Managing the Headaches of Detailed Legal Contracts and Complex Transactions
By Denise Lones
Want to help prevent accidental and serious issues from impacting the success of your transactions? Here’s 8 tips to help you keep your i’s dotted, t’s crossed, and reduce those potential headaches caused by complex real estate transactions.
Real estate transactions by nature can be very tricky. There are so many moving parts to a real estate transaction and so many things that can go wrong. That is why smart real estate professionals have a risk management protocol that they follow through every transaction.
If you want to prevent serious issues from arising from a mistake in a transaction it is imperative that you adopt key risk management practices in your business. When you follow these risk management practices, you protect your clients. In the event of a disagreement with another party it is critical that you have protected your client’s rights.
Here are a few key practices you should implement in your business to keep you protected:
Standard procedures – make sure you follow a set of standard practices in your business. This helps to prevent errors from doing things on the fly. An agent that uses a system for each transaction is more likely to pay attention to all of the important details. Imagine you are a franchise and ask yourself what standards of practice you will want to set up in each of your locations.
This is what you want your business to be like to streamline your practices and to protect your clients and yourself. You should consider your standard procedures for:
-Your process for working with a new buyer – from pre-qualifying to how you handle buyer tours and feedback
-Your process for taking a listing – from marketing to signage and more
-Your process for negotiating a contract on either side – make sure you have all the forms you need. This process can also help you think about other items to include in the negotiations to write or counter an offer. It isn’t always about money.
-Your pending to close process for buyers – from forms to dates and deadlines
-Your pending to close process for sellers – from making sure you have all the forms completed to making sure all deadlines are met or when contingencies have passes.
-Your process for closing a file – have a process for archiving your files.
Communication log – this is critical for any issues that arise either during or after the transaction. You should have a chronological record of all emails, all phone calls, all meetings, all showing, all offers, and a summary record of all conversations you have with your clients. This documentation will be invaluable to you in the event there is ever a problem with any transaction.
Electronic storage backup – many real estate law suits arise months and sometimes years after the closing of the property and it is imperative that you have all of your documents pertaining to the transaction backed up and safe in the event they are needed. This may pertain not only to copies of the documents, but also email and marketing materials.
File management – agents that practice risk management protocols use a file management system to keep everything in their transaction in order. This is essential. It is critical for you to back this information up on a regular basis. There are services you can sign up for that provide automatic backup.
Checklists – you should have a checklist for all the processes in your transactions.
Disclosure – any important issue that need to be disclosed need to be disclosed in writing, not verbally. Any verbal disclosures should be followed up with an email confirming what you disclosed. Disclosures need to be in writing, always.
Email management system – email communication is an official part of the transaction process and all emails need to be kept as part of the legal record of the file.
Paperless transaction – if you are using a paperless transaction system then you need to make sure that all those documents are kept in a very safe place.
A real estate transaction is a very important legal transfer of property and as such needs a detailed log and systems to keep you, the agent, safe. Implement risk management principles into your business to add an extra layer of protection for both you and your clients.
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