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CLAIMPREVENT® BLOG

How To Stop Your Real Estate Licensees from Going Rogue

As a real estate broker, you always try to recruit the best possible licensees. Those that share the same vision and values, and people who you can lead towards success. But, occasionally, things may not quite go to plan. Have you ever thought about what might happen if one of your licensees goes rogue? 

What Could Go Wrong?

Recently, a real estate professional in Los Angeles did just that and posed nude in a series of shots to advertise an LA property. He posed in different rooms around the house and was snapped cooking in the kitchen, reading the newspaper at the front of the property, having a snooze in one of the bedrooms, taking a shower and even doing a spot of sunbathing in the garden. The images were posted on Instagram with mixed responses, as you can imagine. The licensee had permission from the homeowners to market their property a little differently. 

The licensee stated in news articles that he thought it was funny and a way to help the property stand out. The images were only posted on his personal social media and all other online listings for the property took a more traditional approach. 

Nevertheless, it seems the licensee’s broker was not as supportive — Inman reported in October that his brokerage had dissociated itself from the licensee after the photos were published. 

Other Things To Watch Out For

While you might think the chances are slim that one of your team would go so far as to advertise a property in their birthday suit, there are many other ways licensees can go rogue. Whether it’s a breach of ethics or actions not in line with your corporate values as a business owner, your team of licensees can make or break your business (and your reputation). 

There is also potential for legal ramifications if one of your licensees does something wrong, even accidentally. Brokers can be held liable for the actions of their licensees. 

The most common reasons that real estate professionals are sued are:

  • Failure to disclose — for example, not disclosing a known property defect
  • Breach of Duty or Negligence — this sometimes relates to failure to disclose or where property defects have been found post-sale. However, claims may also relate to alleged misleading or inaccurate information provided by the licensee. 
  • Privacy or data breach — where a client’s information is obtained by a third party
  • Providing advice outside of the licensee’s real estate expertise — if the buyer relies on this information as fact and something goes wrong, you guessed it, they can sue the licensee (and their broker). 

More serious legal scenarios, such as fraud, while less common, are also issues to watch out for with your team of licensees. 

Prevention Strategies for Brokers

The best way to prevent a rogue licensee is to not recruit them in the first place. Effective human resources strategies to recruit, train and retain the best can be costly up front, but it’s  an investment in your business. 

A good induction process for all licensees is equally as important. Ensure you communicate your vision, values and preferred ways of working with your team to ensure they know what is expected of them. In addition, frequent communication with your licensees is necessary to ensure a continued pathway to success. 

Dealing with a Rogue Licensee

Even if you’ve done all of these things, there’s no guarantee you won’t one day be faced with a rogue licensee. Here’s what you can do to work through the situation:

Analyze the problem

You may be alerted to the problem by a lawsuit, or it might be a complaint or call from a client. Either way, speak to all parties involved to gather the information you need.

Speak to your licensee to get his or her side of the story

Not all clients are created equal. It’s important to get your licensee’s side of the story before you take any immediate action. It’s possible the problem is on the client’s side, and your licensee may have acted in good faith as a real estate professional. So approach the discussion with an open mind. 

Focus on customer service

You have no business without clients, so customer service is important, particularly when dealing with complaints. Keep the client informed of what you’re doing to investigate and/or rectify the problem if it’s a complaint. If it’s a lawsuit, ensure you provide information promptly through your legal team

Assess the alternatives

There could be several solutions to the problem when dealing with a customer complaint. This could range from discounted commission or other financial compensation to negotiating more flexible terms of agreement. In the case of a lawsuit, you might face more limited options. In any case, assess the alternatives and determine if any options can result in a win/win situation. 

Take action to repair the problem 

Many brokers are judged, not on the problems that occur within their team, but on what actions they take to deal with these issues. Problem-solving is a learned skill that is invaluable in real estate. 

Protect Your Brokerage 

Because brokers can be sued for their licensees’ actions, having the right insurance coverage is essential. It will help you to minimize your liability and protect yourself, your team and your brokerage if you face a lawsuit. 

CRES offers E&O Insurance with optional inclusions to cover your team. We can tailor your policy to suit the needs of your brokerage. With CRES E&O + ClaimPrevent®, you’ll even get free access to qualified attorneys who can answer any legal questions you may have, 7 days a week. 

Contact the CRES team at 800-880-2747 for a confidential discussion today.

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