Avoid Being a Victim of Wire Fraud Schemes When Buying a Home

Buying a home is an exciting time. You’ve saved, found the perfect home and planned the move. Now, the closing day for your home is just around the corner.

The American Land Title Association wants to make sure your home purchase doesn’t get derailed by a dangerous threat that could keep you from getting the keys, painting walls and decorating. Criminals have stolen money meant for the purchase of homes through malicious wire fraud schemes targeting consumers across the country.

Criminals begin the wire fraud process way before the attempted theft occurs. Most often, they begin with a common social engineering technique called phishing. This can take the form of email messages, website forms or phone calls to fraudulently obtain private information. Through seemingly harmless communication, criminals trick users into inputting their information or clicking a link that allows hackers to steal login and password information.

Once hackers gain access to an email account, they will monitor messages to find someone in the process of buying a home. Hacks can come from various parties involved in a transaction, including real estate agents, title companies, attorneys or consumers. Criminals then use the stolen information to email fraudulent wire transfer instructions disguised to appear as if they came from a professional you’re working with to purchase a home. If you receive an email with wiring instructions, don’t respond. Email is not a secure way to send financial information. If you take the bait, your money could be gone in minutes.

“Attorneys and title companies have taken many steps to combat this problem, such as putting consumer warnings on websites and communications, securing email communications and sending notices to consumers and real estate agents informing them of the scams,” said Michelle Korsmo, chief executive officer of the American Land Title Association. “But the criminals are smart and constantly alter their tactics to steal information and money.

“Everyone involved in real estate transactions must also be aware of the potential losses as criminals phish for information and stalk home closings, hoping someone makes a mistake. If someone does mess up, it could cost your savings or retirement.”

Here are five tips to protect against wire fraud:

1. Call, don’t email: Confirm all wiring instructions by phone before transferring funds. Use the phone number from the title company’s website or a business card.

2. Be suspicious: It’s not common for title companies to change wiring instructions and payment info.

3. Confirm it all: Ask your bank to confirm not just the account number but also the name on the account before sending a wire.

4. Verify immediately: You should call the title company or real estate agent to validate that the funds were received. Detecting that you sent the money to the wrong account within 24 hours gives you the best chance of recovering your money.

5. Forward, don’t reply: When responding to an email, hit forward instead of reply and then start typing in the person’s email address. Criminals use email address that are very similar to the real one for a company. By typing in email addresses you will make it easier to discover if a fraudster is after you.

This article is courtesy of ALTA. The American Land Title Association helps educate homebuyers about title insurance so they can protect your property rights. Check out www.homeclosing101.org to learn more about title insurance and the home closing process. Attorney Khila Khani is proud to serve as a HOP (Homebuyer Outreach Program) Leader with ALTA. If you have any questions about this topic or need assistance, please contact us.

APPRAISALS…..WHAT ARE THEY GOOD FOR?

REVEALING THE MYTHS OF THE HOME APPRAISAL

You are so excited because someone finally made an offer on your home and you ACCEPTED! You have been working so hard to sell your place and now, since the contract has been fully executed, you can sit back and relax while the Buyer does their thing. WRONG. You can’t just sit back and relax, just yet. You still have an appraisal to worry about. In most cases, Buyers won’t come to you with a wad of cash and say, “I want to buy your house.” A majority of the residential real estate transactions are financed and the bank, well, they are the Buyer’s partner and as such, they want to make sure they get their full value. So what about that appraisal?

Lenders will often require the use of their own, FHA-approved appraiser. What does that mean for the Seller? Basically this….you have absolutely no say in who determines the financial value of your home. The home you have nurtured, put your entire life savings into and built relationships in.
In this article, I include things that Sellers can do to help them get through this process.

1. THE APPRAISER IS NOT A MAGICIAN
If you think the appraiser can determine the value or worth of your home upon entry, think again. They don’t. Once you have a clear understanding of the appraisal process, you can understand the home’s value determination.
Initially, the appraiser will compile a list of comparable listings in the area where your property is located, what we lovingly refer to in the biz as “comps”. Comps can be someone’s dream come true or possibly a nightmare, depending on how they are compiled. You would hope that the homes being used in the comps are homes similar in location, square footage and style that have been sold within the past few months. After pulling the comps, the appraiser will then do a physical inspection of the home to determine its quality and condition. In an effort to make the most accurate assessment, the appraiser will also take in to account other factors that may affect the home’s value. Keep in mind, this won’t be immediate and could take a few days to complete.

2. STAGING, STAGING, STAGING
If there was ever a reason to clean your house, this is a perfect one. The appraiser is not judging you on cleanliness, but clear away the clutter, clean the floor and do what you can to make the home presentable. More than likely, your home won’t be devalued due to a mess, but staging (organizing and decluttering) may help. Be sure the occupants of the home are prepared when the appraiser shows up. This includes the reclusive teen’s room.

3. PREP YOUR PAPERS
Beat the appraiser to the punch and send any information you have about the house to the appraiser BEFORE they arrive. The lender or broker may ask for this information, but be prepared.
Prepare a list of major improvements (with their permits attached), detailed information about the condition and age of the roof, plumbing, air conditioning and major appliances. Appraisers do not appreciate surprises and if they see an improvement that hasn’t been supported by documentation, they will get concerned and the values will not be accurate. Full disclosure will serve you well.

4. DON’T PUT ALL YOUR EGGS IN THE HOME IMPROVEMENT BASKET
Sure, your recently renovated kitchen is fabulous, but don’t take it personally when it doesn’t proportionally increase the home’s market value.
Folks in the biz will tell you that only a fraction of what you may have invested or spent may add value to the house. So, if you are looking for a large ROI from your improvements, don’t be disappointed when the ROI is not as large as you initially expected. This expectation applies doubly for a new pool. Depending on what kind of climate you live in, the pool addition may or may not bring as much value as you had hoped for.

5. DON’T BULLSH*T ON FACTS THAT CAN BE CONFIRMED
Before even listing a property, be sure that you and your real estate agent take a realistic snapshot of what the home actually offers. What are you including in the square footage total. Is it really there or are you just making it up? If you hope that no one will notice that the roof is not actually new, think again. Even if the appraiser doesn’t notice, a subsequent inspection will. Be real about numbers. Puffery will get you nowhere.
In South Florida, it’s even more difficult to fudge the numbers because they exist online at the Property Appraiser’s website and they are typically accurate. If you think nobody will notice, think again. And the appraiser, well he or she will definitely notice and it won’t help you.

At Khani & Auerbach, we are doing our very best to remain at the forefront of the real estate market. We will continue to educate ourselves, our clients and real estate professionals. If you have any questions, please feel free to ask us!