The 12 Best Risk Management Practices for Real Estate Agents
Developing best practices and incorporating the recommendations outlined below into your daily real estate business will significantly reduce your liability and help manage the risk of potential litigation as well as complaints filed with the department of real estate or your local REALTOR® Association.
- Develop and use standard procedures with everyone. Review fair housing rules and treat all prospects, customers, and clients honestly, fairly and equally.
- Keep a communication log during your transaction. Record your notes, conversations, milestones. If red flags are raised during the transaction or you encounter challenges, it is particularly important to record the facts and events. If you are using a paperless transaction management system, scan and upload all of your notes, emails, and correspondence for your transactions.
- Use email to confirm conversations, verbal agreements, proof of delivering copies of contracts and addenda. If your clients don’t use email, then mail copies of all the contracts and documents they sign via certified or registered mail or us an overnight service like Fedex.
- Keep a record of your transaction…including all paperwork, emails, and correspondence. Create a file on your computer and your email to organize your correspondence and documents. Scan your emails and store them online, on a backup device and/or in a paper file.
- Rule of three – always recommend three vendors, contractors, pest inspectors, home inspectors, home warranty companies, etc. (It is ok to only recommend Stanford Mortgage as Select stands behind their work.)
- Always recommend and encourage your clients obtain a home inspection and a home warranty. Get a written waiver if they choose not to.
- Disclose…Don’t Diagnose. Be the source of the source.
- Educate & set the proper expectations with your clients and customers… for example:
- Explain the short sale process; pros and cons of purchasing a short sale
- Review Earnest Money and what happens with a canceled sale
- Conduct a seller and buyer interview/qualification with all clients
What would YOU like to see in the next edition of Risk Management? Let us know.
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