FTC Real Estate Scam Alerts: Protect Yourself When Selling

Real estate transactions involve large sums of money, time pressure, and a complex web of parties communicating by email. That combination makes them a prime target for fraud. The FBI's Internet Crime Complaint Center consistently ranks real estate wire fraud among the highest-dollar cybercrime categories, and the FTC regularly issues alerts about scams targeting home sellers and buyers. Here's what you need to know to protect yourself.

Wire Fraud: The Biggest Threat

Wire fraud is the most financially devastating scam in real estate. Here's how it works: a criminal monitors email communications between you, your agent, your escrow officer, and your lender. At a critical moment — usually just before closing, when wire instructions are being exchanged — the criminal sends an email that appears to come from your escrow company or agent. The email contains wire instructions directing you to send your funds to the criminal's account instead of the legitimate escrow account.

These emails are sophisticated. They use spoofed email addresses that look nearly identical to the real ones, they reference real details from your transaction, and they create urgency ('wire must be received by 3pm today or your closing will be delayed').

Once the wire is sent, the money is almost always gone. Banks can rarely recover wired funds, and law enforcement recovery rates are low.

The protection: always verify wire instructions by calling your escrow officer directly at a phone number you obtained independently — not a number provided in the email. Never wire money based solely on email instructions, no matter how legitimate they appear.

Title and Deed Fraud

Title fraud involves criminals fraudulently transferring ownership of your property without your knowledge — typically by forging your signature on a deed and recording it with the county. This is more common with vacant land, rental properties, and homes where the owner is elderly or lives out of state.

The FTC and California Department of Real Estate have both issued alerts about this type of fraud, which has increased as property records have become more accessible online.

The protection: sign up for property alert notifications through your county recorder's office. Orange County offers a free Property Alert service that notifies you by email whenever a document is recorded against your property. This won't prevent fraud but gives you early warning to act quickly. Also, purchase an owner's title insurance policy — it protects you if a title defect or fraudulent transfer is discovered after closing.

Fake Buyer Schemes

Fake buyer schemes target sellers directly, often bypassing agents entirely. A 'buyer' contacts you — sometimes through your listing, sometimes cold — expressing strong interest in purchasing your home quickly, often for cash, often above asking price. They may send a cashier's check for the earnest money deposit that appears legitimate.

The scam typically involves the fake buyer sending a check for more than the agreed amount and asking you to wire back the difference. The original check later bounces, leaving you out the wired funds.

Variations include fake buyers who use the showing process to case your home for burglary, and 'investors' who pressure sellers into signing over their deed in exchange for a promise to pay off their mortgage — a scheme that strips equity and leaves sellers homeless.

The protection: work with a licensed real estate agent for all transactions. Never accept personal checks or cashier's checks from unknown parties and wire back the difference. Verify the identity of any buyer claiming to be a cash investor before allowing access to your home.

Phishing and Email Compromise

Beyond wire fraud, real estate transactions are targeted by broader phishing schemes. Criminals send emails impersonating your agent, lender, or escrow officer asking you to click a link, log into a portal, or provide personal information. These links lead to fake websites designed to steal your login credentials or personal data.

The protection: be skeptical of any email asking you to click a link or log into an account during your transaction. When in doubt, call the sender directly at a known number to verify. Use strong, unique passwords for your email account and enable two-factor authentication — your email is the master key to your entire transaction.

What to Do If You Suspect Fraud

If you believe you've been targeted by real estate fraud, act immediately. Contact your bank to attempt to recall a wire transfer — speed is critical, as funds move quickly. File a complaint with the FBI's Internet Crime Complaint Center (IC3.gov) and the FTC (ReportFraud.ftc.gov). Contact the California Department of Real Estate if a licensed agent is involved. And notify your escrow company and agent immediately so they can alert other parties and secure communications.

At Fixed Rate Real Estate, we brief every client on wire fraud prevention at the start of every transaction. We verify wire instructions by phone on every closing. Protecting our clients' money is part of what full-service representation means.