The Ten: Cyberattacks exposed real estate's vulnerabilities — and strengths
Hacks wreaked havoc in the second half of the year. But the industry pulled together, proving that professionalism and relationships are what drive real estate.
Editor's Note: In a historic year shaped by trials — of all kinds — a handful of people and themes have emerged as defining forces. Real Estate News has selected the top newsmakers of 2023 who have left a mark on the industry or shown perseverance in the face of epic challenges and opportunities. They are The Ten.
The Ten: Cyberattacks
In a year when the real estate industry felt under attack from all sides, hackers decided to pile on, disrupting closings, listings and mortgages, and giving an unwelcome lesson in how interconnected the industry is.
A cyberattack on MLS system provider Rapattoni caused outages across the country in August, followed in the fall by a hack of Fidelity National Financial, the largest title services provider in the nation, and, in a separate incident, mortgage provider Mr. Cooper. Then just before Christmas, First American Financial, the second-largest provider of title insurance, was hit by an attack which stalled closings for more than a week.
While the cybersecurity breakdowns left agents scrambling, they also gave the industry an opportunity to band together and show that when the chips — or the servers — are down, real estate is still a family.
When Rapattoni went offline, "it was a catastrophic type of loss scenario," said Leo Pareja, eXp Realty's chief strategy officer. Agents across the country working on Rapattoni systems found themselves locked out of their MLS, unable to post or update listings.
At first, no one knew what was happening. Bill Johnson, an agent with Coldwell Banker in Greenbrae, California, only learned that his MLS had gone down when he was ghosted. "I had a broker's open, and nobody showed up," he said.
The industry comes together
The impact and widespread reach of the outage quickly became clear, prompting unaffected MLSs and associations across the country to offer up their services.
Jeff Ullery, MLS director for Dayton Realtors, quickly opened the organization's doors to Cincinnati Realtors impacted by the Rapattoni outage. "At the end of the day we're all Realtors," he said. "It's just the right thing to do."
California Regional MLS CEO Art Carter said the Rapattoni hack should be a wake-up call for the industry. "Cybersecurity is no longer a peripheral concern; it must be ingrained as a fundamental business standard across all sectors," he said.
As if to prove his point, hackers breached mortgage provider Mr. Cooper's systems on October 31, compromising customer information and forcing Mr. Cooper to shut down access for several days.
Then, on November 19, Fidelity National Financial, the nation's biggest title services provider, discovered a cyber breach and shut down its title and mortgage systems for a week.
A company statement to investors noted that the disruption "was relatively brief, as a portion of that time was over the Thanksgiving holiday weekend."
Cyberattacks 'can happen to anyone,' so be ready
In the interim, real estate agents and closing officers affected by the hacks worked with paper files and telephone calls. "It can happen to anyone," said Veronica Torres Luna, an agent with RE/MAX in Clovis, California, expressing support for the beleaguered title officers involved in her deals.
That was also the message from independent consultant Richard Rosenblum, a licensed real estate broker as well as a Certified Fraud Examiner and Certified Financial Crime Specialist, in an April column about cybersecurity.
"Real estate brokerages are excellent targets for cybercriminals, due in part to the high transaction amounts involved and easily accessed system failure points that are especially ripe for social engineering," he wrote.
Robert Siciliano, the head of training and co-founder of Protect Now, also urged real estate professionals to be vigilant about cyber threats in a column for National Cyber Security Awareness Month in October.
"Most real estate professionals may think of this as a time to change passwords or update software, but it should be an opportunity to consider, assess and mitigate any form of cyber risk that threatens your business," Siciliano wrote.
"Wire fraud remains one of the biggest cybersecurity risks facing the real estate industry, and when your clients get scammed, you lose more than your commission: You lose your reputation and the confidence of potential clients."