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Tips to Reduce Your Chances of Getting Sued as an Agent - Transactly

Written by Madison Clifton | Jul 14, 2020 5:00:00 AM

Lawsuits are a concern for many professionals, and real estate agents are no expectation. Lawsuits quickly become very costly, and even if you are found to have not committed any fault, they can still harm your business. So, taking some tips to reduce your chances of getting sued as an agent could end up saving your reputation, as well as thousands of dollars.  

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Carefully Choose Your Clients 

One of the best ways to protect yourself against a harmful lawsuit is to be very careful, and cautious of who you represent. Pay attention to the behavior of potential clients when you are first interacting with them. If they present any of the following, it is a clear sign of problems arising in the future.

  • aggressive tendencies 
  • make unreasonable demands
  • are never satisfied with your advice
  • constantly questioning your advice 

Even if you provide excellent service to a difficult client it can still be very risky. Some people will find a reason to be upset no matter the circumstance. So, if a client gives you a reason to be concerned, whether they be new or a previous client, don’t be afraid to terminate the relationship.

Maintain Excellent Communication

Maintaining extremely timely, well-documented, appropriate communication with your clients will save you a lot of trouble in the long run. Not only will your clients be satisfied with your communications skills, but you will provide yourself with protections in case a client were to attempt to file a lawsuit against you. When communicating with clients be cautious of the following:

  • Avoid providing false expectations. Even if the news is something you know they don’t want to hear, be blunt and honest. Buyers and sellers need to know the reality of their situations. Ensuring they do will always turn out better than attempting to save their feelings. 
  • Let the client make all big decisions. Your job is to provide your clients with the risks and benefits associated with their decisions throughout a transaction. It is not to make those decisions for them. When you make decisions, they can then blame you when the outcome was not what they expected.
  • Don’t provide any advice that could be construed as legal advice. You do not have a license to provide legal advice. So, always leave that to the experts.

It is not enough to simply be aware of these common miscommunication errors though. You must be documenting all communication with clients to have written proof they did not happen. Make sure to keep all email chains with clients. When you speak over the phone, send them an email recapping what you spoke about so there is a written copy. Also be sure to document all advice you have given a client, as well as the decision they ultimately made. 

Doing this tedious documentation could save you from a lawsuit. So it is imperative that your records are always in order to protect yourself, and your business.

Always Work in the Best Interest of the Client 

This tip to reduce your chances of getting sued as an agent may seem obvious. At times though greed, or external factors can take over and cloud your judgement. Thus certainly resulting in a lawsuit. So, always remember to take a step back and evaluate everything you want to tell, or do for your clients to ensure it is in line with your professional code of ethics

Even the appearance of a conflict of interest can result in a detrimental lawsuit. Therefore it is crucial that every conflict or miscommunication between you and your client is addressed. Then the least harmful resolution for the client should always taken. You may take some monetary losses taking this route, but you will ultimately be able to stay in business if a peaceful resolution can be met. Which is the most important, and significant outcome for you.

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Avoid Filing Against a Client 

If a client has wronged you, you need to take every step towards resolution that does not result in you filing against them. When you file against a client there is a high likelihood they will attempt to file a countersuit against you. Thus leading to a lengthy, and expensive civil proceeding.

Evaluate if the result of a lawsuit would be worth the time and money you are forfeiting in order to engage in it. Effective time management is essential to your success as an agent. So, is your time truly best spent pursuing justice with a difficult client? Oftentimes it is more cost-effective, and beneficial to your business to walk away from the dispute entirely.

Invest in Liability Insurance 

Liability insurance can not keep you out of a lawsuit, but it can help make sure your business is financially protected in the event of one. It will cover a portion, if not all, of the payout that is required of you to make to the plaintiff should you lose the case. Consult with an insurance agent to ensure you have the appropriate coverage to operate as a real estate agent.

These tips to reduce your chances of getting sued as an agent can not guarantee you never deal with a lawsuit in your career, but following them will help you take the precautionary steps to attempt to prevent one.