By Samantha Gamble
You can say one thing about the real estate market: It’s never boring. With so many variables, real estate brokers and agents should be sure they are being proactive about reducing their risk of claims.
Here are five things real estate agents and brokers should keep in mind to limit their exposure.
1. Keep professional skills sharp and maintain your professional connections.
The real estate world keeps things interesting, with regularly changing property tax laws and exemptions, zoning regulations and even school district boundaries. Stay on top of industry trends and emerging issues in your community, state and region by taking advantage of continuing education and professional development opportunities. Armed with up-to-date information, agents and brokers can optimally assist their sellers and buyers in the listing and purchasing process – and even prevent errors and omissions (E&O) claims.
2. Focus on your niche.
This is where real estate professionals bring value. There is a wide range of property types in the market, and real estate agents and brokers who develop expertise in a particular type of property are in the best position to expertly handle any issues that may arise. Venturing too far from your comfort zone could potentially increase your risk of an E&O claim. Consider partnering with another agent whose experience is a good fit for a particular transaction or developing a referral system with colleagues to match up properties to those with the appropriate niche expertise.
3. Always document.
It can be challenging to keep meticulous notes of all details for a particular property, but keeping track of offers, bids and other essential developments is critical. Make sure your notes are clear and complete. Consider the potential claims that could arise if an agent were to fail to document and present a competing bid to a seller: an errors and omissions claim via a potential misrepresentation, breach of fiduciary duty, failure to disclose, breach of contract or even a Fair Housing discrimination complaint.
4. Don’t make promises that you can’t keep.
Be very clear with buyers and sellers about what you can and can’t deliver. Avoid potential claims by ensuring listing agreements contain provisions which clearly state that agents do not assume responsibility for obtaining or verifying property information, such as zoning, size, boundaries and permitted use.
5. Manage buyers’ and sellers’ expectations regarding total costs for services.
A real estate transaction can include many players, including the real estate agent/broker, a real estate attorney, the title company, a property inspector and a local municipality, each with separate fees often not addressed up front in the real estate agreement. Avoid potential misrepresentation or failure-to-disclose claims by being clear with buyers and sellers so they aren’t reeling with sticker shock when they discover additional fees.
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