First-time homebuyers, often overwhelmed by the complexity of the sale and closing process, have yet another concern to keep in mind.
People buying their first homes are nearly three times more likely to become victims of real estate fraud than experienced buyers and sellers, a new survey shows.
Real estate fraud has soared in less than a decade from $9 million to $446 million in losses reported to the FBI Internet Crime Complaint Center, according to CertifID, a wire fraud protection firm based in Austin, Texas.
CertifID's third annual State of Wire Fraud Report is based on an online survey of 1,500 people in the U.S. who bought or sold a property in the past three years.
The company said real estate professionals should take extra care to educate first-time buyers about the risks of fraud. It blamed the rise in real estate cybercrime on publicly available data and the complex sale and closing process involving multiple properties.
In addition, thieves are eyeing the industry because of the sums of money involved as home prices increase, the company said.
Impersonation of a real estate agent was the most common type of fraud, with 58% of respondents reporting suspicious communications from people claiming to be agents, according to the survey. Impersonating the title or settlement agent was the next most common at 41%.
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"This data provides meaningful insight into the true impact of these crimes targeting American home buyers and sellers, who are already under stress in what is the most challenging housing market in recent history," said Thomas Cronkright II, co-founder and executive chairman of CertifID, in a statement. "We hope this report sparks new and continued action for all real estate and title professionals to lead their communities in the change needed to protect consumers.”
Other findings from the report include that 52% of respondents were “not aware” or only “somewhat aware” of the risks of wire fraud at the start of a transaction. What's more, only 47% said they were informed about the risks by their real estate professionals.
Last month, CertifID said it was expanding consumer protections in the real estate field with the acquisition of a digital money transfer platform Paymints.io of Hoboken, New Jersey.
CertifID's existing business model verifies identities and wire instructions and checks for fraud before consumers, title companies, real estate brokerages and law firms wire funds during transactions. It also provides wire fraud insurance and funds recovery services.
Paymints.io allows customers to directly send and receive money rather than use wire transfers. It secures funds from the time buyers submit earnest money until sellers' mortgages are paid off, extending the security of transactions from beginning to end.