Risky (Real Estate) Business
Last week I attended the National Association of Realtors (NAR) Mid Year Legislative Assembly in Washington as a representative of the Toronto Real Estate Board. Unlike the NAR Fall event, this one is a little more policy heavy with more emphasis on politics, lobbying and government relations. Still, it was a worthwhile event and I attended some very good break out sessions. One in particular was about risk. I believe real estate agents of all levels and skill and experience encounter daily challenges about their fiduciary roles to their clients.This session used real world examples to illustrate some of the reasons why we get sued or taken to RECO.
Here is an interesting question that was posed at the meeting; Who’s making more mistakes, the guy doing 1 or 2 deals a year or the guy doing 1 or 2 a week? That’s a tough one. On one hand you could argue that the guy who does one deal a year takes lots of time to make it right while the guy doing lots of deals is more susceptible to sloppiness. Then again, the once-a-year guy may have a lesser understanding of the process and make fundamental (read..bigger) mistakes while the prolific deal maker is so good at his job that nothing gets forgotten. What do you think?
Well, the idea of risk got me thinking, so my first morning meeting back in Toronto I made my topic all about risk. I asked the group to list areas where risk is more likely. In less than 30 minutes we came up with 48 possible ways you can open yourself to liability and avoid risk. I’m sure we could find another hundred if time permitted. Have a look at the list. Is there anything you would add?
At the core of this discussion is the philosophy that the real estate industry must centre on the needs of the client rather than the broker or the agent. When the needs of the client are put first, the risk diminishes. When agents function at the top-level of service and offer a standard level of service EVERYTIME, fewer mistakes happen.
With new agents getting into the business daily we should be concerned about competency levels. While education is good it does not prepare new agents for real life experiences. As I like to say, OREA teaches you the moves but it doesn’t teach you to dance. Only a handful of brokerages offer additional training. Are you at all worried? Recently I spoke to an experienced agent who prepares standard offers on her own properties, complete with all the right clauses, to give to agents who are preparing offers. At first it seemed a little crazy, after all, why is she preparing offers for other agents? Simply put, she believes that there are lots of qualified buyers out there who may lose a great house because their agent isn’t as experienced. By preparing an offer herself she is reducing the risk which ultimately is better business.
Interesting fact; regardless of a deal happening, if you provide exceptional service, and put the needs of the client first, both you and your client will feel great. I believe competent agents do more deals. Their listings sell, their buyers buy, their deals hold together, therefore creating less risk and less liability. Food for thought…