Wire Fraud in Real Estate: What Buyers and Sellers Must Know to Protect Their Funds

Wire fraud is one of the fastest-growing threats in real estate transactions. Because buyers and sellers often transfer large sums of money during escrow, criminals specifically target real estate deals using sophisticated email scams and impersonation tactics. In many cases, fraud occurs just days — or even hours — before closing.

Understanding how wire fraud works, how escrow companies safeguard funds, and how to verify wiring instructions can dramatically reduce the risk of financial loss. This guide explains what buyers and sellers need to know to stay protected throughout the transaction.

Wire Fraud in Real Estate: What Buyers and Sellers Must Know

Real estate wire fraud typically occurs when a criminal gains access to — or convincingly impersonates — a trusted party involved in the transaction, such as an escrow officer, real estate agent, or lender. Fraudsters then send fake wiring instructions directing funds to a fraudulent account.

Common characteristics of real estate wire fraud include:

• Emails that appear to come from escrow or a real estate professional

• Urgent language requesting immediate wire transfers

• Last-minute changes to wiring instructions

• Slight variations in email addresses or signatures

Once funds are wired to a fraudulent account, they can be moved quickly and are often extremely difficult to recover. Awareness and verification are the strongest defenses against these scams.

How Escrow Companies Protect Your Funds

Escrow companies play a critical role in protecting buyers and sellers from wire fraud and financial loss. Legitimate escrow companies follow strict security protocols and regulatory requirements designed to safeguard funds throughout the transaction.

Escrow protection measures often include:

• Holding funds in regulated trust accounts

• Implementing internal controls and dual verification processes

• Using secure portals for document delivery

• Limiting how and when wiring instructions are provided

• Educating clients about wire fraud risks

While escrow companies implement multiple layers of protection, client awareness and verification remain essential parts of the security process.

Why You Should Never Trust Wiring Instructions Sent by Email

Email is the most common entry point for wire fraud. Criminals use phishing techniques to intercept or mimic legitimate email communications, making fraudulent messages appear authentic.

You should never rely on wiring instructions sent by email alone because:

• Email accounts can be compromised without visible warning

• Fraudsters can replicate logos, signatures, and language

• Wiring changes are often presented as “urgent” or “last-minute”

Best practices for wiring funds include:

• Always verify wiring instructions by phone using a known, trusted number

• Confirm instructions directly with your escrow officer

• Never wire funds based solely on emailed instructions

• Be cautious of any changes to wiring details

If something feels unusual or rushed, pause the transaction and verify before sending funds.

Common Real Estate Scams and How to Avoid Them

In addition to wire fraud, buyers and sellers should be aware of other common real estate scams that can occur during a transaction.

Common real estate scams include:

• Fake escrow companies or impersonated escrow officers

• Phishing emails requesting personal or financial information

• Title fraud involving forged ownership documents

• Rental or listing scams using copied property listings

How to avoid real estate scams:

• Work only with licensed real estate professionals

• Verify escrow company credentials and contact information

• Use secure communication methods whenever possible

• Question unexpected requests for funds or information

• Confirm details verbally before taking action

Staying informed and cautious throughout the transaction significantly reduces exposure to fraud.

Final Thoughts

Wire fraud and real estate scams are serious risks, but they are also highly preventable. By understanding how fraud occurs, knowing how escrow companies protect funds, and following strict verification practices, buyers and sellers can confidently navigate the escrow process.

Security in real estate transactions depends on awareness, communication, and trust — supported by proper verification. Taking a few extra steps to confirm wiring instructions and recognize red flags can protect your investment and ensure a safe, successful closing.