In the past week, we have had 4 reports of scam emails that members are very concerned with.
Please, we advise ALL BROKERS to exercise EXTREME CAUTION when dealing with any earnest money that is drawn on a FOREIGN BANKS or with ANY BUYER that YOU’VE never met.
The Scenario / Precautions
- An agent receives an email about a property from an interested buyer outside of the U.S. The email seeks to make an offer on a home, sight unseen. RED FLAG #1
- When the agent follows up on any of the contact information, only the email works. RED FLAG #2
- The agent receives a fairly “out there” story of why the buyer can only communicate via email RED FLAG #3 [on a cargo ship, oil rig, fleeing government persecution, etc…]
- In an attempt to “prove” they are legit, the buyer will send falsified bank statements or documents. RED FLAG #4. (how many buyers willy-nilly send along their bank statement?)
- The offer can includes a hearty earnest money deposit, to be drawn on a foreign bank. RED FLAG #5
- The buyer asks the REALTOR to begin getting appraisals and/or inspections started. RED FLAG #6
What happens then?
Eventually, there are requests for funds to be returned from escrow, or excess funds used to spend on appraisals, inspections and a request for the remaining money returned to the buyer. Unfortunately, the clearing houses for some foreign banks can take a considerable amount of time and the escrow deposit check bounces weeks after funds were “returned” to the buyer by wire.
During the time the funds are deposited and the time they officially bounce, they may be “available”, but have not yet been collected. It can take 2 MONTHS for a check to be determined to be fraudulent, or the time it takes a check to clear a foreign bank (and the funds of a real account can be withdrawn locally so the check is unable to clear. And then the money from escrow is long gone. So why can’t you just wait until the check clears? Well, the scammers are incredibly well versed in banking procedures. With alterations to a checks routing number and sending checks through countries without computerized systems it is hard to determine when a check has truly “cleared” some in some countries.
These requests happen every day. In 2012, we were informed that a local attorney was the victim of such a scam, with reported losses of $500,000. We’ve received 4 calls today about this scam, one agent who wanted to write the offer and accept the check, “just in case” it was real.
Again, please exercise EXTREME CAUTION when dealing with any earnest money that is drawn on a FOREIGN BANKS or with ANY BUYER that YOU’VE never met. BROKERS should be looking at the documents and checks before depositing them into your account.
Most times, it is best to ignore the phishing scam emails altogether – they are designed to engage unsuspecting Realtors. Your office can have a policy that you won’t represent buyers you’ve never met in person or not represent buyers who intend to make offers on homes they’ve never viewed. You can, of course, make an exception to that policy that you will work with someone if the person is known to you or referred (and verified) by a previous client.
Agents should also talk to your broker to see if they will even agree to serve as an escrow agent of foreign funds. An office can have a policy to only serve as escrow agent on local / US drawn checks, or can defer any complicated escrow accounts to an attorney.
Just please, don’t accept money from a foreign bank account by an unknown buyer without an incredible amount of caution and due diligence.
If it seems too good to be true, it is.