Q: I have heard that scammers can hack into my real estate transaction and intercept my funds in a real estate transaction. How can I protect myself?
A: In most California residential real estate transactions, your real estate agent will be completing a purchase agreement commonly known as the “California Residential Purchase Agreement and Joint Escrow Instructions” (RPA-CA). This document contains a provision regarding the buyer’s deposit(s).
Once a buyer has an accepted purchase agreement and/or counter offer(s) acknowledged and signed by all parties, the contract provision for the deposit will state when and how the buyer will deposit the monies with the escrow company handling the real estate transaction. By default the RPA-CA states that the buyer’s deposit will be made by an electronic fund transfer executed by the third business day after the offer has been accepted unless the parties contractually agree to a different time period. The most common and convenient method of electronic transfer is by wire transfer. There are also alternatives to electronic and wired fund transfers such as cashier’s checks or personal checks (optional boxes can be checked indicating one of these alternatives).
While conducting business electronically is becoming a reality in nearly all parts of our lives, it has also provided new opportunities for criminal activity – which includes hackers and scammers involved in the transfer of funds in real estate sales transactions, including rentals.
Although electronically transferring funds is convenient, use extreme caution. Reports indicate that hackers have been able to intercept escrow and/or real estate agents emailed transfer instructions, obtain account information and, by altering some of the data, redirect the funds to a different account. Also, hackers were able to provide false phone numbers for verifying the wiring or funds transfer instructions.
Protect your deposit and down payment funds by the following steps:
Obtain the phone numbers and account numbers only from the escrow officers, real estate agents, or lenders at the beginning of the transaction.
If you receive wiring instructions by email, pick up the phone and contact the escrow officer, your real estate agent or lender to confirm that the transfer instruction is legitimate – confirm bank routing/account numbers and other codes prior to the transfer of funds. Call the phone number you have on record, not the one listed in the suspect email.
Provide personal information in person or over the phone directly to the escrow officer, lender or real estate agent – do not send personal information such as bank account numbers or social security numbers in emails or texts.
Take steps to secure the system you are using with your email account by creating strong passwords and using secure WiFi.
Change your passwords frequently. If you believe you have received suspicious wire or funds transfer instructions, notify your bank and the other party, your escrow officer, lender and real estate agent.