REALTOR® Magazine Online: 10 Tips for Creating Your Agency Policy

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			*Risk management* Controlling Transaction 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		10 Tips for Creating Your Agency Policy 1. Present a brief opening statement of your agency policy. 2. Describe how the policy will be implemented. 3. Define the types of agency relationships that will be practiced. 4. Include a rationale for your company’s agency policy. 5. Explain how the licensee treats the consumer in each type of relationship. 6. Indicate what disclosures need to be made. 7. Indicate when and to whom disclosures must be made. 8. Include standard forms licensees are required to use. 9. Specify what kind of training the company will provide to licensees. 10. Have an attorney review your policy to ensure that it conforms to applicable state laws. TIP: Simplify relationships with consumers. Richard Machado, president of the National Association of Exclusive Buyer's Agents, says brokerages that try to be all things to all consumers increase their liability because associates cannot convey the distinctions well to consumers. —Real Estate Broker's Insider, Alexander Communications, Feb. 1, 2000 A Sample Brokerage Agency Policy A brokerage policy should summarize who you will represent and what forms of agency you will permit. For example: “The ABC Brokerage Co. will represent sellers in the sale of their homes, and buyers in the purchase of homes. The ABC Company also will practice disclosed dual agency in the sale of in-house listings. This type of relationship only will exist after full disclosure is made to all parties to the transaction and after obtaining their informed consent.” Reprinted from "Don’t Risk It: A Broker’s Guide to Risk Management," NATIONAL ASSOCIATION OF REALTORS^®, 2000 and used with permission. This publication is available from NAR by calling 800/847-6500. Tips for Implementing Your Agency Policy Hold regular training sessions to remind associates of common agency conflicts. Remind associates that following agency policy is both a legal and ethical duty. Hold an orientation on agency policy and what forms of representation your company permits. Hold regular sales meetings on the topic. Practice role-playing exercises to ensure that salespeople can adequately explain the agency relationships you permit. Develop a simple, precise explanation of what each of the representation options you permit means to clients (especially if your state doesn't have a standardized disclosure form) and encourage associates to use this as a tool for disclosure. Keep copies of all completed agency disclosure forms in each transaction file. Review files during the transaction to ensure that the forms have been completed properly. Be prepared to make infrequent exceptions to your policy or to change your policy if too many exceptions arise. Portions adapted from Agency Relationships in Real Estate, 2nd edition, John Reilly, Real Estate Education Co., 1987 3 Potential Agency Conflicts >

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