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....
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: email@example.com was the real one, but firstname.lastname@example.org 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.