Growing BusinessSAFEGUARDS

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  • Risk Management for Real Estate Firms
    Game Plan

    Document Management

    Real estate transactions can generate piles of documentation. The sheer amount of paperwork required is one reason why clients depend on a real estate professional. One missing document, or unchecked box, could derail a transaction and lead to client damage claims and lawsuits.

    And it’s not just paper trails that require careful management, filing, and archiving. Emails proliferate just as fast, if not faster. Your liability is significantly increased if agents in your office are not copying you on all transaction-related emails. If you ever face an inquiry from a federal regulatory agency, emails will be part of any pre-trial discovery.

    Faxing may be dead or dying in many industries, but real estate pros still rely on the fax machine, partly because financial institutions still use them. Recognize that many faxed documents contain personal client information, so it’s important to take steps to protect your clients’ privacy, such as being certain that a faxed document reaches its intended recipient and doesn’t sit in a tray overnight where it could be viewed by others.

    Mitigation Measures

    • Design efficient document filing and archiving systems and train everyone in your office to never deviate from the processes. Scan paper documents so you have electronic backups.
    • Keep all emails indefinitely. To make them easier to organize and search, you can convert them to PDFs and store them as part of your regular computer back up routine, preferably in a cloud-based offsite location.
    • If you don’t want a big fax machine sitting on your desk, use an online eFax service to limit your paper pile and be a little more eco-friendly. Online faxing is convenient because you can send and receive faxes from anywhere outside your office, using mobile devices. All faxes come in as PDFs for easy storage and archiving.
    • Find out if your state allows electronic signatures for your real estate transactions. E-signatures save time and paper and are particularly efficient for email and fax communications and for long-distance realtor/client relationships.
    • Get insurance. At a minimum, it is prudent for any small business to have a Business Owner’s Policy. However, because there are unique risks that come with selling and managing property, realtors would be wise to consider additional coverages.

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