 |  | Risk management Controlling Business Risks | | ||
|  Three Lines of Defense Against Risk Keeping Risks Under Control Controlling Transaction Risks Agency Disclosure Avoiding Antitrust Risks Minimizing Liability from Contracts Fair Housing Risks Controlling Personnel Risks Communications Policies to Minimize Risks Insuring Against Risks More Resources: Controlling Business Risks Code of Ethics: Controlling Business Risks | 3 Proven Risk-Shifting Strategies Since it’s impossible to eliminate all risks, finding ways that other will help bear the potential costs of a suit can help mitigate your losses. 1. E&O insurance. Often called "malpractice insurance for real estate brokers," errors and omissions coverage will help pay for the cost of litigation and some judgments against you if you are sued for errors in business practices. 2. Seller disclosure. You can reduce the likelihood of misrepresentation claims by giving your sales associates a standardized disclosure form for all sellers to complete and sign at the time the listing is taken. This form should detail all known physical or legal problems connected with the property. Keep in mind that a disclosure form does not protect your associates or you from liability if they fail to exercise reasonable care in looking for property defects. TIP: Almost 30 states now have state-mandated disclosure forms. If yours does not, review the suggestions on disclosure forms in the Prepackaged Sales Meetings: Property Disclosures. You also might want to consider purchasing copies of the Property Disclosure Pocket Guide for your sales associates by calling NAR at 800/874-6500. 3. Third-party reviews. Buyers and sellers often ask for technical information that goes beyond the expertise of a real estate professional. Brokers have a responsibility to train their associates on the types and limits of advice they can offer and when and how to recommend to clients that they obtain that information from qualified outside sources, such as home inspectors, environmental specialists, and attorneys. See the More Resources section for sources where clients can locate these specialties. TIP: Consider developing lists of qualified experts in several categories most frequently requested by buyers and sellers. This will provide a valuable tool for your salespeople to provide added service and help ensure that clients receive the expert advice they require. Be sure to include at least three vendors under each category to avoid possible legal or ethical violations. Also be careful to make clear that you are not “recommending” or “endorsing” the services of any experts on your list. Keeping Risks Under Control > | Keep It Ethical Agents should avoid exaggeration, misrepresentation, or concealment of pertinent facts, but are not obligated to discover latent defects in the property or reveal facts that are confidential under the scope of state agency laws. (Article 2 ) |