Realities of Real Estate: Wire fraud, drones and mortgage rates

Every once and a while, there isn’t one singular topic we think is important, but rather there are a variety of issues that you need to know about with respect to buying and selling homes. This is one of those weeks, so here are some real estate odds and ends.

Wire fraud

Email is a tremendous convenience and everyone uses it, but there’s a dark side to electronic communication that could cost you a fortune. We’ve all received those email scams, you know the ones where some prince in Ethiopia wants your help transferring a billion dollars into the United States, and if you help him out, he’ll give you a 5 percent processing fee. All you need to do is give him your bank account and Social Security number to get the ball rolling.

Businesses are also confronted with a wide variety of email scams, and the business of real estate is no different. In fact, real estate transactions have become a prime target for hackers and other such criminals, because the process of buying and selling property involves large sums of money. Here’s how the scam often works.

When someone is buying a house, they usually don’t show up at the settlement table with a suitcase full of hundred dollar bills. Typically, the buyer will have a certified check, or in many cases, funds will be wired directly to the title company conducting settlement. If the money is being wired, the bank or title company will need routing instructions to facilitate the electronic transfer of funds. As a result, the Internet criminals scan emails, in a process called phishing, looking for key words that let them know someone is performing a transaction that might include a wire transfer. The criminals will then send you an email that looks like it’s coming from your real estate agent or a title company giving you new wiring instructions.

Unfortunately, if you use those new instructions, the money won’t show up at your settlement. Instead, it’ll be on its way to some obscure bank account in a place like the Soviet Union, and you’ll never get it back.

Fortunately, the solution for protecting yourself from this problem is pretty simple. First, don’t ever, ever, ever send wiring instructions or bank information via email or text. Second, even if you get a very official looking email from your bank, title company or real estate agent requesting bank information or wiring instructions, DO NOT RESPOND.  e tell all our agents to inform buyers and sellers that we will NEVER ask for bank information or wiring instructions using email or text.  Third, the only way to communicate this information to those who need it is over the phone, or better yet, in person. It might seem like a hassle to make a personal visit to the title company or your bank, but it’s a much bigger hassle to lose tens or even hundreds of thousands of dollars, because some unscrupulous character intercepted your email.

Drone update

In an earlier column this year, we talked about drone photography, something that is becoming quite popular due to the dramatic shots that aerial photography can produce. However, what most home sellers, and a large number of real estate agents, don’t know are the significant restrictions associated with the use of drones for commercial purposes. For example, if a drone is used to take pictures of your house, the drone must be registered with the Federal Aviation Administration (FAA), and the drone operator is required to have a Section 333 Exemption, which, among other things, mandates that they have a private pilot’s license or sport pilot’s license. Additionally, there are important insurance issues to consider.

Here’s the update. When we wrote our earlier column, it was illegal to fly a drone, for any purpose, within 30 miles of Ronald Reagan Airport. There are also restrictions on flying drones within five miles of other airports. As a result, flying a drone in most all of Anne Arundel county was strictly forbidden. Subsequent to that column, the FAA reduced the 30 mile no drone zone around Reagan to 15 miles. But, all the other requirements associated with the Section 333 exemption and drone registration are still in place. So, if you have a real estate agent who is promising you drone photography, make sure they are aware of and follow all FAA requirements.

Mortgage rates

I don’t know about you, but going to the gas station and filling up the car has become a pure joy.  Yesterday, it was around $1.60 a gallon, and with the discount points I had from Giant supermarket, it was less than $1 a gallon! Happy days are here again when it comes to the price of gas.

The same is true with mortgage rates. For a while, it looked like the Federal Reserve was going to rain on our parade and start pushing rates up. But, even though the Fed hit the banks with a 25 basis point increase in the Fed Funds Rate, that increase has yet to flow through to mortgage rates.  Not only haven’t mortgage rates gone up; they’ve actually gone down! Last time I looked, the average rate on a 30-year fixed rate loan was just 3.66 percent. A 15-year loan has now dipped below 3 percent and is averaging 2.96 percent.  FHA 30-year loans can be found for as little as 3.25 percent, and you can even get Jumbo 30-year loans for around 3.5 percent.

Like the price of gas, mortgage rates are a bargain. Plus, banks aren’t quite as tight as they used to be on qualification standards, and the amount of money you’ll need for a down payment is also lower.  So, if you didn’t think you could get a loan on the home of your dreams, now is the time to take a second look.