How to Reduce Open House Risks When Someone Else Hosts

open house sign on sidewalk

Have you ever received a request from another brokerage — or another agent within your firm — to host an open house at a property you have listed? This can be a great option for both parties, especially if you’re busy or out of your usual area. But before you agree, you need to take three critical steps before somebody else hosts an open house on a property you’ve listed.

A CRES client recently received a request from another brokerage to host an open house on a property she had listed. She was interested, but knew not to dive in too fast. The CRES Risk Management legal advisory team helped make sure she proceeded prudently.

Has Your Client OKed the Open House?

Before you make any agreements with another brokerage — or another agent from your office — make sure your client agrees. Even if you’ve talked to your sellers, get their response in writing. You’ll need the seller’s written consent for the other brokerage or agent to hold an open house, and include the date in that written consent.  

Are You Covered for the Open House?

Any open house comes with risks. You know how important the right insurance coverage is when hosting open house and showings. You want to make sure you’re covered if somebody else hosts an open house on a property you represent. You need to do two things:

  • Confirm that the other brokerage has sufficient Commercial General Liability insurance at $1–$2 million.  (If it’s another agent from your office, you’ll already know your office’s insurance coverage.)
  • Make sure your brokerage company and the seller are listed as “additional insureds” under that policy when the other brokerage has an open house. Get proof of coverage in writing and keep a copy in the file for this property. (If you have any questions about insurance coverage, be sure to call your CRES Legal Advisory Services Hotline BEFORE you agree to an open house.)

Who Benefits from the Open House?

You don’t want to be arguing about money or leads after the open house happens. So it’s wise to talk about compensation and leads up front.

  • In the event the other agent finds a buyer during the open house, the other agent can represent that buyer and receive a commission for finding the buyer.  
  • Typically, all leads generated from an open house are for the hosting agent, and aren’t shared with the listing agent.  But this is why you want to discuss these things beforehand.

Verbal agreements and handshakes are hard to enforce, so come to an agreement and put it in writing.

Once you’ve got these three pieces in place, you’re good to move forward with another brokerage or agent hosting an open house on a property you’ve listed.

Whether you’re wondering about letting another brokerage or agent host an open house or protecting yourself when you host one, qualified legal advice can put you at ease. With CRES Real Estate Errors & Omissions (E&O) Insurance, you get access to the CRES ClaimPrevent® Hotline 7 days a week.  You’ll receive a guaranteed response within 4 hours or the next business day (if during the week), or same day on a weekend or holiday, with recommendations confirmed in writing. From open houses, to tenant problems to listing issues, we’re here for you.

What’s the strangest thing that’s happened at an Open House you hosted?

This blog/website is made available by CRES Insurance Services for educational purposes to give you general information and understanding of legal risks and insurance options, not to provide specific legal advice. This blog/website should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. Claims examples are for illustrative purposes only. Read your policy for a complete description of what is covered and excluded.

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