Wire Fraud

Written by Richard Hopen from COMPASS Short Hills NJ:

When my wife and I sold our house in 2017, our $239,000 mortgage payoff was stolen.

The money was never recovered.  We were victims of real estate wire fraud.

I’m not only a victim, I’m also a real estate agent and lawyer. And shame on me for not knowing about wire fraud when I sold my house. Real estate wire fraud is perpetrated by cyber criminals who exploit the trust between home buyers and sellers and their real estate agents, title companies, lawyers, and mortgage lenders. Criminals steal home deposits, down payments, and mortgage payoffs by accessing and monitoring email accounts of the parties in a transaction.

When a criminal finds an email with attached wiring instructions, they change the depository account number and email the fraudulent wiring instructions to the person who will wire the funds. If the target is duped, the money will be wired into the criminal’s account. Accessing email accounts is easy for cyber-criminals and opportunities to commit the crime are unlimited. According to a 2021 ALTA survey, 1 in 3 real estate transactions are targeted.

Real estate transactions are ripe conditions for thieves. Each transaction involves multiple parties, working under pressure to meet the closing deadline. Many of the parties share information over unsecured email accounts that can lead a savvy criminal to the wiring instructions. Home buyers and sellers are vulnerable, and real estate agents need to do much more than include wire fraud warnings on emails or have customers sign wire fraud disclosures. At a minimum, every seller and buyer should know about the risk of real estate wire fraud and how to prevent it.

Rich Hopen of COMPASS Short Hills, NJ has worked closely with ALTA to create www.stopwirefraud.org. He has sat on a wire fraud panel with a U.S. Senator; participated in a roundtable discussion with the FBI, ALTA, the Mortgage Bankers Association, American Bankers Association, and NAR; was interviewed and quoted by HousingWire and the Wall Street Journal; and has spoken to many real estate offices and organizations.

https://stopwirefraud.org/

Another thought: Avoid Friday closings to help stop wire fraud.

Friday is the most highly targeted day of the week for wire fraud at real estate closings, because the next business day is on Monday, and there is only a 24 hour window to identify a fraudulent transfer and reverse it, and criminals know and exploit this weakness.

Always tell your clients to follow up with their bank in the hours after closing to be sure wire transfers were done but to also check very first thing the next morning.  If the next morning is Saturday, there is no live person at the bank to follow up on the wire, and by Monday, the window to reverse it is past.

Online Home Auctions

I had a good conversation this week with the people at Doorsey, and they are well on their way to providing a sharp and effective online home auction platform that could change how homes are sold.  If/when Zillow buys them and provides online auctions nationwide, agents will be wondering what happened.

https://www.doorsey.com/

This article is from November:

https://www.spokesman.com/stories/2021/nov/05/spokane-based-online-real-estate-platform-doorsey-/

Excerpts:

Doorsey, an online real estate platform founded by a group of Spokane entrepreneurs, launched this week and secured $4.1 million in a seed funding round.

Founded by Jordan Allen, Nick McLain and Matt Melville, Doorsey is an online bidding platform they say takes the guesswork out of buying a home by providing real estate agents with real-time home prices and upfront sales terms and disclosures.

“Today’s home-buying offer process is rife with frustrations for all parties,” Allen said in a statement. “Buyers and their agents want to know whether their offer can win. Sellers and their agents want to know they’re getting the best offers. And agents want to close more deals in less time.

“Doorsey solves this by allowing sellers to define upfront what it takes to win, so that buyers can compete on a level playing field and sellers can find the right buyers.”

The co-founders sought input from the local real estate community and subsequently evolved the online platform into Doorsey, which provides buyers with such things as access to home-inspection reports, sale contingencies, photos, a 3D virtual tour via Matterport and a community forum for interacting with sellers and neighbors.

Buyers can also schedule showings and view desired closing dates on the platform.

Doorsey’s listings are posted on the Spokane Multiple Listing Service and distributed through national real estate websites, including Zillow, Trulia, Redfin and Realtor.com.

Doorsey has obtained $4.1 million in seed funding – an early stage of capital investment in startups – allowing it to build-out its product, hire more employees and expand to key markets nationwide within two years, according to the company.

The funding round was led by 166 2nd Financial Services with participation from Agya Ventures, Liquid 2 Ventures and SRM Development, among other investors.

Former NFL quarterback Joe Montana is a managing partner of San Francisco-based Liquid 2 Ventures, while 166 2nd Financial Services is led by former WeWork CEO and co-founder Adam Neumann.

https://www.doorsey.com/

Publicizing The Listing Agent

The old rule was that any agent could advertise any MLS listing via the IDX, as long as the listing agent’s name and brokerage was displayed. But now you have to include their contact information too. He sounds confident because this is clearly a shot at Zillow but the unintended consequences from directing the consumer to the listing agent is promoting single agency which will eventually eliminate broker cooperation as we know it.

The discouragement of buyers getting their own representation from a buyer-agent is part of the dumbing-down of the business.  Sellers and listing agents prefer buyers who just pay whatever it takes and don’t ask questions, and when the History of the 2020-2021 Frenzy is written, it should include that it was fueled in part by crazy buyers getting no good help. 


In an emailed statement, a Zillow spokesperson said, “As part of our switch to IDX feeds and becoming CRMLS participants earlier this year, we agreed to comply with all CRMLS rules and regulations, which includes adhering to listing credit and display rules — such as the updates that went into effect this month.

“One of our core values is to empower consumers and increase transparency in real estate, which includes efforts to give shoppers the information they need to connect with listing agents. For more than a decade, our philosophy of ‘turning on the lights’ for consumers has meant that we’ve consistently displayed listing agents’ names and contact information, something not done on all IDX sites today.”

Get Good Help!

Good-Faith Deposit

It is a very rare occurrence where a buyer wants to cancel the sale after releasing all contingencies because they know they could potentially lose their deposit. Would they give up a five-figure or six-figure deposit easily, or fight it out with the seller? If they fight, then the property gets hung up in litigation and can’t be sold, and most sellers want to get on with the sale. Because in almost every case, the buyer will get his deposit back one way or another, should we just quit collecting them as part of the sale?

According to CAR – we don’t need a deposit to have a binding contract:

Q:  Must a buyer give a good faith deposit in a purchase agreement for there to be “consideration” to make it a binding contract?

A: No.  The buyer’s good faith deposit in a real estate purchase agreement has no legal significance. It is not required as consideration for the contract because the purchase agreement is a bilateral contract and the mutual promises of the parties serve as adequate consideration to make the contract binding and enforceable on both parties. (Bleecher v. Conte, 29 Cal. 3d 345, 350 (1981).)

Under the C.A.R. purchase agreements, if a contract is entered into and the buyer fails to make the good faith deposit as agreed to, the seller cannot simply cancel. Instead, the seller must go through the procedure of issuing a Notice to Buyer to Perform and giving the buyer adequate time to perform, and only then can the seller issue a cancellation.

Compass #1 in San Diego County

In less than 4 years, Compass has become the dominant residential-resale brokerage in San Diego County, and it’s not close. Even if you added the two CBs together, their market share is less than half of ours.

It’s been the aggressive recruiting of top agents that built the sales force, and the vast majority of those agents came from the other brokerages on this list.  It tends to be a zero-sum game too – as we get bigger and better, the others are going to struggle to keep up.

Want to be a part of the Compass juggernaut?  The Klinge Realty Group is hiring!

Did you know that 87% of new licensees quit during their first year in the business?

Your training is critical to your success!  Whether you have a few years of experience or are just getting your license, we can help you build a solid real estate practice.  Contact us today!

The Typical Bidding War

Here’s a great snapshot of how the vast majority of listing agents handle multiple offers. They just grab one, and kiss off the rest – which isn’t good for the sellers, it’s not good for the losing buyers who might have made a better offer if there was a highest-and-best round, and it’s not good for the buyer-agents who should have the right to compete fairly to sell the home.

But the listing agent gets to go back to sleep, so there’s that.

The most common response? “I just did what the seller wanted to do”. But isn’t it your job to advise them of a way to create a fair competition that could get them a better offer and more money? I think so.

CCP and The Future

Two years ago, the National Association of Realtors began the Clear Cooperation Policy, a directive that compels agents to submit their listings to the MLS within one business day after any public marketing.

It was an attempt to quell off-market sales, but Glenn says that it’s done the opposite.

Specifically, because the CCP allows brokerages to have ‘Office Exclusives’, he asserts that more companies are withholding their listings from the MLS and selling them in-house without any attempt to include outside agents or buyers.

Rob and Sam, two industry titans, conducted a livestream discussion to see what else can be done.

Rob has the likely solution – that any agent who wants to exclude their listing from the MLS will need to get a signed waiver from the MLS committee to do so.

Yes, it has come to that – agents can’t be trusted to play by the rules, and will need a permission slip from the principal to officially withhold a listing from the MLS.

But it gets worse – I left a bomb in the comment section here:

https://notorious-rob.com/2021/05/in-which-sam-debord-and-i-solve-the-clear-cooperation-dilemma/

Disclosing Offer Prices

To say it’s the Wild Wild West out here is putting it lightly, and how realtors handle multiple offers is the primary reason. There isn’t a standard way to handle a bidding war – and heck, we don’t even agree on what is confidential, and what isn’t. Here is the variety of opinions from a FB thread:

Even when presented with a copy of the actual verbiage from our contracts, she comments, “Wrong”.

Is anyone surprised why buyers are so frustrated?

‘No More Showings’

We see it more and more these days – listing agents who shut down showings of their listings. I’m sure most would say, “What do you want me to do? I had 20-30 appointment times available, and they all booked up!”

When faced with having to work harder, smarter, or less, agents always seem to pick less.

  • But they owe it to their sellers to find a way to show their home to every possible buyer.
  • They owe it to their fellow agents too, and their buyers.

Work Harder:

An agent over the weekend was bombarded with requests to show a newer one-story home on a half-acre lot. She TRIPLE-BOOKED the whole weekend, and designated four stations – two inside, and two outside. As visitors arrived, she explained the process, and deftly guided everyone from station to station to keep the parade moving – and it went very smoothly.

Work Smarter:

Can we please require agents to produce YouTube video tours?

If you don’t like the way you sound or you’re afraid you might say something stupid, then just don’t talk. The video is a boost to understanding the flow of the floor plan, and and a way to highlight the biggest benefits. It’s not that hard to do – you’re doing videos of your grandkids every weekend, surely you can walk around a house with a videocam and pretend you’re showing the house to a buyer – of which you have plenty of practice!  Then the buyers who got shut out from an in-person appointment can view the video and have a fighting chance to compete.

Selling homes by video should have been commonplace by now. Let’s do it!

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