Real Estate Risk Management
For any practicing real estate agent, the idea of getting in trouble or having an otherwise fruitful career derailed by a legal issue is sometimes the furthest thing from their mind. To some extent, I totally get that. I mean, who wants to think about legal problems or getting into trouble with your local real estate regulator? Most figure that either they are off the radar, or that whatever they are doing is fine because everyone else does it too. Well here is a newsflash, just because every other agent in town does something sketchy does not mean you should too! In fact, do the opposite! What I really mean here is that risk management should be an essential tool in the toolbox of any real estate professional as you never know when your day might finally come. Real estate risk management is essential, and let’s take a look at a few reasons why.
just because every other agent in town does something sketchy does not mean you should too!
We Are In a Culture of Compliance
Not too long ago I was listening to an interview, or really a “crossfire type interaction, between two economists discussing the Dodd-Frank Wallstreet Reform Act and whether or not it is the right move to clean up America’s financial industry. One of the gentlemen in the interview said that the purpose of the law, and the entire shift in U.S. government policy, was to create a “compliance culture.” OK, so what does that mean for me the local real estate agent?
the purpose of the law, and the entire shift in U.S. government policy, was to create a “compliance culture.”
Well first, it doesn’t mean that you should be afraid. (sort-of) What it really gives you is an insight is that in order to curb the financial troubles that befell the United States (and world) economy in 2007-2008 the government did what most governments do – they governed. Several key laws have been passed, regulators have been put on notice, and the professional and business climate in the United States is as difficult to navigate as ever. In other words, what you may have been able to get away with 10 years ago probably won’t fly in today’s real estate marketplace. Therefore, staying ahead of the curve means paying attention to real estate risk management issues and ensuring you have the background to stay compliant in a changing world.
The Fraudsters Ruined it For Everybody
As with most issues in business, the few “bad guys” really ruined the climate for the rest of us. Since the real estate market was red hot in the late 90s and into the 2000s, money was flowing and business was great. However, anytime there is a big opportunity for money the inevitable fraudsters will make their way into the marketplace. Unfortunately, some of these fraud schemes were so large that they shook the business and marketplace to it’s knees. The result – more rules!
What Should I Watch as a Real Estate Agent?
As a local real estate agent, it is true that your risk of being targeting by any major regulatory agency is relatively minor. Assuming you are not doing billions of dollars in business, and assuming you are not one of those fraudsters we discussed earlier! However, there are key real estate risk management issues I think every real estate agent should keep an eye on in their real estate business such as:
- Fair Housing
- Modern technology
- Social media and modern marketing
- Agency and disclosure issues
- Local laws and regulations
- And of course, ethics
I’ll break down each one of these in later posts, but for now remember to manage your risk and stay ahead of the curve!
Risk Management in Real Estate – A Course Every Real Estate Agent Should Take
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