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Young Professionals
REALTOR® Emeritus |  | Risk management Keeping Risks Under Control | | ||
|  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 | Risk control hinges on rigorous standards for quality service, rapid response when disagreements arise, and reliable legal counsel to suggest the best way to address conflicts. Risk Reduction Through Communication In many cases, conflicts can arise because of a simple case of miscommunication. Use these five tips to avoid misunderstanding with clients, customers, and associates. 1. Ask questions, if you’re not sure what the other party is saying. Don’t let a fear of appearing stupid lead to a misunderstanding. 2. Paraphrase what the other party says to you to ensure that you understand correctly. 3. Make it clear that when you make a judgment or an inference that you aren't stating facts. 4. Follow up important oral statements in writing to help ensure clear communication. 5. Avoid jargon when talking to clients. Define terms they may not understand to avoid confusion. 9 Tips for Preparing Defensive Record Keeping A comprehensive paper trail helps your associates avoid misunderstandings with clients and identify mistakes that could lead to litigation. 1. Document your sources of information. When you’re passing on information you obtained from someone else—a local zoning board or school system, for example—document your conversations with the source (who, what, when, where) and with the client. Keep those notes on file. 2. Keep a telephone log that summarizes all business calls. Note the date and time of the call, the name of the caller, and a one- to two-line summary of the conversation. —Gary Pesselt, White House Properties, Woodland Hills, Calif. 3. Teach sales associates how to structure a complete transaction file that includes documents such as disclosure statements and waivers as well as detailed notes. Develop a checklist for the front of the file that lists each document that should be present. To avoid documents “disappearing,” add a checkout box that must be initialed before a document is removed. 4. Keep records of what types of housing each prospective buyer asked to see, all housing options offered, all services provided, and the dates of showings. Retain these files for at least two years, since fair housing complaints may be filed for two years from the incident or the breach of a conciliation agreement that resolved a previous fair-housing complaint. 5. Send sellers written updates on showings and feedback. Phone calls are great, but letters are a more tangible defense if a dispute arises as to your diligence in marketing a listing. Keep file copies of all correspondence. 6. Indicate on correspondence who is receiving copies. For important documents, consider certified mail, courier, or other option that provides a confirmation that the documents were received. 7. Get a letter from the lending institution stating the reason if a mortgage loan is denied. —Sony Taylor, CRB, “Magic of the Paper Trail, Illinois REALTOR®, November/December 1990 8. Send copies of changes in listing terms, such as price reductions or changes in the listing period to the seller, any cooperating brokers, the MLS, and the transaction file. 9. Use confirmation letters to shift the burden of response to the other party. The recipient of a confirming letter is asked to take some action if the content does not match his or her understanding of what was said. —Oliver Frascona, The Paper Trail, Real Estate Law Books Inc., 1987 TIP: Remove the need to improvise by using only state- or company-approved forms and clauses and standardized cover letters for each stage of a transaction. Discourage sales associates from modifying standard forms and procedures to suit the needs of a particular transaction. —Oliver Frascona, The Paper Trail,Real Estate Law Books Inc., 1987 12 Things Every Transaction File Should Have > | Keep It Ethical Avoid exaggeration, misrepresentation, or concealment of pertinent facts when discussing a property. (Article 2 ) |