Real estate brokers face constant financial risk working with contract agreements, private showings, and open houses. These dangers, along with a significant number more, can harm a real estate firm. A solid real estate risk management plan can shield firms from these unanticipated occurrences. Whether a realtor operates individually or in a brokerage, developing a thorough risk management strategy will help minimize financial repercussions.
Have an Open House Strategy
Enticing houses in popular communities will surely draw sizable audiences during an open house. This raises the possibility of unintentional injury or property damage. Consider making a safety plan for open houses to reduce these dangers. Get general liability insurance to safeguard against the costs associated with lawsuits. This coverage takes care of physical and property damage claims, legal fees, and any settlement reached with the opposing party. Before exhibiting the home, check it for dangers such as a slippery pathway, exposed cables, or sloppy carpeting that someone might trip over. While setting up, provide plenty of room for potential buyers to wander about. During the showing, keep an eye on any young children. Encourage prospective customers to look only with their eyes, not their hands, to avoid being held accountable for property damage.
Read Every Contract
Clients will sue real estate brokers and agents for various contract-related issues. Examples include legal action for omitting to disclose a sale contingency or if the seller’s concession statement isn’t explicit. Make sure you’re performing due diligence to prevent client litigation. Double-check your contracts, and before sending them, think about asking a friend or real estate attorney to evaluate any crucial legal paperwork. Have your customer check the agreement for mistakes before it’s too late. Having errors and omissions insurance (E&O), commonly called professional liability insurance, is helpful if you find yourself in a legal dispute with a client. If a customer is badly impacted by a contract mistake or false information, E&O insurance will shield you from financial damage.
Think Communication and Transparency
Realtors abide by professional standards and a code of ethics set by the industry. If you inadvertently or deliberately break the code, a buyer or seller may choose to take legal action against you. Aim for total client openness in all parts of a transaction to prevent ethical breaches and ensure that both the buyer and the seller have a written agreement outlining all conditions. Effective communication requires listening to your customers’ needs. Avoid overstating things or promising things you can’t deliver. In addition, be careful to identify any known dangers or flaws that might influence a buyer’s choice. Upholding the Code of Ethics is vital. If you break a code of ethics, no insurance policy—no matter how extensive your company’s insurance portfolio—will shield you from liability.