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CLAIMPREVENT® BLOG

The Danger of High-Pressure Sales Tactics in Your Real Estate Brokerage

Picture this — a real estate licensee who works for you uses a relentless, high-pressure sales pitch to corner a client so they can’t possibly say no. The licensee refuses to take no for an answer. The client, feeling pressured and overwhelmed, signs on the dotted line, only to regret the decision later. Unfortunately, situations like this actually happen in real estate sometimes. But, for brokers, these high-pressure sales tactics could see them facing a lawsuit — even if it was a member of their team who did it and not themselves. 

What is Considered a High-Pressure Sales Tactic? 

High-pressure techniques aim to influence the buyer (or seller) to sign on the dotted line and close fast. This can range from aggressive sales pitches, hounding buyers or sellers to make a deal, or emphasizing the negatives of not acting immediately. Anything that influences a person into making a quick decision (that they may potentially regret later) is a high-pressure sales tactic. 

The Risky Allure of High-Pressure Sales Tactics  

While some real estate professionals may feel the temptation to close deals quickly for short-term gains, there can be major consequences of using high-pressure tactics. They can quickly cross ethical lines and put the licensee and broker at heightened risk of client complaints, lawsuits, and tarnished reputations. 

Sales Mastery or Manipulation and Coercive Behavior?

Of course, it is possible for a real estate licensee to be a natural sales master without using high-pressure tactics. Natural talent, skills, and knowledge go a long way. But, sometimes there can be a fine line between sales mastery and what could be viewed by the client as manipulation or coercive tactics. It’s unwise to push clients into making hasty decisions when it comes to property purchases. Buying property is one of the largest investments that a person can make. The consequences of purchasing the WRONG property can be devastating for them. 

Lawsuits Waiting to Happen

When emotions are running high and a client feels they have been misled, pressured, or coerced by their real estate agent or broker, the next step is often a lawsuit. Lawsuits against their real estate licensee, the seller, and also the brokerage may follow. If you have used high-pressure sales tactics and not taken the instructions of your seller, you could even be facing a lawsuit from them too. 

From misrepresentation and negligence to breach of duty to violations of consumer protection laws — defending legal battles can be a costly and stressful process for a broker. There can be substantial legal fees as well as potential damages. These expenses can add up and put a significant strain on your financial stability as a business. 

Consider the Reputational Impacts

Aside from the potential lawsuits that could be coming your way as a real estate broker, there is also significant damage to your reputation. Most clients won’t want to feel pressured into a sale and instead will more likely respond to more ethical licensees and brokers for  the biggest investment of their lives. Real estate is a client-centric game and maintaining integrity is crucial to the longevity of your real estate brokerage. 

Strategies for Brokers to Minimize the Risks

Be Proactive in Risk Management

To protect your real estate brokerage, being proactive in risk management is crucial. Ensuring you have effective risk management policies and processes in your business will help you minimize your exposure to risk and potential lawsuits. 

Build a Positive Culture in Your Brokerage

Brokers should establish a positive culture of integrity and ethics. Success comes from focusing on client needs and not trying to railroad clients into making decisions they may well regret. Listen to what your clients need and provide them with honest advice. 

Focus on Recruiting the Right People

Part of building a positive culture is having the right people on board. When you’re recruiting, look for candidates who share your values and commitment to ethical practices. Recruit people who have a genuine passion for the industry, and not those who may be tempted by quick-fix, high-pressure sales tactics. 

Train Your Team

Provide training and ongoing support to your team to ensure they understand the way licensees in your brokerage should do business. Educate them about ethical conduct and the dangers of resorting to high-pressure sales tactics, including the legal, financial, and reputational ramifications. Ensure they know what is not acceptable and empower your team to navigate their jobs with integrity and professionalism. 

Protect Your Real Estate Business With CRES Insurance

As a real estate broker, you need to protect your business against the risks you face every day. You also need to protect yourself in case your team does something unethical or illegal because you can be held responsible for their actions too. 

From Real Estate Errors and Omissions insurance to a Business Owner’s Policy, CRES has got you and your brokerage covered, giving you peace of mind if you do find yourself needing to defend a lawsuit. 

As part of one of the largest insurance brokers in the world, CRES has access to more E&O and other insurance options for real estate brokers than just about anyone else. Let us find you the right coverage for the right price.

Contact the CRES team today at 800-880-2747.

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