You are regularly helping in the purchase and sale of the largest investment most Americans will make in their lives. Since each home and its buyer/seller are unique, so are the risks. You need to make sure that you properly represent your client in case of buyer’s remorse after the excitement fades. You would have to be a fortuneteller, able to see directly into the future, for your transaction to be without risk.
This, of course, is where insurance comes in. Having real estate E&O insurance is one way of mitigating risk. It provides the specific coverage you need in the event of a claim.
However, E&O insurance is often not enough. Risk management, or rather the plan you put in place before a claim, can help reduce claims and thereby reduce your premiums. In essence, risk management planning is what is upstream of having to tap into your E&O insurance.
But what does this look like? What does “risk management” really mean to a real estate professional? We have compiled a list of actions and precautions that can be put in place to help reduce the risk of a claim. These are services that are offered by CRES and our team of experts who are constantly working to prevent a claim from happening:
- Phone consultations: You or your agents can call our “stress less” Legal Hotline and consult with our team of attorneys about any aspect of a real estate transaction, including general questions about forms or disclosures.
- Contract and document review: You and your agents can fax or email real estate documents to our attorneys for review and commentary.
- Risk management seminars: As a CRES Firm member, you can attend free risk management seminars to learn how best to protect your business. In 2014, we hosted 31 seminars nationwide for more than 2,000 attendees.
- Legal resources: Access valuable risk management resources, including legal case alerts, sample letters, updated contract supplements, specific disclosures, and other risk management tools.
- Attorney letters: Our risk management attorneys will write letters on your behalf in connection with any real estate transaction.
- Case alerts: As new case and statutory law goes into effect, we will keep you up-to-date on legal rules and requirements affecting your business.
- Sample documents: Our risk management team provides draft documents, such as releases or purchase contract supplements, to ensure smooth transactions.
Everyday Risk Management
Yes, you can hire someone to have your back so you don’t pay high attorney’s fees every time you need support, but what else can you do to cover yourself to prevent a claim?
- Stay Informed: Changes to federal and state law happen all the time. Subscribe to your local real estate association newsletter to stay informed on what changes may affect your work.
- Record: Your phone is a powerful tool. Use it to take photos, video, and even audio when a situation arises that may cause a claim to be filed. Broken window at an open house? Photograph it. Questionable safety issues at a listing? Video record it. You never know when a record of the event will come in handy.
- Get it in writing: Whenever possible, keep a paper trail. This means emails, notarized documents, even text messages can help support you should a disagreement arise. Nothing clarifies who said what and when better than a time stamped written document.
- Foster great relationships: Your coworkers and business associates can be excellent allies. Foster positive business relationships everywhere you go. You’d be surprised how much a positive business relationship can help you.
If your firm’s E&O policy does not come with extensive Risk Management services consider purchasing your own. CRES Real Estate Professional individual policy includes extensive attorney support for about what an attorney would charge for just one hour of work.