Safety Tips Homebuyers May Consider When Depositing Down Payment in an Escrow


For most people, fulfilling the American dream of homeownership could be very complicated and stressful. This is because the homebuying process involves several entities, strict requirements and deadlines to meet. An escrow company is one of several entities that perform a critical role in ensuring a smooth homebuying transaction.

Before going to the closing table, homebuyers will be required to deposit their down payment to the assigned escrow company or with the settlement attorney. First-time homebuyers may want to consider some safety tips when depositing their down payment for the home they are about to purchase. Failure to observe some escrow safety tips could lead to homebuyers losing their down payment to make the purchase.

Scammers could intercept the homebuyer’s down payment

A couple in San Diego, California recently lost $775,000 after they unknowingly wire transferred to a scammer posing to be employees from their escrow company. The couple apparently received several unsecured email instructions on how they should transfer the down payment. The emails, according to the couple, contains signatures and addresses similar to the contacts in their phones. After wiring the money, the couple called the escrow company only to be told that the company never gave them instructions. The couple later learned that they wired the funds to a bitcoin exchange account owned by a hacker in Singapore.

Like the San Diego couple, homebuyers are often left tormented when they lose the funds they intend to use to fulfill their homeownership dreams. However, there are safety measures they can do to ensure their funds go to the right hands.  

Homebuyers should always suspect the emails they receive

Although the Federal Bureau of Investigation (FBI) said such scams mostly hit Californians, internet financial scams could also happen to homebuyers in other states.

Email is a convenient messaging system often used in many transactions including real estate. However, first-time, and even experienced homebuyers should always suspect that hackers could intercept important communications especially when a large transaction is about to happen. Chief security officer for ZeroFOX, Sam Small, said in a recent article to consider emails as one of the very effective tricks in the book. “You get an email, it looks and feels authentic, from someone you trust and they’re asking you to do something. The next thing you know, you’ve sent out a bogus wire transfer and the entire organization is at risk,” he said. Online hackers nowadays are very hard to detect, and they could pose as someone involved in the transaction. Homebuyers who receive wire transfer instructions through email should call their trusted contacts to confirm the information they receive. It’s one of the important steps to protect down payment. Escrow companies typically warn homebuyers not to accept wire transfer instructions through email.

Moreover, homebuyers must never trust an email that came from unsecured sources, even if it seems legitimate. Some homebuyers find it ideal to get the phone numbers of important persons involved in the transactions and prefer to accept instructions over the phone or meet them personally.

It pays to check the credibility of parties involved in the homebuying process

Escrow companies or settlement attorneys secure the funds and documents for the homebuyer and the seller in a real estate transaction. After depositing earnest money, homebuyers need to deposit the remaining funds to an escrow account to complete the down payment in advance before going to the closing table. For first-time homebuyers, this could be the most stressful part of the transaction.    

Homebuyers or the sellers could negotiate who will choose the escrow company. Homebuyers who agree to work with the escrow company selected by the seller may consider checking its credibility through reviews or from past clients before depositing their earnest money. Some signs of a fraudulent escrow company could include obliging clients to act fast, or those who overemphasize the words “safe” and “secure” in their websites. Homebuyers could even ask their agents about the legitimacy of an escrow company.


First-time homebuyers should know that an escrow company or a settlement attorney will secure their funds as they make the biggest purchase of their lives. However, homebuyers should be vigilant to ensure the security of their funds, especially the down payments needed to fulfill their American dream of homeownership.