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Buying or Selling Soon? This is a MUST READ Story!!!

Mindy JensenPro Member

BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes

I hate this article.

It's well-written, but the story makes me sick.

If you are buying or selling soon - or ever - read this article from The BiggerPockets Blog. You can't afford not to.

[email protected]Podcast Guest on Show #261

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Scott F.

Rental Property Investor · Grand Rapids, MI · Member since 2017 · 113 posts · 91 votes

Cashier's checks are easy to fake!

From now on I'm just mailing cash via USPS, those guys never seem to lose any bills or junk mail addressed to me!

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Scott F.
Rental Property Investor · Grand Rapids, MI · Member since 2017 · 113 posts · 91 votes
9y
@Mindy Jensen
I just took a CE class with two attorneys that own a large Title Company in my town. They actually discussed the $800,000.00 scam and how it happened. One of the principals had their email account hacked but they never really did anything about it.
The crooks monitored the back and forth emails that were leading up to the close, sent fake wire instructions, the money was wired and vanished!
The only reason it was caught was someone happened to notice a small difference in the email address (if I remember correctly) but by that time it was too late.
Once the funds are wired they vanish and are NOT retrievable.
Geesh!
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Mindy JensenPro Member
OP
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
9y
Thanks @Scott F.
I use wire transfers in my investing, too. The bank I use will allow me to send the instructions via email, but then will call to confirm amounts and account numbers over the phone using the number I gave them during account set up - not through email.
This is just awful. Secure passwords - changed frequently - are the way to go. It will only get more necessary as the crooks get more savvy.
[email protected]Podcast Guest on Show #261
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Jim Shepard
Investor · Edwardsville, IL · Member since 2015 · 432 posts · 481 votes
9y
This happened to my friends 3 years back and became a total nightmare. I'll call them Bill & Sue. Bill had just retired from his sales job of 30 years. Sue retired from her nurses position of 25 years. Sue wanted to move to Chicago so they could be closer to their grandkids. So they sold their house in St. Louis for $350,000 and put money down on a house in Chicago. Sounds good so far. I should also mention that Bill ordered a new Corvette as his retirement gift to himself. They had the movers come pickup their belongings and closed on their house. They were to close on their Chicago house the next day so they headed up to their condo in Chicago. They went to closing and the nightmare began...their money wasn't there! They wired the money to the instructions that were given to them by their Chicago title company. Someone had hacked into his email account and poof $350 large is gone into thin air. They ended up moving into their condo they had planned to sell and the shiny new Corvette got cancelled. They hired an attorney and he sued the title company and their bank on their behalf. How do you think their retirement is going so far? 3 long years later and they settled for $290,000 split between the title company and the bank. They sold their condo and bought a new Corvette so the story has a semi happy endind. This type of scam is rampant in Florida as well. When we bought our second home in Florida this last year, I called the title company and verified the account numbers before wiring the money even though it was emailed to to me by an encrypted email. Wish I could take CASH to closings instead of wiring!
1 Reply
Kyle Doney
Flipper/Rehabber · Golden, CO · Member since 2013 · 590 posts · 319 votes
9y
So how can this not be tracked and stopped by authorities? There is an account number and I'm sure plenty of ways to figure out where the account was opened and by who. When they figure that out, they could get video footage if opened in a branch. If not opened in a branch, couldn't the money be followed after it left the phony account?
Its hard to believe this type of thing can't be tracked and the crooks wouldn't be brought to justice.
3 Reply
John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
It happens every day. If the scammers had someone in the states open an account, and then the wiring instructions included a swift number, the money probably ends up in Nigeria within a matter of minutes. The odds are greatly in favor of the crooks that they will never be brought to just..and the money is GONE BABY GONE. Even if someone steals the money, and they go to jail, the money is often not recovered. Heck--look at bernie MADE-OFF---he is in jail...but many of his investors lost hundreds of millions of dollars even though they busted him. His son also committed suicide, and I just read another victim of him just committed suicide. I had some scammer try to get me for about 15K on a M16--but I asked questions, talked to the FEDS, and found out it was a scam before I sent them money. They still contact me with bogus deals, more bogus email accounts, trying to rip me and other well known NFA dealers off for thousands at a time.
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John Thedford
Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
9y
Mindy: this is why I use one local title company I have a long standing relationship with. Even then, I call her directly and put her on the phone with my banker before sending out anything. I sent out 100K this morning, and she sent an email verifying receipt of funds. Things get pretty scary playing with that much money via wiring, etc. Most criminals like the internet because they can remain faceless.
1 Reply
Alan Grobmeier
Rental Property Investor · Phoenix, AZ · Member since 2013 · 919 posts · 911 votes
9y
I 'get' that it is easier to wire the funds, but has anyone thought of a certified check or money order written to the title company instead? I still do business in that manner. IMHO it's safer. ;-)
2 Reply
Mindy JensenPro Member
OP
BiggerPockets Money Podcast Host · Longmont, CO · Member since 2014 · 7k+ posts · 10k+ votes
9y
@Alan Grobmeier , at my last closing, I almost screwed it up (I was the agent representing the buyer) when I told them just to bring a check to closing.
The title company called me the day before closing to tell me that my funds had not arrived. I frantically called the bank who I have worked with multiple times and he assured me the wire was sent and received. A call back to title confirmed. She was looking for the down payment funds from the buyer.
"Oh, we're bringing a cashier's check to closing."
"No, we don't accept them over $50k. There has been rampant fraud in cashier's checks too."
The buyer happened to have the same bank as the title company, so the transfer went through in the am. I'd prefer some other way, too.
[email protected]Podcast Guest on Show #261
1 Reply
Meghan McCallum
Specialist · CHICAGO · Member since 2015 · 680 posts · 650 votes
9y
Nightmare!
What a crazy nightmare.
0 Reply
Scott F.
Rental Property Investor · Grand Rapids, MI · Member since 2017 · 113 posts · 91 votes
9y
Cashier's checks are easy to fake!
From now on I'm just mailing cash via USPS, those guys never seem to lose any bills or junk mail addressed to me!
4 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Alan Grobmeier NOPE cashiers checks are forged all the time.. this led title companies to ONLY accept wires.
@Mindy Jensen we just caught one of these I was sending a small sum 15k for a rehab draw and my staff noticed the e mail request did not look right called my vendor and sure enough she had been hacked.
what I personally do is send my wires instructions in my closing package.. written form then I ask title to call me and give me or my staff the numbers verbally to double check. we basically do not e mail wire instructions anymore.
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3 Reply
Kendrick Salazar
Cranston, RI · Member since 2017 · 64 posts · 22 votes
9y
Wow what a story its sad that good honest people just trying to make a better living for their family's and themselves even have to deal with such unfortunate things Im glad they were able to come up and out of it 800,000 dollars is no easy debt to get out of for sure.
0 Reply
Steve Kontos
Investor · Great Neck, NY · Member since 2016 · 679 posts · 467 votes
9y
@Mindy Jensen
Great article, thank you!
0 Reply
Brent M.
Investor · Hayward, CA · Member since 2015 · 83 posts · 72 votes
9y
I chase these scammers down for a living. They're smart, savvy and always international. I have a lot of tools to go after American crooks. I just recently got felony charges on one of their mules in CA. He took 20% of what they were stealing and forwarded the rest overseas. Nigerians, Jamaicans, Russians- even the FBI won't look at them till its over $1,000,000 taken. Once your money is wired, it'll be sent overseas in minutes. I've caught one persons $, only one, in time before it disappeared. The odds aren't on your side. The best defense is a good offence. Encrypted emails, verbal confirmation, triple check your instructions and where they're from. Once our current debt bomb explodes, we might go back to cash at closings like Argentina does.....
2 Reply
Andrew SyriosPro Member
Moderator
Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
9y
Geez, that is unbelievable! I think I'm going to start calling to confirm wire instructions from now on.
Podcast Guest on Show #121
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John Miller
Houston , TX · Member since 2017 · 31 posts · 11 votes
9y
the best approach to this would be end-to-end encryption so that emails in travel are useless until they reach an endpoint that has the encryption key. always ensure your network is secure. you can outsource that task if you are not familiar with network security.
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Rodney Sums
Laveen, AZ · Member since 2016 · 584 posts · 528 votes
9y
@Mindy Jensen Thank you for the article, I will continue doing it the olden schoolen way with the cashiers check, or we can all meet at the bank and exchange paper money like when buying a car from a private buyer.
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Kalimah Jenkins
Investor · Marietta, GA · Member since 2014 · 226 posts · 97 votes
9y
Mindy Jensen Interesting article. I did a closing recently where the attorney's office sent an email regarding its wiring instructions. In essence, it stated that NO WIRES were to be sent until all numbers were verified via telephone. I thought it odd at the time. Now I see why they were being so careful. Thanks for the info.
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Tony WooldridgePro Member
Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes
9y
@Mindy Jensen not to sound like a broken record but thanks for steering myself and fellow colleagues to this article. It truly is sad to think about the mindset of criminals and the ways they dream up to take advantage of people and situations. You can never be to safe! I am just glad that all involved were able to recover and still maintain a successful and trusting relationship moving forward. RE is all about establishing lasting relationships! Thanks again Mindy and here is to wishing you a successful 2017 in your REI ventures. Thanks for allowing me to share.
1 Reply
Tony WooldridgePro Member
Rental Property Investor · Walla Walla, WA · Member since 2016 · 480 posts · 346 votes
9y
@Jay Hinrichs thanks for sharing your insight as well. Are there any other instances or nuggets that you can share based off of experiences that you are at liberty to share for the greater good? Thanks ahead of time.
0 Reply
Brent Langlois
Investor · Fort Pierce, FL · Member since 2016 · 47 posts · 16 votes
9y
You would think title companies would be more vigilant with this stuff. I've used two different title companies and both sent wire instructions via email. Luckily I have a great agent who tipped me to call and confirm acct numbers.
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Tom Huang
Rental Property Investor · New York, NY · Member since 2017 · 11 posts · 3 votes
9y
Great articles, and informative. These are the little things that people usually miss or don't think twice before because they are in the happy mood for the closing of their deal!
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
9y
@Brent Langlois all title companies are different.
there are a few in PA were I was selling some prop.. and they would not accept wire instructions unless I was physically in there office dictating them in person.
I said well that's kind of tough being I am in Orygun... so they fed ex a check.
I don't like checks from small non national companies there was a title co. in Texas that went busto and many folks lost tons of their proceeds as the money went missing and company closed its doors.. so I 99% of the time want my funds wired. but with whats going on I can't beotch too much if they refuse to wire.
Podcast Guest on Show #222
JLH Capital Partners51 Review
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0 Reply
Jesse Fragale
Investor · Toronto, Ontario · Member since 2016 · 50 posts · 15 votes
9y
Unreal :o
Very informative
0 Reply
Chris MasonPro Member
Moderator
Lender · CA · Member since 2015 · 9k+ posts · 10k+ votes
9y
Yup, wire fraud is on the rise.
The system described in that article makes sense for the volume of deals it appears they are doing.
A one-off method to be secure is actually to skip technology and go old school:
- Physically walk into the title company (make your earnest money deposit while you're at it, this can generally be a personal check because there is time to wait for it to clear), have them physically hand you your wire instructions for your particular transaction.
- Put the wire instructions somewhere safe.
- Always & only refer back to that.
For that not to work, you'd have to imagine the bad guys not just spoofing an email, but spoofing an entire title company.
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