The costliest closing mistake: wiring your down payment to a criminal

One rule stops almost all of it

Before you send any money for a closing, confirm the wiring instructions by phone with your escrow officer, using a number you got independently, never one from the email that delivered the instructions. Treat any email that says the instructions have changed as a fraud attempt until proven otherwise. If you have already sent a wire and suspect it went to the wrong place, call your bank immediately and ask for a wire recall, then report it to the FBI's Internet Crime Complaint Center.

We at Capital Title talk about this with every buyer and seller, and I do not apologize for repeating it. Of all the things that can go wrong in a real estate transaction, this is the one where the money can simply be gone. Everything else in this guide supports that one rule.

This applies whether you are buying a starter home or closing a commercial purchase, and whether the deal is in Dallas or across the state. The amount changes; the method does not.

How the scheme actually works

According to the Consumer Financial Protection Bureau, scammers compromise the email of real estate professionals, watch for upcoming transactions, and then send spoofed emails to homebuyers posing as the agent, the settlement agent or an attorney, with false instructions for wiring closing funds. The messages arrive at exactly the right time, mention the correct property and closing date, and often continue a real conversation thread.

That is why the usual advice about spotting scams fails here. There may be no spelling errors, no strange requests, no obvious urgency. The email can look identical to the one you were expecting, except for the account number. The only reliable defense is to verify outside of email.

Real estate is attractive to criminals for simple reasons. The amounts are large, the timing is predictable, many people are emailing each other, and buyers expect to send a wire. A criminal who has read a few weeks of an agent's or buyer's email knows the closing date, the cash-to-close figure and the names of everyone involved. All they have to change is one number.

Warning signs worth stopping for

Any one of these is a reason to pick up the phone before you do anything else. The Texas Department of Insurance specifically warns about emails demanding an immediate response or saying payment details have changed.

The timing is not random. These emails tend to arrive in the last few days before closing, when buyers are juggling movers, utilities and work and are most likely to act quickly. If you notice that you feel rushed, treat the feeling itself as a warning sign and slow down long enough to make the call.

• New or updated wiring instructions, especially close to closing day
• A request to send funds to a different bank, a different account name or an individual
• Pressure to wire today, before you can reach anyone by phone
• A slightly different email address, or a reply that goes somewhere other than the sender
• A phone number in the email that does not match the one you were given at the start
• A request to send personal or banking information by email

A verification routine that holds up

The CFPB and TDI recommend nearly the same steps, and they work because they take email out of the loop entirely. Set this up when your contract is signed, not the day you wire.

This routine adds perhaps ten minutes to the entire transaction. It feels excessive only until you hear from someone who skipped it. In my experience, nobody has ever regretted calling to verify, and every escrow officer would rather answer the same question twice than watch a client's down payment disappear.

• At the start, get a name and phone number for your escrow officer, agent and lender, in person or from a source you trust
• Consider agreeing on a code phrase with your two most trusted contacts
• Call your escrow officer at the number you already have and read back the account name and number before wiring
• Do not use links, attachments or phone numbers from an email to verify that email
• Keep banking information out of email in both directions
• Call again right after you send the wire to confirm it was received

If the money already went out

Speed matters more than anything. The CFPB advises contacting your bank or wire-transfer company immediately and asking for a wire recall, because quick reporting improves the chances of recovering funds. Then file a complaint with the FBI's Internet Crime Complaint Center at ic3.gov.

Call your escrow officer too, and your agent. We need to know so we can protect the rest of the file and work with your bank. Keep every email, text and voicemail involved, because investigators and banks will need them. Do not delete the fraudulent messages, and do not reply to them.

Do not let embarrassment slow you down. This fraud works on careful, intelligent people precisely because it is designed to look routine. Every minute spent wondering whether you are overreacting is a minute the money moves further away. If you are wrong and the wire was legitimate, the call costs you nothing.

Sellers are targets too

Buyers sending a down payment are the obvious targets, but sellers are not safe. Proceeds can be diverted by a fraudulent email that appears to come from the seller and asks the title company to change where the money goes. Give your disbursement instructions in a way your escrow officer can verify, and expect to be called to confirm them.

There is also a version where the criminal is the seller. TDI warns about seller impersonation fraud, which starts with someone forging documents to sell a house they do not own. Its red flags include a seller who wants only a cash buyer, will not appear for closing, wants to use their own remote notary or asks for the sale money to go directly to them. If a title company asks extra questions in that situation, it is protecting everyone.

Owners of vacant houses and rental properties should be especially alert. TDI says one of the fastest-growing real estate scams targets vacant or unoccupied houses for sale, where the real owner is often not around to notice a sale in progress.

Habits that leave even careful people exposed

The people who get caught are not careless. They are busy, and the fraud is timed to the busiest week of their year. These are the habits I see that open the door.

Each of these habits is understandable, and each one is easy to replace with the phone call described above. If you share email accounts or devices with family, assume a criminal could be reading those too, and keep the verification step offline.

• Forwarding wiring instructions to a spouse or assistant who then wires without calling
• Calling the number in the email signature rather than a number from the start of the file
• Waiting until the morning of closing to wire, when there is no time to verify
• Sending a copy of a bank statement or ID as an email attachment
• Assuming a message in the same email thread must be legitimate

Family members sending gift funds

Down payment help from parents or other relatives creates a second person who may wire money, often someone who has never been part of the email threads and does not know the escrow officer. That person is just as exposed as the buyer. Give them the escrow officer's name and a phone number you have confirmed, and ask them to call and verify before sending, exactly as you would.

The same goes for anyone sending funds on a buyer's behalf, such as a business partner in an investment purchase. Every sender needs to verify independently. One verified wire and one unverified wire is still a risk.

What we do on our side

At Capital Title we will never change wiring instructions by email. If you receive an email saying otherwise, it did not come from us, no matter how it looks. Call your escrow officer to verify before you send anything, and call again afterward to confirm the funds arrived.

Wire fraud is also a reason to choose your title company carefully. My guide on how to choose a title company includes asking any company you consider to explain its wiring procedures before you name it in the contract.

Before you send a dollar

Put your escrow officer's direct number in your phone today, from a source you trust. When you receive the instructions, call that number. When you send the wire, call again. That is the whole routine, and it works.

Tell everyone involved on your side that this is how you work: your spouse, your parents if they are helping, your assistant if you have one. Fraud succeeds when one person in the chain does not know the rule. Writing the escrow officer's verified number on a sticky note next to the computer is not paranoid; it is the most effective security step in the transaction.

If you are preparing for closing in Dallas, my guide on the closing appointment and what to bring explains how your funds fit into the day. And after you own the house, the risk does not disappear entirely; my guide on what to do after closing covers the free Dallas County alert that tells you when a document is recorded in your name.

Questions people ask me