A Baker’s Dozen Risk Management Tips
Minimizing risk is a legitimate goal in any situation. The following tips should assist a broker in better serving the client and reducing the possibility of costly and time-consuming litigation.
1. Get to Know Your Client—The disclosures, advice and counsel required of the broker, depend upon:
- the facts of each transaction
- the knowledge and the experience of the client
- the questions asked by the client
- the nature of the property
- the terms of sale
2. Read & Understand the Purchase Contract & Related Forms—Understanding these documents is pivotal to giving competent advice
3. Educate Your Client—On the contract, CC&Rs, title report, public report and any other important matters
4. Avoid Shortcuts—Shortcuts such as incorporating the MLS or listing form into the contract, giving the buyer a list of properties to see at open houses unaccompanied and failing to write contingencies out completely all lead to ambiguity and the potential for disputes
5. Handle Offers Properly—Submit all offers promptly
6. Practice Within Your Area of Expertise—Both in practice area and geographically
7. When in Doubt, Disclose—Focus on common issues. If you have actual knowledge of a material defect – disclose it. If you notice a suspicious condition – point it out to the client and recommend the appropriate technical or professional investigation.
8. Assist the Client with Disclosures & Due Diligence—Recommend inspections and attend the inspections and walk through when possible. Supply the buyer with the tools to obtain information.
9. Think Before You Speak—Don’t speculate or guess. Identify the source of any information provided and direct your client to the source if possible.
10. Verify Information—If you have reason to question the accuracy of information being provided in a transaction or where the client has questioned the accuracy of the information.
11. Follow Through—Get the buyer pre-approved for financing. Review the title report and all other pertinent documents.
12. Document the Transaction
- Take contemporaneous notes
- Confirm important issues in writing
- Keep a complete and organized file
- Promptly return calls to clients and the other broker
- Provide updates even if nothing is happening
- Handle complaints promptly
“This article is of a general nature and reflects only the opinion of the author at the time it was drafted. It is not intended as definitive legal advice, and you should not act upon it without seeking independent legal counsel.”Tags: disclosure, K. Michelle Lind, risk management, tips