Risk management and the real estate agent
This morning I attended a risk management meeting. The speaker was a E&O insurance specialist. Right off the bat he tossed out this statistic for claims his company is involved with; 70% of the E&O claims his company receives are against real estate agents with over 7 years’ experience!
Does that surprise you?
It certainly caught me off guard. It would be reasonable to think newer agents are at higher risk of being sued, right? After his explanation and examples he provided it started making sense.
Things agents say
Ask yourself if you have said or heard an experience agents say or do something similar to the follow;
1. The roof is new.
2. This is a great deal!
3. You will love the neighbors.
4. The house has all new appliances
5. Just make offers on several homes, I’ll make sure you only buy one.
6. Yes, you can build a house here
7. The buyer said they would…
8. The seller said they will leave the…….
9. I only show homes to buyers that are prequalified.
10. I am a short sale expert.
11. Don’t make your mortgage payment.
12. Foreclosure hurts your credit score more than a short sale.
13. Short selling is better than bankruptcy.
14. Yes you can put in a pool, the neighbor has one.
15. The schools are great!
16. The schools are bad!
17. I don’t think you need a survey.
18. I don’t think you need an inspection.
19. You can have chickens here.
20. You don’t need flood insurance.
21. There are several offers on this house, I think you should offer more than list price.
22. Don’t worry about the inspection report, it looks pretty good to me.
23. I did not see anything really bad on the inspection report.
24. Let me have a contractor I know take a look at the problem.
25. I would offer $5000 more.
26. I would offer $10,000 less.
27. You don’t have to see the house to make an offer.
28. You don’t need an attorney.
29. I don’t speak your language; will your young child/family friend/complete stranger interpret for you?
30. This is a great neighborhood!
31. This is a perfect family home!
32. Sink hole inspections are too costly.
33. I have never heard of anyone getting a radon inspection.
34. That would be a waste of money if you ask me.
35. I am happy to meet the inspector at the house since you can’t be there, I’ll let you know if he finds anything bad.
36. You are paying cash, you don’t need an appraisal.
37. I have never sold a commercial property but I have always wanted to try.
38. I think the appraisal is wrong.
39. I knew I needed to get the extension, put it in writing, fill out the escrow, I just didn’t get around to it.
40. If the buyer defaults, you will get their escrow money.
It is not an issue until it is
This list could be endless. It makes sense that experienced agents have the majority of the issues. Often times out of habit they say things to buyers and sellers that never become an issue UNTIL…it does.
In our office we are fortunate that many of our seasoned experienced agents attend sales meetings where important information is discussed, but there are some experienced agents that feel they no longer need this weekly education. As a result they might miss out on important updates, new changes to the law or worthwhile conversation dealing with local sales issues and risk management situations.
The presenter made a great suggestion for Brokers wanting to protect themselves and help inform the agent body. Hold mandatory risk management meetings. Scheduling these meetings would give the Broker time to deal with the most common risk management situation Brokers face; escrow issues, and would also allow the Broker to speak on a variety of subjects encountered weekly.
I actually liked that idea and am considering offering that type of mandatory meeting at least once throughout the year.