BAM Key Details:
- According to CertifID’s newly-released 2024 State of Wire Fraud report, one in ten Americans are targets for real estate fraud, and one in 20 suffer losses as a result.
- Americans aged 65 and older are especially vulnerable to real estate fraud for multiple reasons. They’re the group most likely to make all-cash purchases and, statistically, the least likely to be informed of the risks by their real estate agents.
CertifID recently released its 2024 State of Wire Fraud report. And for one in 10 Americans, the findings come as no surprise.
According to the report, at least 10% of Americans are targeted for real estate fraud, and one in 20 (5%) suffer losses as a result of real estate fraud.
More than one factor explains the increase in wire fraud specific to the real estate industry, but these three combined create an ideal environment for fraudsters:
- Advanced technology
- Socioeconomic factors that create pressure to close quickly
- Lack of awareness of—and education on—the risks of real estate fraud
CertifID’s report provides a detailed examination of wire fraud in the real estate industry, highlighting the latest threats, the general lack of consumer awareness, and the consequent rise of real estate fraud, resulting in $446M in annual losses.
#1—Technology is only as helpful as your awareness of its weaknesses
The very technology that makes our lives easier and facilitates smooth real estate transactions is also a tool fraudsters are using to impersonate agents and target consumers who are blissfully unaware of their tactics.
Blissfully, that is, until their money disappears without a trace.
Real estate transactions are notoriously complicated, involving multiple parties (up to 10) and lacking an established and closed system to both verify and protect payments.
Meanwhile, fraudsters have the following in their favor:
- Data on property listings is publicly available (including the list price)
- Real estate transactions involve large amounts of money
- Up to 10 people are involved and discussing the terms of the transaction
Real estate scammers have also become skilled at breaching broker and title agency systems, at which point they can deploy AI-enabled tactics to impersonate real estate professionals through email, text, social media, and phone calls.
Consumers who are unaware of these tactics (and the technology behind them) make easy targets.
#2—Buyers, sellers, and agents are under pressure to close quickly
Scammers are capitalizing on that situation, playing on the fears of buyers who just want the sale to close already so they know they don’t have to start the home search all over again.
Cybercrime rings have taken aim at U.S. real estate transactions at an alarming rate. Consumers and their real estate service providers need to take extra precautions in every transaction, including verifying identity and banking details, to ensure payments are made securely and safely.
#3—Lack of fraud awareness and education is hurting everyone involved
Wire fraud is not a new thing. Yet, according to CertifID’s report, one in two (51%) surveyed consumers admitted they were insufficiently aware of the risks of real estate fraud prior to closing.
That’s roughly equivalent to the level of education provided to buyers and sellers by their agents, title agencies, and attorneys: 60% indicated they received little to no education on the risks of real estate fraud from the industry professionals involved in their transaction.
The lesson here: Never assume your client knows the risks. And be prepared to have this conversation with them before they become a target.
Heightened risk for consumers aged 65 and up
Fifty-one percent of the general public is insufficiently aware of the risk of real estate fraud, but among consumers aged 65 and up, 63% admitted they were either somewhat aware or not at all aware of the risks. And a full three-quarters (75%) indicated they’d received minimal or no education on fraud risks.
Considering this group is also the most likely to make all-cash purchases, the stakes are considerably higher.
So, who should be responsible for educating buyers and sellers about the risks?
More than two-thirds (71%) of consumers say they expect their real estate agent or another professional involved in the transaction to take the initiative and get them up to speed on what scammers are doing and what they can do to protect themselves.
The real estate industry has a lot of work to do when it comes to educating consumers and putting guardrails in place that protect real estate transactions. This report highlights the particularly high risks in real estate transactions which involve multiple parties being impersonated, unsuspecting consumers, large sums of money, and lack of strong protections. It’s imperative that the industry comes together on behalf of the consumer, to step up its effort to fight fraud, and to create a safer customer experience.
Read the full CertifID report for more information.