homebuyer makes at least five bids before any is accepted. Buyers are eager to do what’s necessary to purchase a house, which includes escalation clauses, waivers — and sometimes risky actions that scammers pose as necessary. Buyers simply aren’t as wary and diligent as they otherwise might be, because they’re afraid to lose out on a house.

Furthermore, schemes are more successful when buyers fall for them. The increasing house prices mean that buyers are paying more money for services and purchases, and a significant number of buyers are making cash offers that require especially large transfers. This, scammers are receiving more than they have in the past when they’re successful.

IC3 real estate numbers bear this trend out. The number of successful fraud instances rose 7 percent — but the losses from fraud increased by 64 percent. That’s a nine-fold higher increase in losses than instances.

Scammers Are More Sophisticated

Scammers have also developed email and other schemes that are more sophisticated. No longer is the long-lost relative who’s a prince in Africa the only person emailing (although he still is). Scammers are now using much more plausible stories, and threatening that not complying with what’s posed as routine real estate transactions could cause a purchase to fail.

Everyone in Real Estate Must Combat Fraud

In light of these trends, everyone within the real estate industry should do what they can to combat fraud. Homebuyers and homesellers should educate themselves, real estate agents should explain the typical process and transactions, banks and attorneys should have secure processes in place for making transfers.

Escrow Hub is part of the effort to combat wire fraud within the industry and make homebuying safe. We’re doing what we can, and we have extensive resources through the Peak Corporate Network to help real estate agents and homebuyers with escrow. Contact us to learn more about how we can make processing escrow as easy as possible.