How to Protect Yourself From Wire Fraud During Closing

How to Protect Yourself From Wire Fraud During Closing

3 min read
Mindy Jensen

Mindy Jensen has been buying and selling homes for more than 20 years. Her preferred method of investing is the “live-in flip”—she buys a house, moves in, makes it beautiful, sells it after two years to take advantage of the Section 121 Capital Gains Exemption, and starts the process all over again. She is currently working on her ninth live-in flip.

Mindy is a licensed real estate agent in Colorado, author of How to Sell Your Home, and the Community Manager for BiggerPockets, where she helps new and experienced investors learn the proper ways to invest in real estate to grow their wealth. She’s also the co-host of the BiggerPockets Money Podcast.

Mindy is passionate about financial independence and wants to help as many people reach this milestone as possible, so they can live their best lives.

As both an agent and an investor, Mindy LOVES real estate. She has taken part in syndications, private lending, and deals involving seller financing. She owns a single family rental, a short-term rental, a mobile home park, a co-working space, and her most recent purchase—a caboose!

Mindy is an alumnus of the School of Hard Knocks and will happily share her experiences with anyone who asks. When you can get her to stop talking about real estate, you can find her on her bike or adventuring in the beautiful mountains of Colorado.

Mindy has been featured on, CNBC’s Make It, 60 Second Docs, as well as podcasts like Money Nerds, The FI Show, Stacking Benjamins, and How to Be Awesome at Your Job.

Mindy is a licensed real estate agent in Colorado.

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Recently, one of our members fell victim to wire fraud. His agent’s email was hacked, and the hacker sent wiring instructions for the closing that included his own wire instructions, allowing him to steal the proceeds from the purchase.

Unfortunately, this is an up-and-coming scam that is sure to snag more victims. A few years ago, cashier’s checks were being forged, resulting in title companies not accepting them over a certain dollar amount — some as low as $1,000.

So how do you safely purchase your home, when you can’t bring a check to closing and don’t want to risk wire fraud?

Use a Reputable Title Company

Your agent will know which title companies are great to work with — and can ask other agents in their office about title companies they’ve never worked with.

Chris Mason, a mortgage lender from Bay Equity Home Loans, suggests visiting the title company in person: “When you go into contract and have to make your earnest money deposit, bring that check to the title company physically in person. Pick up a printed copy of your wire instructions at that point and always refer back to that. So far, I’ve not heard of fraudsters setting up an entire fake title company branch, so if you walk in and it feels like a title company and has a bunch of middle aged women in cubicles typing away and talking away on landline phones, with other couples and babies in strollers hanging out in the front waiting area type place, it’s probably a title company. Your agent will also be able to let you know if they’ve done business with XYZ Title on 5th Street before.

Immediately prior to ordering the wire, you can call the title company and have them recite the routing/account numbers, etc. to you, with that copy of the wire instructions in-hand in front of you. None of the routing/account numbers should have changed.


Related: 4 Types of All-Too-Common Real Estate Scams Making Headlines

Have Wire Instructions Overnighted

If you are purchasing outside of your local area, ask the title company via telephone (not email) to overnight the wire instructions to you.

Jay Hinrichs of Turnkey-Reviews has been investing since before dirt was even invented. He takes extra precautions to prevent fraud:

“My SOPs are as follows…

  1. I always send my wire instructions via FedEx. I have them all printed out for my various companies. When I set up with a new closer, i.e. I am going to do 20 to 50 deals in a year with them, I send them via FedEx my wire instructions.
  2. Once they have them, then verbal conference that they are correct.
  3. I ONLY accept wired funds from closing attorneys. I will NOT accept their company checks. Many of these one-man shops are simply too small, and there are rotten attorneys that pilfer clients’ dough. So I want collectible funds on the spot.”

I Love the ’80s!

Remember fax machines? Remember that awful thermal paper on a roll? I had a machine that didn’t even have a cutting feature. Yikes!

Some lenders and attorneys are reverting back to that fantastic ’80s technological wonder, the fax machine, to share wire instructions with their clients.

Secure Password

When you’re discussing your purchase with your agent, ask them about their email password. No, don’t ask them FOR it, but ask them how they chose it. If they used “the same thing I use for all passwords I have,” then perhaps it’s time to ask them to change it. Ditto if they used “something easy to remember” or “my children’s names.”

Ask them to use a more secure password and to change it frequently. Request that they do not write it down so they can remember it. Instead, suggest they utilize a secure password manager service like LastPass. LastPass is free and stores all the passwords for all your accounts in one place. Now, you just have one master password to remember. And LastPass securely encrypts your data so only YOU can access it.


Telephone Verification

On the day of the wire transfer, pick up the phone and verbally verify the wire instructions with the recipient. Use the phone number you have been using to contact them all along — not a “new” phone number you received through an email.

Related: 10 Glaring Red Flags That Indicate Your “Great Deal” May Be a Costly Scam

In fact, you will be communicating with the title company, your real estate agent, and possibly an attorney multiple times throughout the transaction. Consider saving their contact information in your phone the first time you contact them.

You Can’t Be Too Careful

Check and double check the information for the wire transfer as many times as you need to in order to feel comfortable. Use the phone — which is far more difficult to hack — or better yet, pick up a physical copy of the wire instructions direct from the source (or have them sent to you using a secure overnight delivery service). Consider going into your bank in person to make the wire transfer happen, rather than emailing.

Criminals are getting smarter. Nothing beats in-person transactions, but those aren’t always practical. Double check your instructions on a phone call you initiate using a phone number you’ve used since the beginning of the deal. You just can’t be too careful.

How have you secured your wire transfers or checked the legitimacy of the account numbers you’ve been given?

Please share below.