Understanding cybersecurity risks in real estate

Cybercriminals will go to great lengths to gain access to your personal and confidential information. Be prepared with a risk mitigation plan.

NEW YORK. Your real estate firm is at risk from a growing cyber security threat. The days of keeping hard copies and physical files are increasingly becoming a thing of the past. In an era where digital transformation is changing the landscape of the industry, real estate companies are increasingly vulnerable to cyber security threats due to the sensitive information they hold. While companies are implementing digital solutions to streamline operations, close transactions faster, and improve customer experience to streamline operations, this also makes them prime targets for cybercriminals. As cyberattacks increase in frequency and sophistication, real estate firms and professionals must understand the risks and implement robust security measures to protect themselves from the escalating threat of cybercrime.

Cyber ​​Security Threats Facing Real Estate Companies

Real estate firms are particularly vulnerable to various cybersecurity threats due to the sensitive nature of the information they manage. From phishing attacks and social engineering to data breaches and ransomware, it’s important to be aware of the most common cybersecurity threats your real estate company may face.

Phishing attacks

Phishing remains one of the most common threats facing real estate professionals and companies. Cybercriminals use deceptive emails or messages to trick people into revealing sensitive information, such as login credentials and/or financial information. It is becoming increasingly common to receive emails or messages from criminals posing as “trusted colleagues” or “trusted clients” asking for immediate action on an urgent matter.

Social engineering

Similar to phishing attempts, social engineering tactics involve manipulating individuals into divulging sensitive information. In the real estate industry, attackers can impersonate clients or colleagues through phone calls, emails or other forms of communication to establish trust and gain access to sensitive data or financial resources.

Data breaches and ransomware

Data breaches are also common, where unauthorized parties gain access to sensitive information such as personal data, financial records and/or transaction history. In addition, ransomware attacks that hold companies’ encrypted data hostage are quickly becoming a constant threat. Nearly 318 million ransomware attacks were reported in 2023 alone, and researchers estimate that such attacks will increase to one every two seconds by 2031.1 Real estate firms, which store significant amounts of sensitive data, are prime targets for such attacks.

Given the current threats and future projections, it is critical for your real estate firm to prioritize this threat. Cybercriminals will go to great lengths to gain unauthorized access to your personal and confidential information. You must be ready to attack.

How cyber security attacks affect real estate transactions

Cyber ​​security threats pose a broad risk to real estate operations, with significant implications for a company’s financial stability, reputation and legal compliance.

The financial consequences can be catastrophic as companies grapple with the costs of buyouts, data breach remediation, potential regulatory fines, legal fees and lost business opportunities. Such attacks can be economically devastating for large firms and catastrophic for smaller firms.

Disclosing confidential and proprietary information can lead to serious legal consequences, class action lawsuits, data loss, compliance issues, and financial fraud, just to name a few. Ransomware incidents cripple operations, resulting in significant financial losses and downtime. On September 12, 2023, MGM Resorts confirmed that it suffered a ransomware attack that disabled multiple operating systems, resulting in $100 million in losses, according to SEC filings.2

In addition to immediate monetary losses, a cyber security incident can also damage a firm’s reputation, as trust and reliability are essential in real estate transactions. Customers provide personal and financial records during a real estate transaction that goes through financial institutions and brokerages to complete transactions. Any breach of customer data and/or service failure may result in negative publicity, delays in transaction processing, reduced customer base and/or lenders and financial institutions refusing to do business with the breached firm. In this environment, prioritizing cybersecurity is not just a technical necessity, but a critical component of maintaining financial health, customer confidence, and regulatory compliance.

Best practices for improving cybersecurity in real estate

Given the cybersecurity threats to real estate companies and their customers, it is important to highlight the mitigation strategies that companies and individuals should implement to avoid such threats. As the most practical strategy, training employees in cybersecurity best practices is essential. Recommendations include the following:

• Employee training is vital to maintaining strong cybersecurity. Companies should provide regular training to employees and agents to help them understand how to: 1) work safely online, 2) identify and avoid cyber threats, and 3) handle and protect sensitive information.
• Using encrypted communication methods and strong multi-factor authentication to share information can also help protect against unauthorized access and add an extra layer of security for attackers trying to gain such access.
• Ensuring regular software updates, regular data backups, and creating recovery plans further eliminate vulnerabilities that attackers can exploit.
• Developing and implementing clear policies along with implementing robust security protocols are also important to combat any existing risks and can protect against future threats.

Coupled with these best practices, it’s vital to ensure a firm’s preparedness by creating a robust incident response plan to follow in the event of any cyber attack.

Conclusion

As real estate companies continue to embrace digital solutions, the importance of cybersecurity cannot be overstated. By understanding threats and implementing best practices, firms can protect their operations, protect customer information, and maintain their reputation in an increasingly digital world. Caution, awareness, and preventative measures are key to navigating the complex real estate cybersecurity landscape.

© Mondaq Ltd, 2024