RISMedia's Real Estate Magazine

MAR 2017

Real Estate magazine is the industry's leading source for real estate news and information since 1980. Published monthly by RISMedia, Real Estate magazine offers timely and relevant real estate news to the industry's top brokers and agents.

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16 March 2017 RISMedia's REAL ESTATE {The NAR Power Broker Roundtable} Robert Bailey: As brokers and agents, we are deeply committed to protecting the interests of our customers, and to manag- ing our business in ways that are honest and fair to all. But despite a willingness to hold ourselves accountable, we live in an increasingly litigious society. Hence the rise of risk management: the strategies we use to identify, control and mitigate the risk of being sued or penalized for real or perceived injustices. In the absence of unanimous guidelines, and with laws and regulations differing from state to state, every broker develops best practices in terms of managing risk. Jason, what's your approach? Jason Waugh: We put time and energy into agent education, and we have multiple layers of compliance in place, beginning at the branch level and on up. It's such a built-in part of our culture, in fact, that we have a full-time resource person on staff. He's available to agents at any time as "iffy" issues come up, and he sits in on our training sessions to be sure we understand where risk comes from. Ma Deuitch: Like Jason, we've embedded the issue of risk manage- ment into our company policy and we have systems in place for dealing with the issues. We focus heavily on agent training and education to mini- mize the potential for risk. The Ari- zona Association of REALTORS® has a legal hotline in place for agents, so they have an additional resource. Dan Elsea: Sad to say, we're finding risk management a sort of "growth industry" in Michigan, so we're doing more and more each year to help keep us more or less bulletproof. Mandatory agent training is a big part of our strategy, but we also have a vice president and an attorney on staff who do a great job of keeping us on track for minimizing risk. Nelson Zide: The best way to avoid risk is just to be careful what you say. We do a lot of agent training in our company—including seminars with appraisers and inspectors—to help our agents identify and avoid the kind of misunderstandings that are often at the root of a complaint. You can't be sued for what you didn't state. Our mantra is, "If you don't know the answer, say 'I don't know, but I'll find out.'" RB: Are there any issues that stand out as the ones most frequently at the root of complaints or lawsuits? MD: I'd say 70 percent of the com- plaints we hear about are based on non-disclosures by the seller. DE: That's about right, but those are also the issues that go away the fastest. A lot of the risk today comes from wire fraud issues, which are becoming rampant. That's something we're working very hard to contain. NZ: Part of the problem, at least as far as non-disclosure by the seller, is that disclosure forms are not manda- tory in every state. And some issues, like undetected mold, may not be cov- ered in errors and omission policies. RB: Still, there are guidelines available, from NAR and from state and local as- sociations, for taking steps to minimize liability—setting proper expectations, for example, keeping a log to record conver- sations, and using email to confirm verbal agreements. JW: That's true, and we use those points in our agent training. We did more than 10,000 transactions last year, and never had a single claim. DE: The idea is to be a great set of brakes —good at stopping potential issues before they explode, rather than the airbag that blows up after the damage is done. RB: NAR offers a number of risk manage- ment resources, forms and documents for brokerages, including the new publication Real Estate Brokerage Essentials: Navi- gating Legal Risks and Managing a Suc- cessful Brokerage, 4th Edition. See www. NAR.realtor/topics/risk-management for more. RE 8For an expanded version of this article and other NAR Power Broker Roundtable topics, please visit www.rismedia.com. Risk Management: Strategies and Best Practices MODERATOR: Robert Bailey Broker/Owner, Bailey Properties, Santa Cruz, Calif.; Liaison for Large Residential Firms Relations, NAR PARTICIPANTS: Jason Waugh, President, Berkshire Hathaway HomeServices Northwest Real Estate, Portland, Ore. Ma Deuitch, Designated Broker, DPR Realty, Scottsdale, Ariz. Dan Elsea, President, Realty One, Southfield, Mich. Nelson Zide, Vice President, ERA Key Realty Services, Framingham, Mass. The Power Broker Roundtable is brought to you by the National Association of REALTORS® and Robert Bailey, NAR's Liaison for Large Residential Firms Relations. Watch for this column each month, where we address broker issues, concerns and milestones.

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