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Risk Management for Your Real Estate Business

October 07 2018

hdc risk management for your real estate businessAs a real estate agent, you should be focused on two main things: your success and the happiness of your clients. Part of creating a successful business and keeping your clients is being aware of and managing the risks you and your clients face.

Save All of Your Documents

In most states, real estate agents are required to save all documents pertaining to their clients for six years. These documents include everything from financial statements to legal documents. Keeping documents can ensure that if an issue arises down the road, you are prepared to protect yourself with any and all of your documents.

If you receive an email from a client, save it as a PDF or print a hardcopy. Keeping these forms of communication can ensure your preparedness should a situation arise that requires you have these documents handy.

There are different ways to store your documents securely. Saving all documents as hard copy file is great, but there are ways to digitally backup your documents and encrypt them with a password so they remain safe. Saving the documents as a PDF is simple, secure, and prevents clutter in your office. When saving documents as a PDF, create a folder for your client and save each of them in chronological order, if possible.

Mortgage Fraud

As the real estate market and the need for homes continues to grow, so does the increase in mortgage fraud. When a person is purchasing a home, they tend to finance the home with a mortgage. As a real estate agent, you should be on the lookout for signs of mortgage fraud.

Here are some tips for avoiding potential mortgage fraud:

  • Proper identification should be provided during the home buying process.
  • Be on the lookout for misrepresentation of finances or assets.
  • Make sure that the use of the home is properly defined. If the home is intended for anything other than residential purposes, this needs to be made clear.
  • Be aware of "straw buyers." These are buyers who go in and use another person's identity to purchase the home and shift the deed to their name.
  • The home that is being purchased should be valued at the actual market value, not inflated. The higher the appraisal, the more debt that the homebuyer could take on after purchasing the home.

These are the common things to be aware of when it comes to mortgage fraud for the home. Hopefully being prepared with this list will help you avoid getting involved in mortgage fraud.

Social Media Copyright

Social media is one of the best ways to market yourself as a real estate agent. However, there are some rules to follow when posting to social media.

  • When using videos or images, use assets that are either yours or are something that you own the license for. Using images that do not belong to you can result in violating copyright laws. Doing this may result in a fine.
  • When using social media to market a home or piece of real estate, try taking your own photos or videos so that you can avoid violating copyright laws. Also, when the content is yours, it can be repurposed as you see fit.
  • When writing for social media or a blog, use your own words and copyright. Do not copy another person's work and use it as your own without citing the other party involved. This is plagiarism and could harm your business as a real estate agent.

There are risks involved in every profession, but the benefits of a being a real estate agent make it all worthwhile. If you do find yourself in a potentially risky situation, don't be afraid to ask a trusted mentor for advice.

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