Preventing Dirty Deeds & Wire Fraud

The Threat

Housingwire states that from 2013 to 2022, title insurers recorded 203,181 claims for policies written during that time, and paid out $4.4 billion in claims related to losses and loss expenses. Wire fraud losses for last year alone were 12.5 billion. Human beings have the capacity to make unintended errors and poor decisions. You must safeguard against this as much as possible. I have personally known victims of wire fraud and who bought properties with clouded titles.

Use 3rd party escrow

Do not send money to an individual for a real estate transaction. Make sure you have a true 3rd party escrow agent who can mitigate your risk and ensure you have clear insured title to the property. Do not send loan or transactional related fees to a private lender or private money partner. You are asking them for money, they should not need money from you before they perform their end of the bargain. If they require appraisal (which I don't), pay the appraiser directly and make sure it's a local, reputable appraiser who isn't in their pocket. Do not use their personal attorney as it's a conflict of interest. Suggest a 3rd party attorney or title company if possible.

Attorney States vs Title Company/Escrow Agent States

There are title company states and attorney states. Attorney states are Connecticut, Delaware, Georgia, Massachusetts, South Carolina, and West Virginia. In non-attorney states, title companies or escrow agents handle transactions.

Vetting the agent

If the agent can pass the following criteria, I generally feel okay with my money being in their hands.

1) Robust online presence: Make sure that when you search the company's name online that find a built-out Google page that looks complete with phone numbers, photos, company address, website, and most importantly, reviews. You want to go for companies that have at least 10 recent reviews and take your time to read through negative reviews. It's okay for some negative reviews to be there, but just make sure none of them involve fraud or title insurance claim issues. Ask yourself: Does it appear that this company is regularly used by people in this area based on the reviews and online presence?

2) Physical office: I can't tell you how many times I've been able to weed out potential scammers because they lack the resources to be ale to "fake" a successful brick and mortar office. Often times the addresses listed on these scammer's company profiles lead back to a large office building or unmarked building where many small business names are listed, or even worse, a Regus/WeWork type shared workspace building. I choose to avoid these kinds of companies because the inability to have a standalone staffed office with permanent signage points to lack of staying power. I want to ensure my title company, escrow agent, or attorney's office will be around when and if I have issues with a transaction or need to file a title insurance claim years after closing. Use Google Street View, look for permanent signage. You should be able to see evidence of the company from the street view of the address given.

3) Research the staff: Look on the company website for an employee directory. Make sure these people are real people by googling their names, numbers, or email addresses. See what kind of web presence they have as individuals. Are their linkedin or other social media profiles built out and do they appear to be real people who are interacted with on a regular basis? Do they have information about this company in their profiles? In extreme cases, if I was on the fence, I would reach out to these people (not using contact info found on the company site) and verify their involvement with the company. Sometimes if I feel I have to take this step due to the first 2 tests barely passing, I opt out of using the company.

4) Size: I recommend going for larger companies whenever possible. They are used to handling transaction volume and are often faster and more professional than smaller companies. In rural areas like Kansas or the Dakotas you may not have a choice. You want to make sure that if the company makes a mistake, or one of its employees does something illegal, that they have the size and collectability for you to recover your money and that the company is not so small or bootstrapped that they cannot handle a hit like that.

5) Extra homework: You can check sites like BBB (Better Business Bureau) and Google "vs" after their company or attorney name which may pull up law suits etc that they may have been named in. It doesn't hurt to learn a bit more about the company you're going to be sending or receiving large sums of money from.

Conclusion

If it sounds fishy it probably is. Go with your gut instinct. Use a reputable, sizable company with staying power and robust online presence. If the other party is unwilling to change companies/agents, there may be a reason.