The days when physical contracts were needed to buy and sell property are gone forever. But as the real estate industry moves online, cybercriminals are increasingly targeting the large – and sometimes lightly protected – sums of money that are involved in property transactions.
Traditionally, the real estate world has been awash in paper-based processes. But just as it did for so many other parts of our lives, COVID-19 accelerated the digitalisation of the property sector. Virtual inspections and auctions have become commonplace, and contactless contracts have quickly become the norm.
Isaac J Coonan is the Founder of Proptech BNE, a platform dedicated to facilitating industry connections and supporting the development of the property technology community in Brisbane and South-East Queensland. He says COVID was the catalyst for a digital transformation that was long overdue in the industry.
“COVID opened the door for the industry to understand what was possible,” he says. “The truth is that the property industry has been a slow adopter of technology. I think the vast majority of the people in the industry would admit that. And I think the reason why it was slow to adopt technology is because it was such a highly profitable industry as it was.
“When you look at the main catalysts for digital transformation and innovation, it rarely comes from scenarios where the industry’s doing phenomenally well, everyone’s quite happy and everyone’s quite wealthy. It normally comes from crisis, or from an urgent need for growth.
“I think COVID shone a light on how technology can bring resilience to an industry. What we’re seeing now is the industry is starting to understand, ‘Okay, just because it’s not broken doesn’t mean it can’t be better.’”
Now that the industry has seen how digital solutions can save time, energy and money for agents, buyers and sellers alike, there’s no putting the genie back in the bottle. Isaac says Proptech will continue to help the sector to innovate and evolve, and remove friction from everyday tasks and processes.
“The vast majority of this technology is not disruptive, it’s enabling,” Isaac says. “It’s technology that enables people in the property industry to do what they do more efficiently, and at scale. This industry is such a relationship-driven beast, and proptech means they don’t need to waste time on mundane, highly repetitive and easily programmed tasks. Instead, they can spend that time building relationships.”
The challenge for the industry, then, is to use technology to maximise efficiencies and provide more convenient user experiences without sacrificing security.
The red tape around electronic signing has eased significantly over the last few years, to the point where it’s become the norm in the industry. But even Isaac, a fierce proponent of the benefits of technology for the property sector, admits this makes him nervous.
“Electronic signing has been transformative, but this is one of those things that gives me a little bit of anxiety,” he says. “Because when there’s a rush to adopt a technology, you sometimes overlook some fairly significant risks.
“Electronic signing needed to happen, and it’s been highly beneficial for the industry. Sales agents have seen they don’t need to spend 20 per cent of their time driving contracts back and forth anymore, and they’re not going to go back to that. And that’s great – they should be spending that time on more important parts of their job.
“But you need to use the right tools, not just the easiest and most readily available tools. When you look at an electronic contract, it can actually increase the risk profile for a real estate transaction if there’s no verification of who’s doing the signing.
“If I can jump on Adobe and throw someone else’s signature on a contract, that’s a problem. I think that’s going to lead to some major screw-ups in the next year or so, which will lead to people realising they need to use better digital contract solutions.”
Cyber scammers and the property sector
The total value of residential real estate in Australia passed $8 trillion earlier this year, according to CoreLogic data.
That makes residential property Australia’s largest asset class, and puts it around four times the size of Australia’s GDP, worth around $1 trillion more than the combined value of the ASX, superannuation and all of Australia’s commercial real estate stock.
In other words, there’s plenty of cash flowing through the sector, with plenty of small businesses – who tend not to have the same cybersecurity protections in place as larger organisations – taking part in online transactions that involve large sums of money.
As a result, real estate agents, mortgage brokers and conveyancers are becoming increasingly popular targets for cybercriminals.
The Australian Cyber Security Centre (ACSC) recently warned that property-related scams are rising in Australia, while the Australian Competition and Consumer Commission’s (ACCC) Scamwatch says reports of payment redirection scams in real estate are up substantially from last year.
The most common property-related cybercrimes are business email compromise (BEC) scams, in which cybercriminals impersonate email accounts in an attempt to deceive people who are buying, selling or leasing property.
They’ll often register domain names and create email addresses that appear, at a glance, to belong to a legitimate company, but might have letters swapped, or an additional character added.
A property BEC scammer’s modus operandi is to insert illegitimate bank details for settlement or rental payments. In Australia, the ACSC says cybercriminals will often impersonate property sellers and ask their agent or lawyer to update their details on Property Exchange Australia (PEXA), an online service for property transactions.
This results in fraudulent bank account details being added to PEXA, without the criminals having to hack PEXA itself, and funds being sent to the cybercriminal’s account.
While banks are sometimes able to stop fraudulent transactions that are caught within the first few days, successful property BECs can go unnoticed until a business follows up on a missing payment. This can take weeks – and by that time, the money is long gone.
According to the ACSC’s most recent Annual Cyber Threat Report, average reported losses from BEC scams, across all industries, were up 54 per cent in 2020-21 compared to the previous financial year.
How to protect yourself when you sign a property contract online
With cybercriminals trying to squeeze through any openings they can find, the onus is on real estate agents, conveyancers, mortgage lenders, lawyers and any client of these businesses to be vigilant – especially during the settlement period.
The ACSC recommends all parties involved in the buying, selling and leasing of property to:
- Verify payment details. Before transferring money, especially if it’s a large transaction, take extreme care to confirm the account details you have are correct. The ACSC suggests going so far as to meet in person before transferring any funds, or calling the person you’re paying via a phone number you’ve sourced independently (i.e. not a phone number you got from their emails).
- Train your staff to identify suspicious emails, including requests to change bank account details or emails linking to fake websites. It’s common for scammers to attempt to create a sense of urgency – and this is particularly easy to do in industries like real estate, where a sense of urgency is often already present.
But take your time, look carefully at the sender’s email address, and if you’ve received a request to change payment details in a platform like PEXA, confirm this with the sender using contact details you source independently.
- Secure your email accounts. Cybercriminals pulling BEC scams won’t always use fake email addresses – they’ll sometimes hack into actual accounts using compromised passwords. Use strong passwords and implement multi-factor authentication to help prevent unauthorised access.
If you’re signing a property contract online, it’s important to know which type of signature is being recorded – is it an electronic signature, or a digital signature? Though the terms are often used interchangeably, they’re not the same thing.
Electronic signatures are simply signatures added to PDFs sent via email that essentially recreate paper contracts. They’re not secure or verifiable, they don’t require multi-factor authentication, and they can be easily faked or intercepted by cybercriminals.
A secure digital signature solution, on the other hand, should only be accessible by the intended recipient, and should provide encrypted evidence that a document has been signed. These are what should be used for all legally binding contracts and agreements, including contracts of sale and residential tenancy agreements.
To be effective, a digital signature solution should also be able to prove a contract has not been tampered with after a signature was added.
Cryptoloc’s Secure2Client is a secure digital signature solution that enables users to send encrypted documents and generate fully admissible digital signature certificates that are legally binding.
Powered by Crypotloc’s patented three-key encryption technology, Secure2Client guarantees the verification and integrity of contracts, enabling users to share and sign property contracts without compromising security.
Cryptoloc’s multi-factor authentication process ensures that only the intended recipients can view and sign the contract. And with each contract assigned its own audit trail, complete with time and date stamps, users can record every time a contract is accessed, modified, shared or signed, and be certain it hasn’t been altered after a signature has been added.
Better yet, Secure2Client conveniently integrates with existing systems like Microsoft Outlook and Salesforce. That means users can keep following their current processes and procedures, while ensuring the property contracts they send and sign online are safe, secure, and not susceptible to scammers.
Learn more about how Cryptoloc Secure2Client can protect your property contracts and book your demo here.
Cryptoloc is proud to support the Proptech Founders Forum 2022 as part of Something Fest 2022, Queensland’s digital, innovation and technology festival. The Proptech Founders Forum will bring property technology founders from around the country together for an afternoon of community building and invaluable insights into the ever-growing property economy.
The invite-only Proptech Founders Forum will be held at Brisbane Powerhouse on Thursday 27 October. Expressions of interest can be registered here. Tickets for Something Fest, which will run from October 24 to 28, are available now.