In the world of real estate, where transactions often seem routine, unexpected challenges can arise, even in the most ordinary deals. We recently encountered a scenario that serves as a powerful reminder of the importance of vigilance and thorough due diligence in your real estate business.

The “Seemingly” Normal Transaction

Last week, RealClear Settlement closed a seemingly straightforward lender transaction. The sellers were out-of-state residents, and the property in question was an undeveloped lot intended for a future home. The transaction proceeded as usual—closing, recorded documents, and no initial red flags.

The Unforeseen Twist

However, when we attempted to wire the seller proceeds, we encountered a hiccup that set off alarm bells. Our system checks for a match between the routing number and the provided bank information. It didn’t match in this case, and things took a rapid downturn from there.

Our listing agent’s transaction coordinator promptly contacted the seller via email, pointing out the discrepancy. The seller admitted to an account number error and requested a resend to an alternative account. Unfortunately, the routing number, once again, did not align with the bank in our system.

Protecting Our Interests

To ensure the security of the transaction, we required the sellers to complete a new proceeds wire form. This form needed to be signed, notarized and mailed back to us before we would initiate another wire transfer.

The new form arrived with original signatures and a valid notary stamp from the state of Texas. However, upon closer examination, we discovered that the signatures did not match those on the previously signed documents. Furthermore, the notary’s signature, although claiming to be the same notary who signed the deed, appeared different.

The Shocking Revelation

Our listing agent reached out to the seller via Forewarn using the provided contact information. To our astonishment, the seller professed no knowledge of the transaction. They had never intended to sell their lot. What unfolded before us was a full-scale fraud, from the listing documents to the deed documents.

Why We’re Sharing This

You might be wondering why we’re sharing this story. There are several compelling reasons:

1. Don’t Underestimate the Risk of Fraud

Fraud can happen anywhere and is continually evolving. It’s crucial to stay informed about the latest tactics employed by fraudsters in the real estate industry.

2. Trust Your Instincts

If something doesn’t feel right, it probably isn’t. Trust your instincts, and if you sense trouble, involve your broker or an attorney immediately. Your license is too valuable to risk.

3. Be a More Vigilant Listing Agent

Request copies of driver’s licenses or photo identification from parties before signing listing documents. This simple step could have exposed the fraud in our case.

4. Understand the Need for Additional Documents

When your closing agent requests more documents or information, it’s because they’re necessary, not because they want to burden you. We all share the goal of protecting our licenses.

5. Verify Wire Instructions

Before your buyers send any wires, ensure they independently verify the wiring instructions. For RealClear, you can verify our instructions via our general number (515.346.6360) by pressing the Star Key. Taking these precautions can save thousands.

6. Verify Identities in Electronic Transactions

In an era of electronic signing, make sure you know who you’re dealing with. Use tools like Forewarn and request identification to mitigate risks. Don’t rely solely on one form of communication.

7. Share Your Experiences

We learn from each other’s experiences and insights. Sharing your stories might help save someone else’s career, just as we hope this case study will.

Your diligence and commitment to safeguarding your real estate business are paramount. By staying informed, trusting your instincts, and implementing best practices, you can protect your interests and those of your clients. Your dedication to professionalism sets you apart in the industry.

Thank you for reading and for being part of the RealClear Settlement community.