By Dr. Sharon H. Porter | October 5, 2023 | 4:22 PM ET
With October being Cybersecurity Awareness Month and real estate transaction risk at an all-time high, here is some info and tips that all homebuyers should be aware of. With mortgage and seller impersonation fraud schemes all trending upward, along with government agencies (including the FBI and the Secret Service) issuing PSAs on the topic within the past few months, homebuyers need to be on the lookout.
Cybersecurity is a critical consideration in real estate transactions due to the fact that the real estate industry increasingly relies on digital tools and platforms for various aspects of the buying, selling, and management of properties.
Because of the tight housing marketing, many homebuyers are under immense pressure to close. What they don’t often realize is that cybercriminals, equipped with buyer / seller information and details of the transaction, are actively taking advantage of homebuyers and socially engineering them into unwittingly wiring them cash — often a downpayment on a home, representing a massive loss that is sometimes unrecoverable.
Tyler Adams, CEO of a leading real estate wire fraud detection and recovery service – CertifID , provided four major tips to help protect homebuyers.
1. Early in the closing process, you will receive very specific instructions on how you will send or receive payment from your title/closing agent.
2. Never trust last-minute or "urgent" emails or texts asking you to change wire instructions or bank details.
3. If you do get a request to change payment details, always confirm the changes directly with your REALTOR or real estate agent.
4. Ask your REALTOR or real estate agent if payment insurance is available. Homebuyers are liable for any transaction they initiate, so it’s important that homebuyers act with caution when facilitating a transaction.
Additional key points to consider regarding cybersecurity and real estate transactions:
Data Protection: Real estate transactions involve a significant amount of sensitive information, such as personal and financial data. It is crucial to protect this information from unauthorized access and data breaches. Implementing strong data encryption and access controls is essential.
Email Security: Email is commonly used in real estate transactions for communication and document sharing. However, email is also a common vector for cyberattacks, such as phishing. Real estate professionals should be vigilant and educate themselves about email security best practices.
Secure Document Management: Digital documents are commonly used in real estate transactions, including contracts, deeds, and financial documents. Secure document management systems and secure file sharing platforms should be employed to prevent unauthorized access and document tampering.
Wire Fraud Prevention: Cybercriminals often attempt to divert funds by sending fraudulent wire transfer instructions. Real estate professionals and buyers/sellers should verify any wire transfer instructions by phone or in person before sending funds.
Network Security: Real estate agencies and professionals should have robust network security measures in place to protect their systems and data. This includes firewalls, intrusion detection systems, and regular security audits.
Vendor Security: Many real estate transactions involve third-party vendors and service providers, such as title companies and escrow agents. It's essential to ensure that these vendors have strong cybersecurity measures in place to protect sensitive data.
Training and Awareness: Training and educating employees and clients about cybersecurity best practices is crucial. People should be aware of common threats like phishing and should know how to recognize and respond to them.
Regulatory Compliance: Depending on the location, there may be specific regulations governing the protection of personal and financial data in real estate transactions. Compliance with these regulations is essential to avoid legal and financial consequences.
Incident Response Plan: Have a well-defined incident response plan in place. In case of a data breach or cyberattack, knowing how to respond promptly can minimize damage and protect sensitive information.
Insurance: Consider cyber insurance to mitigate the financial impact of a data breach or cyberattack. Cyber insurance policies can help cover the costs of investigation, notification, and potential legal liabilities.
In summary, cybersecurity is a critical aspect of real estate transactions due to the digital nature of the industry and the sensitive information involved. Real estate professionals and organizations should prioritize cybersecurity measures to protect themselves and their clients from cyber threats and data breaches.