Hackers target hundreds of real estate transactions every day, sometimes stealing six-figure sums from home buyers. New technology developed in San Francisco offers a “safe room” to keep funds safe. So, why hasn’t the real estate industry embraced tighter security to protect clients’ money? The NBC Bay Area Responds team investigates.
What to Know
- San Francisco-based Qualia has developed technology to keep hackers out of real estate transactions
- Cyber-thieves use spoofed emails and similar methods to intercept homebuyers' down payments
- Not all real estate professionals use security software to protect their clients
It's a story we've shared many times on NBC Bay Area since last year: homebuyers losing down payments of tens or hundreds of thousands of dollars to crooks. Thieves hack into transactions, spoof agents' email addresses, and dupe the victims into sending their entire down payments overseas.
The power brokers in real estate say they're alerting the puiblic to this scam. But new victims fall for it every day. The NBC Bay Area Responds team wanted to start an open, national conversation. We were shut down — so we flew 2,700 miles east to get insiders talking, and get answers for you.
It's remarkable our cameras were there, in Andover, Massachusetts — just outside of Boston. It's true we were invited to a historic law office. But the very small, very private, and very blunt meeting is not an event that would ordinarly permit a TV news crew to attend.
Here, real estate insiders quietly discussed how hackers are stealing their clients' down payments.
Nate Baker, founder and CEO of San Francisco-based Qualia, also traveled from the Bay Area to Boston. He's here to help agents protect their customers.
"The industry is under attack," Baker said.
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Baker travels around the U.S. and hosts confidential meetings like this wherever people will listen. His company, Qualia, helps process home sales, and aims to stop the scam. Qualia offers real estate agents software with a digital "safe room", of sorts. Baker says all homebuying communication goes through Qualia, with only trusted and verified participants allowed inside.
"That locks everything down, and makes it more difficult for any fraud or phishing attacks to happen," he said.
Other companies offer similar "safe room" technology. But Baker says FWE agents are using it.
Our investigation has show many agents still communicate with personal email, which the FBI has warned them hackers can easily infiltrate.
Closing agent Barry Finegold is the exception.
"We need to build a fortress," Finegold said. "Having software like Qualia definitely helps us."
We asked Finegold whether security software like this should be required of all real estate agents.
"I believe so," Finegold said. "If more and more people adopt software that's safe and secure, we'll have fewer incidents of things like this happening."
The large real estate groups could require agents to use secure software, and make it a condition of membership. But none do.
Participants at the Massachusetts meeting told us there's a bigger, more fundamental problem: gatherings like this are rare. The industry is reluctant to even talk about the scam.
"There needs to be a lot more conversation about this," Baker said. "I think people have this viwe: this won't happen to me."
However, homebuyers are losing money virtually every day. We found news reports from around the U.S. that indicate the scam is spreading. Our own reporting has found at least five victims right here in the Bay Area.
There was even a case close to the Boston-area office where we met with Baker and Finegold. Hackers took Ted Williams' $300,000 down payment.
"It's gone," Williams said. "There's no recovering that."
It's a nationwide problem, so NBC Bay Area arranged a first-of-its-kind national meeting. The National Association of Realtors, National Association of Mortgage Brokers, and American Land Title Association committed to an open brainstorming session in Washington, D.C. But the Realtors canceled, and instead hosted their own private meeting. We were not invited.
The National Association of Realtors told us it is addressing the scam, with agent training, warnings on its website, and this YouTube video. It's been viewed more than 28,000 times — impressive, but nowhere close to reaching the association's 1.3 million members, or the more than 10 million people who bought a house since the video was posted.
"I think they need to do a lot more," Baker said.
Baker feels national tech and security standards are urgently needed to protect homebuyers.
"It's necessary to lock down communication," he said.
Baker also advocates more meetings like the Massachusetts event. Agents who attended the event, like Bob Bohlen, agree.
"The issue is not going to go away," Bohlen said.
Finegold agrees. "We have to do something about it," he said.
If you or someone you know has lost money in a real estate transaction to fraud, we want to hear from you. Please call us any time at 888-996-8477, or send us a message by clicking here.
