Education Needed to Halt Real Estate Fraud
Real estate fraud costs, on average, $70K per incident, a recent study found. Better education is needed, particularly for those age 65 and older.
AUSTIN, Texas – Unsuspecting home buyers and sellers are increasingly becoming the target of real estate fraud schemes, with consumer losses exceeding $70,000 per incident due to stolen buyer down payments and seller net proceeds, the wire fraud protection company CertifID said.
The company, in its 2024 State of Wire Fraud report, said 25% of the 650 U.S. homebuyers and sellers surveyed were the focus of suspicious or potentially fraudulent activities. Ten percent were targeted for real estate fraud, and 5% had losses during their real estate transaction due to fraud.
Real estate fraud losses exceed $446 million, the company said.
Since real estate transactions can involve multiple parties, fraud can arise, the company said. At the same time, fraudsters have become skilled at leveraging public records, breaching computer systems and deploying AI-enabled tactics to impersonate real estate professionals using email, text, social media and phone calls.
“Cybercrime rings have taken aim at U.S. real estate transactions at an alarming rate,” said Katie Pierce, assistant to the Special Agent In Charge, Global Investigative Operations Center (GIOC) at the U.S. Secret Service, “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.”
CertifID's report found one in two (51%) of the surveyed consumers said they were not thoroughly educated about the risks of real estate fraud before closing.
The report also said consumers aged 65 and older were found to be the least aware of real estate fraud than any other age group, with 63% being only somewhat or not aware at all of the risks. Because this group represents the largest segment of all-cash buyers, real estate fraud represents a significant and costly risk, the company said.
“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,” Tyler Adams, co-founder and CEO at CertifID, said.