SECTION 9 UNIT 5 RISK MANAGEMENT STRATEGIES

ESTIMATE OF CLOSING COSTS

USE THE BROKER'S FORM

VERIFY DATA IN A FORM

dates, times, amounts, warranties, descriptions, names, representations, promises, procedures, authority, etc. One way to reduce risk in the contracting process is to use a checklist that covers all the contract items.

DISCLOSURE

AVOIDS MISLEADING. WRITING OR VERBAL

AVOIDANCE

AVOID THE RISK

FOUR STRATEGIES FOR MANAGING RISK

AVOIDANCE (ELIMINATION), REDUCTION, TRANSFERENCE, RETENTION

COMPARATIVE MARKET ANALYSIS (CMA)

BE CONSERVATIVE AND RETAIN DOCUMENTATION.

DISCLOSURE REQUIREMENTS

DISCLOSE STATUS VERBALLY TO OTHER LICENSEES ON INITIAL CONTACT. DISCLOSE STATUES VERBALLY TO BUYER AND SELLER BEFORE PROVIDING RE SERVICES. CONFIRM THE DISCLOSURE IN WRITING BEFORE SIGNING A LISTING OR PRESENTING A PURCHASE OFFER OR BEFORE PREPARING A PURCHASE OFFER.

ADVERTISING

DO NOT MAKE MISREPRESENTATIONS MAKE FALSE PROMISES MAKE BLATANT MISREPRESENTATIONS MAKE MISLEADING OR UNTRUTHFUL STATEMENTS.

STRATEGIES FOR RISK MANAGEMENT

EDUCATION, DISCLOSURE, DOCUMENTATION, INSURANCE.

RETENTION (ACCEPTANCE AND BUDGETING)

ENTERING INTO A RISKY ACTIVITY AND TAKING FULL RESPONSIBILITY.

DOCUMENTATION AND RECORD KEEPING

EVIDENCE OF COMPLIANCE. DOCUMENT: POLICY AND PROCEDURE MANUALS, STANDARD FORMS, COMMUNICATION RECORDS, TRANSACTION RECORDS, CONTRACTS, ACCOUNTING, OTHER IMPORTANT DOCUMENTS

EDUCATION

FIRST LINE OF DEFENSE, TO KNOW.

DUTIES

HONESTY, FAIRNESS, REASONABLE CARE AND SKILL, DISCLOSURES.

TRANSFERENCE (OUTSOURCING, INSURING)

PASS THE RISK TO ANOTHER PARTY. ERRORS AND OMISIONS INSURANCE.

VERIFY, DUE DILIGENCE

PROPERTY CONDITION OWNERSHIP STATUS CLIENT'S AUTHORITY ACT

PENALTIES FOR BREACH AGENCY RELATIONSHIP

RESCISSION OF TRANSACTION, LOSS OF COMPENSATION, FEES AND COSTS, PUNITIVE DAMAGES, ETHICS DISCIPLINE, LICENSE DISCIPLINE

DUTIES TO CLIENTS

SKILL, CARE, DILIGENCE, LOYALTY, OBEDIENCE, CONFIDENTIALITY, ACCOUNTING, FULL DISCLOSURE.

REDUCTION (MITIGATION, SHARING)

TAKE STEPS TO REDUCE THE SEVERITY OF A POTENTIAL LOSS. SHARE RESPONSIBILITY IN DECISION MAKING.

RESPA VIOLATIONS

failing to ensure that the consumer is informed about his or her rights under the law giving or receiving an illegal kickback.