Managing Risk - Communication
There's been some wonderful posts and articles on our blog here about risk lately for all parties involved with real estate transactions, I thought I'd put my two cents in on one aspect that not only creates risk but can be very frustrating for all parties involved - communication.
Bad Communication - More than Frustrating
With so many different methods and tools with which to communicate, it is a wonder that humans still fail to communicate well enough to avoid problems. In the practice of Real Estate, communication is so heavily focused on generating business, that sometimes Brokers and Realtors leave themselves unguarded to risk. This gap in caution and communication can lead to problems that give rise to litigation not just for the professionals involved but the clients too.
Examining the practice of Real Estate, how is risk applied to the different aspects one performs each day? Realtors should also ask themselves how much risk they can tolerate, since this varies person to person. Lastly, how can a good Realtor manage their exposure to risk and protect their client's interests?
But what is risk? Risk is, at least in our world, the unknown factors of a business transaction that can affect our reputation and ability to continue our livelihood. Since Realtors participate in a wide range of negotiations and contracts they can be open to varying degrees of risk. A Realtor can mitigate risk through CEU training, education and a network of professional peers. It is of utmost importance to be accountable to the advice they give and the service they provide to clients. Applying that knowledge and experience to each transaction is a must.
Understanding and Taking Accountability
Understanding how much risk one wants to manage is a personal reflection much like that of investing. A person with a low tolerance to risk is not going to be comfortable delving deep into some real estate transactions requiring a great deal of scrutiny. The opposite can be said for another Realtor that is comfortable with risk. Risk also changes when one considers the solid reputation they have built and the degree of influence they carry within their peer network. A new Realtor can assume more risk if they choose since they are not as well known as someone that has twenty years of experience.
Timely, Effective Communication - Benefits
- The benefit of being on top of communication with clients is they feel important. They feel the sincerity and grow to trust the suggestions given to them. The diligent and competent Realtor, who fully educates himself and communicates well can serve clients in both high and low economic conditions. Risk is minimal when communication, competency and trust is high. Does this describe you?
- Timely communication can make or break a deal. "Time is of the essence" is a more than just a prompt, or good reminder on contracts. Listing agents responding to buyer's agents questions on behalf of their clients can mean the difference between making an offer, or the buyer moving on to another property or even rescinding a current offer. At the same time, buyer's agents that don't respond quickly (and thoroughly) to existing or potential new clients can cost them business and reputation. Timeliness comes into play in so many different common scenarios from scheduling showings, inspections, or getting a contract in before others make their move.
- Effectively communication involves thorough but succinct answers and also in the fashion a client prefers; email, phone or text. Agents should be skilled and knowledgeable about disclosure which gets more agents (and their clients) into trouble and litigation more than any other issue.
Speaking of disclosure, my colleague and fellow Realtor Juanita Limes wrote a wonderful piece on disclosure that's a short, but important read for Realtors, buyers and sellers and you should take an extra minute to learn a bit more - Agent Duty to Disclose. Make sure you as an agent or if you're a client, your real estate agent handles disclosure correctly.
The crux of the mitigation of risk is knowledge and communication. Taking the time to clearly explain to clients what they can expect from the terms of their contract is critical to managing risk. Following up with clients, keeping them abreast of any changes during the selling or buying process helps avoid surprises. It is the unfortunate surprise that angers a client, leading to thoughts of litigation. Arrogance is often the downfall of some. No one has practiced their profession so long that they know everything. It's good to remember to be humble, to give the duty of care to each client and practice good manners.
If you're looking for a home (or thinking of selling) around Columbus or Central Ohio area, you'll find me very responsive and openly communicate with my clients.