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Couple sues real estate agent, title co, bank over wire fraud #WatchOut

(HOMEOWNERSHIP) Wire fraud in the digital age: it happens. Is there anything that can be done about it or is everyone vulnerable?

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A simple wire transfer

It should have been a dream come true for James and Candace Butcher. They’d chosen the house they wanted to retire in, negotiated the price, and sold their home for a down payment.

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All that was left was the last wire transfer – $272,000.

The next day, they were bankrupt.

Too good to be true

Like many older adults, the Butchers entered the real estate market with family in mind. They wanted to live closer to their son, and to have a place big enough for grandchildren to enjoy.

“We were truly excited, when through negotiations, we won the bid,” Candace Butcher said. “Through the entire process, I kept saying, ‘I can’t believe this is going to be our house.”

All it took to rob them was a simple confluence: wire fraud and poor security precautions. The email that provided the Butchers with wire transfer details was sent from the proper domains for the Butchers’ pay agreement, under the proper names.

The only problem, according to the complaint and the Butchers’ attorney, was that those domains had been hacked.

Someone had gotten inside Land Title Guarantee Co. and Envoy Mortgage and used their contact information to obtain a fraudulent wire transfer.

The secret behind the hack

It’s a frighteningly simple trick: all it takes is the password to the right email account. The exact dollar amount had yet to be specified, and the Butchers had no reason to think an email from their mortgage company would be anything but legitimate. They’re currently suing both companies for insufficient security.

They’re also suing Wells Fargo, the bank handling the transfer. According to the complaint, Wells Fargo failed to acknowledge the fraud and neglected to make recourse available, including a 72-hour freeze that would have saved the couple’s savings.

Instead, while the problem is being resolved, the Butchers are living in their son’s basement.

The details of the whole sad saga can be found here, but the takeaway is simple: security is everything. Everyone cares about housing. Not everyone is an expert in data security. The real estate industry has a moral and professional responsibility to guarantee secure transactions.

Better safe than sorry

Real estate customers can avoid tragedies likes the Butchers’ by taking precautions on their end.

The National Association of Realtors provides guidelines for both. They should be required reading for anyone in real estate, but by way of a simple version:

If you’re a real estate professional, be aware of the possibility of fraud. Build warnings into your client communication structure. Better yet, educate your clients about common types of scams and what to do about them.

Better than better, designate or hire a staff member who is specifically responsible for the process, keeping lines of communication open to guarantee this never happens to you.

Don’t reuse passwords.

Don’t repeat passwords.

Clean out your email to secure sensitive information.

Instruct clients double-check everything. What happened to the Butchers started because they trusted an unverified email.

Don’t do that, ever.

When you receive instructions via email, confirm them by phone or in person, and at the risk of stating the obvious, don’t use any of the contact info in the email. Some very committed hackers will even put up legitimate looking websites. Call someone you’ve already spoken with in person, or for that matter, drop by.

New startup solves this problem

You can do all of those things and still feel insecure about the process. But we’ve uncovered a brand new real estate tech startup that is dedicated to solving this problem.

BuyerDocs can help prevent wire fraud cases like this with its simple, free, easy-to-use solution. Our service can save home buyers from losing their down payments to a scam, while also helping protect title companies from potential lawsuits,” Abigail White, Cofounder & CMO

Because the startup is brand new, it’s not yet the industry standard, but it truly should be.

Send a link to your title company and ask why they’re not using BuyerDocs to protect your clients.

Finally, trust your instincts and teach your clients to do the same. If something about the transaction feels wrong, go with that feeling and confirm.

The Butchers are working with attorneys and the FBI to resolve their fraud claim. This is how you keep from having to do the same.

#fraudsucks

Matt Salter is a writer and former fundraising and communications officer for nonprofit organizations, including Volunteers of America and PICO National Network. He’s excited to put his knowledge of fundraising, marketing, and all things digital to work for your reading enjoyment. When not writing about himself in the third person, Matt enjoys horror movies and tabletop gaming, and can usually be found somewhere in the DFW Metroplex with WiFi and a good all-day breakfast.

Homeownership

The phrase ‘starter home’ is overrated and overused

(HOMEOWNERSHIP) You see the term in the MLS for fixer uppers, you hear it when Realtors are working with first time buyers. But the term “starter home” shouldn’t be in anyone’s vocabulary. Here’s why.

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Just words

Collins English Dictionary defines a starter home as a “small, new house which is cheap enough for people who are buying their first home to afford.” You won’t find the phrase too often outside of the real estate industry.

There isn’t much about the etymology of the phrase, but most likely, it’s a marketing ploy to get people to buy into the idea of purchasing another home in a few years.

Grind your gears

Mark Greutman, husband to Lauren Greutman, believes that the term “starter home” should bother people. The phrase implies that you will upgrade later.

Your starter home isn’t good enough for the rest of your life. And not to get into how well Americans have it, what about people who will never be able to afford anything more? Is it an insult to them?

Do you really need two living rooms?

Older generations bought one home and lived in it until they could no longer be independent. In today’s world, we buy a starter home, then upgrade to have more space, to live farther away from our neighbors, to have rooms that are only used once or twice a year, and to make sure you have a 2 or 3 car garage to hold your vehicles and more stuff, some of which isn’t taken out very often.

But consider this: You could pay off your starter home in 15 to 20 years, if you budget right.

You could be out from under a mortgage and have money to travel, send the kids to college, or even retire early. When you think about what led to the financial crisis in 2008, isn’t it better to have a smaller house where you can make the payments than worry about losing your house?

Be content where you are

Realtors are motivated to make sure that they have customers. If people buy one home with the intent to stay, will the market dry up? Probably not, because people move and a new generation will be ready to purchase homes for their own family.

Let’s think about that phrase, “starter home.” It fuels consumerism and discontentment. Don’t call cheaper houses starter homes, but just a home.

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Homeownership

The remodeling projects with best ROI that actually increase home value

(HOMEOWNERSHIP) Knowing which remodeling projects to tackle when a home is being put on the market can save a lot of wasted effort and money.

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If you’re looking to help your clients to identify which projects to tackle before putting their home on the market, look no further: the National Association of Realtors surveyed thousands of real estate agents, industry professionals, and consumers on interior and exterior house remodeling projects, and these are the best projects for upping a home’s value before listing it on the market, ranked on the most value and cost recovery a homeowner can get.

  • Refinishing hardwood floors. Start from the bottom to earn top dollar. Refinishing floors transform a home from worn-out and aging to vibrant and inviting, and only costs about $2500 according to the National Association of the Remodeling Industry (NARI). The project also increases a home’s value by that same amount, meaning a homeowner can recover 100 percent of the costs. Pretty sweet deal.
  • Upgrading insulation. Because it’s what’s inside that counts. This project costs about $2100 based on NARI Remodeler’s estimate and increases a home’s value by $2000 according to Realtors surveyed. That’s a 95% cost recovery.
  • Adding new wood floors. If you don’t have wood floors to refinish, add them in! This costs about $5,500 according to NARI Remodelers, and the increased sales value is $5000. A homeowner can recover 91% of costs from a new wood floor addition.
  • Replacing HVAC system. A new HVAC system adds energy efficiency and refreshes the entire home, and NARI Remodelers estimate doing so costs $7000. The increased value for sellers is $5000 according to NAR REALTORS, meaning an easy breezy 71% cost recovery for homeowners.
  • Converting a basement into a living area. Not only is this cost and space-efficient, it’s also undeniably trendy. A basement makeover costs about $36,000 according to NARI Remodelers estimate and increases value for sellers by $25,000 according to Realtors surveyed. That comes out to a cost recovery of 69%.

Which projects are the most costly?

In case you’re curious, these are some of the most expensive remodeling projects:

  • New master suite. More like master $uite – this costs about $112,500 with a cost recovery of 53%. 
  • Converting an attic into a living area. Cute idea, but also a $65,000 one with a 61% cost recovery. One might say the price is through the roof.
  • Complete kitchen renovation. This project costs an estimated $60,000 with a 67% cost recovery. Even more if you want to throw in a brick oven, and you probably do.
  • New bathroom. With an estimated cost of $50,000 and a 52% cost recovery, make sure you aren’t flushing money down the drain with your bathroom addition!

These trends change over the years, so make sure your knowledge is up to date locally since we all know local trends trump national. Hopefully today you’ve garnered some ammo to help clients better understand how to improve their home’s value!

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Homeownership

How to inform clients about well-known homebuyer scams

(HOMEOWNERSHIP) Real estate scams continue to victimize people, but Realtors are in a position to better protect homebuyers. Here are some tips.

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Despite warning after warning and news story after news story, homebuyers keep getting their money stolen in real estate wire transfer schemes. Some blame the mortgage and real estate industries for not doing enough to educate and protect their clients. Others say the people committing these crimes are getting more and more sophisticated. No matter who’s to blame, there’s no arguing that this crime is on the rise.

What exactly do these real estate scams look like? These criminals usually hack into a business’s emails, often a title company, and get all the pertinent information they need. They then steal and copy that company’s letterhead, and the email addresses, signature blocks and any other relevant information they will need to fool the homebuyer. The homebuyer then gets an email that appears to be from the title company, asking them to wire money, often tens or sometimes hundreds of thousands of dollars.

So, you’re probably wondering right now: What can I do? You want to know how to warn and protect your clients and keep your reputation intact (and avoid costly lawsuits). The following safeguarding tips can help keep cash out of cyberthieves’ hands:

1. Pick up the phone. If you’re closing on a home and receive an email with instructions on how to transfer money to your closing company or lender, take a few minutes to call your agent or broker to make sure it’s legit. Yes, this might be a bit annoying, but not as annoying as losing thousands of dollars in an email scam.

2. Be aware. These scammers usually send emails that look like the real thing. If you’re a homebuyer, look for weirdly timed emails (sent in the middle of the night) or spelling and punctuation errors. Is there a sense of urgency to the email?

3. Educate your clients. If you’re a real estate professional, make sure your clients know about this scheme. Not everyone is aware they could be a target (which is why it keeps happening). Set up a specific passcode for each client.

4. Consider using ClosingLock and asking your title company to use this technology for all of their transactions… What’s ClosingLock (previous name was BuyerDocs), you ask? This tech startup provides secure document delivery for closing companies and homebuyers. The company says it has protected more than $5 billion in wire transfers and works with big and small businesses across the country.

Scams will never be eradicated, but it is part of your job to know the current scams and how to protect transactions against shady folks.

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