Think twice before wiring funds to the title company

By
Real Estate Agent with Keller Williams First Coast Realty - The Marro Team

While I am a licensed Realtor with Keller Williams, I have put that hat into moth balls and instead spend my time as a professional home stager. My husband quit his job last year to take over my real estate team. Last week we lost a deal that should have been easy cheesy. The deal was all cash on an investment property for a buyer that we found through FSBO calls. We actually hadn't even put the property on MLS when we negotiated the deal. 

Everything about the Jacksonville Investment Property deal was going well... until.... 

This was one investor selling to another investor. The seller owned the house outright, except for needing to get her ex-husband to sign a quit claim deed (which was already settled in the divorce paperwork). The buyer was all cash and buying as-is. No inspection. No appraisal. We had a 2 week close, which had been pushed back by a few days waiting on the husband's signature. 

The closing was set for Friday.... 

The buyer contact my husband, who had been managing this transaction, and asked for the wiring instructions. He advised, as we always do, that they needed to contact the title company directly. 

Thursday, they received an email and wired the money. Unfortunately, Friday morning, the day of closing, the title company sent them an email with wiring info. The buyer, confused, as they had already wired the money, contacted their agent and the title company. 

This is when things get really bad.... 

Jacksonville home staging testimonial

As it turns out, the first email they received was a scam. Wire fraud prior to real estate closings has been in the news a lot lately, but you just never expect it to happen to one of your transactions. In this case, the buyer lost close to $100,000. The seller lost the sale of an investment property and now has to start from scratch. The buyer is threatening to sue the title company and both brokerages involved. 

How could this situation have been avoided? 

There are some simple things that could have happened to protect the buyer's funds. 

Always contact the title company directly: When my husband was asked to send the wiring instructions, he advised the buyer to contact the title company directly. This is also what we told the seller as the money would be wired directly to them. It's not that we don't have access to this information, it is that information regarding the processing and access of funds should ALWAYS come from the title company.

 

Verify that the phone number and website listed on the wiring instructions matches the information that you have been previously given. In this case, the email was similar, but not the same as the title company's. The differences were obvious if the buyer had looked. It wasn't a simple letter or character off. It was the entire @titlecompanyname.com that was wrong. EX: susie@abctitlecompany.com was the real one, but susie@abctitlecompanyofamerica.com was used. 

Call and confirm with the title company contact that you've been communicating with that the information is accurate, then let them know immediately before wiring and immediately afterwards, then confirm that the wire was received. 

An expensive lesson... 

This is an expensive lesson that the buyers are learning. Diligence is the responsibility of all parties. I personally cannot imagine losing $100,000 through fraud. The FBI has been contacted, but it seems unlikely that the money will be recovered. 

This type of fraud is not covered under the FDIC and won't be refunded by the bank. No one broke into the account to steal the money, the seller ACTIVELY DIRECTED the bank to send the money to this account.  

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 Author Bio: Melissa Marro, Home Staging Industry leader, Realtor, and entrepreneur offers a unique perspective on New Home Construction, Resale Residential Real Estate, and Home Staging

For more information on buying or selling in the Fleming Island, Orange Park, or Jacksonville, area, visit StageListSellNEFL.com or call Melissa Marro (marro.melissa at gmail.com), Keller Williams First Coast Realty, for more information (904-466-2093).

 

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Rainmaker
109,693
Julie Larson Realtor® Sarasota FL 941-882-0322
PalmerHouse Properties Florida - 941-882-0322 | Serving Sarasota, Manatee & Charlotte Counties - Sarasota, FL
When you're thinking of moving...ThinkSuncoast.com

So sorry to hear about this happening again! It happened in Sarasota last year. I don't know how these criminals can live with themselves.   

Mar 14, 2017 08:53 PM #1
Rainmaker
107,189
Mary Jo Quay
Remax Advisors - Minneapolis, MN

A year ago I received an email from a buyer overseas who wanted to make an offer on an historical 4 plex.  I explained that I'd need a bank statement showing proof of funds, and know who was representing him here as he hadn't seen the property.  He provided a statement that I had no way of checking if it was valid, and had no local representation. The offer was 10% less than asking price, and $30,000 in earnest money to be put into a title company.  This seemed odd, and I asked an Asian agent to contact him. 

My broker explained that scam was to write an offer with an inspection period, deposit a lump with a title company, cancel based on inspection, demand that the earnest money be returned immediately.  Because there is up to a 14 hour time difference, they were able to cancel the wire, but the it wouldn't show as canceled in the title company's account when they demanded that the money be returned.  Then that account would evaporate, and the title company would be stuck with the loss. 

Mar 14, 2017 09:04 PM #2
Rainmaker
624,232
Thomas J. Nelson, Realtor,CRS,e-Pro
Big Block Realty 858.232.8722 - La Jolla, CA
Co-Host of Mail-Right's: Real Estate Agent Podcast

Yep, it's taken very seriously out here in San Diuego, CA. Our Title and escrow send this warning to all clients:

BEWARE OF CYBER-FRAUD – Before wiring any funds, call the intended recipient at a number you know is valid to confirm the instructions – and be very wary of any request to change wire instructions you already received. 

 This email may be confidential. If you are not the intended recipient, please notify us immediately and delete this copy from your system.

Mar 14, 2017 09:31 PM #3
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1,060,057
Joe Pryor
The Virtual Real Estate Team - Oklahoma City, OK
REALTOR® - Oklahoma Investment Properties

When we close out of state deals that require wiring, the email goes out with the CD that they get three days before closing. The email contains with it wiring instructions so we have never had a problem.

Mar 15, 2017 08:26 AM #4
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John Meussner
Mason-McDuffie Mortgage, Conventional Loans, Jumbo Loans, FHA, 203(k), USDA, VA, - Costa Mesa, CA
#MortgageMadeEasy Costa Mesa, CA 484-680-4852

Ouch, an expensive lesson indeed!  Hope that all of the damaged parties make out OK.  And I hope whoever is the theif gets what is coming to them.

Mar 16, 2017 04:03 PM #5
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Melissa Marro

Jacksonville Real Estate and Home Staging
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