I received this from one of my title companies. There is a new type of fraud to be alert for. Please read this and share it with others to be alert. This fraud could have possibly cost the title company in the area of $100 grand. Kind of long read, but well worth it.
During the holidays, I received a call from an agent who asked me to listen to her story and try and get a feel for what was going on with a particular transaction. Apparently, an agent had called her and told her she was working with a client who wanted to write a contract on her million dollar listing. She said the client was very qualified, had lots of money, and this had been his dream house. Nothing alerted me to any issues until she proceeded to tell me the client fell in love with the house when he serviced it a while back during his employment with a pest control company. She went on to say the client had made a significant investment overseas, the investment had paid off very well, and the cash was just rolling in. Red flags started coming to mind! Red flags really started flying when it was mentioned there was a slight problem in that the client’s investments are doing so well that Congress is now involved. Knowing this was, to say the least, atypical, I cautioned the agent about going further with this “potential” buyer.
Don’t Be A Victim of Fraud!
She said, “Well, the Buyer’s agent has said that they can close in two weeks, so if I write a contract for a short closing and it doesn’t play out, all I’ve done is held the property off the market for two weeks.” I suggested other possible findings to her story. The Buyer is going to write a significant earnest money check to show they are serious buyers, deposit the check with the title company, then terminate during the option. At that point, the buyer will send wire instructions for the title company to wire the money back. Wire gets sent and a few days later, the buyer’s earnest money check is returned to the title company unpaid. Alternatively, because of this recurring scam, it is common practice for the title company to delay refunding earnest money until the check has cleared, so buyer doesn’t terminate, but when their earnest money check is returned the buyer blames the bank and assures the title company that the check will be made good. After several calls and excuses, the buyer starts blaming the title company, the agents, and the seller for harassment, slander and liable. The property remains encumbered by a contract hindering the further marketing of the property by the seller, even though the buyer has already breached the contract.
I also explained to the listing agent that title companies are being presented with an increased number of counterfeit cashier’s checks, so with such a short closing for this transaction and in view of some of the questionable information being received, I told the agent that if we were the title company on this particular transaction, I would require wire transfers for both the earnest money and funds to close. It was at that point the listing agent said, “That is interesting, when they said they were going to write the contract they wanted to close by cashier’s check.” I then suggested to the agent, if the seller still wants to entertain a contract from this particular buyer, make it a requirement that all funds due from the buyer be deposited by wire transfer. For a transaction that size, if it were legitimate, the buyer should not have a problem with the request. After the agent made the wire transfer a requirement, she never received a contract from that buyer.
Pay attention to the red flags. If you feel it sounds too good to be true, it probably is and you shouldn’t get involved. It is not worth it to tie up the property even for a short period of time. If you do and the contract falls through you could get embroiled in issues with both the client and the property.