| Saturday, June 26, 2010 |
| Realtors' Edge - June 26, 2010 |
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Dear Realtor: Welcome to Realtors' Edge whose purpose is to ascertain that as a professional agent you are well informed about things that can impact your income, your reputation and your career, by providing the best of news and perspectives on key issues that affect the real estate industry. We make you smarter!
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| June 26, 2010 / Volume 2 / Number 21 |
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| E & O insurance is certainly nothing new for Madison, Wisconsin-based HSA Home Warranty. In fact, with its own in-house insurance division since 1986, HSA Insurance Services, risk management and liability insurance is built right into HSA’s corporate structure. |
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 “Back in the day, when we first started offering E & O insurance 25 years ago, it was something of an unknown entity,” says HSA Chief Corporate Development Officer, Gary Lombardo. “We sold home warranties on the basis of it being part of a risk management program. If the warranty didn’t do an adequate job of deflecting lawsuits, you had the safety net of E & O insurance.”
While risk and E & O insurance may have been downplayed during the market boom of the early 2000s, in today’s tumultuous market, risk is at the center of the conversation.
“Today, there’s more risk than there has been in the past 10 years,” according to Lombardo. “In the era of short sales and REOs, there are a lot more activities that create more liability than there’s been in the past. Since HSA has an insurance agency, we have the ability to consult our clients through these more turbulent times when agents and agencies need to protect themselves that much more. We are better poised to address these issues than most of our competitors because we are only one of two companies that has its own insurance agency. At HSA, this has always been a part of our corporate structure.”
At the helm of HSA’s in-house insurance operation is James Candler, president of HSA Insurance Services. With 21 years’ experience in professional liability insurance and real estate liability insurance, Candler is quite familiar with the impact of today’s market and its implications for insurance. In the current real estate climate, says Candler, insurance carriers have become more stringent.
“Carriers perceive more risk in the market building up because of the financial crisis, largely, and are becoming more conservative,” he explains.
“Not only do we write insurance for real estate agents, but also for property managers, appraisers and mortgage brokers. Things have been especially tough [for those professionals]. On the real estate side, if it’s a company that’s got some blemishes, carriers are often not willing to give the best pricing…if [they are willing to insure those companies] at all.”
That said, the need for real estate professionals to have effective liability coverage is essential in the current, litigious real estate environment. According to Lombardo, in today’s market, brokers and agents need to review their insurance coverage in great detail to ensure they are prepared.
“It became clear to us how many clients were unaware of the risks their policies didn’t cover,” he explains. “Our industry is under siege right now. We are trying to refocus agents on the big-picture role that warranty and E & O insurance plays in their lives and their careers and how this should be more important to them than the small fee they get for selling the warranty. In recent years, in many of the agent’s minds, the value of the home warranty was measured by the per-transactional remuneration. Chances are, though, they would spend more money on a lawsuit than they receive as an administrative fee. It’s the only over-riding risk management tool they have to shield them from post-litigation liability.”
According to Candler and Lombardo, the risk climate of today’s market is presenting unique insurance issues in terms of short sales and bank-owned properties.
“Many banks are requiring our clients to affiliate with the bank in order to sell these types of properties,” explains Candler. “Banks are requiring real estate firms to carry higher limits and they are trying to get these firms to name the bank as an additional insured on their policy. But agents need to know that when they name an additional insured on their policy, they are then sharing that policy value with the bank. While banks are looking to protect their interests, they really don’t need to be on the agent’s policy, because if the agent makes a mistake, the bank could bring suit against the agent or the real estate firm. If they’re on the agent’s policy, then they become a co-insured, and one co-insured cannot sue another.”
While Candler advises real estate agents to never add a bank to their liability insurance, he does strongly recommend that all real estate professionals make sure they have an adequate amount of quality insurance, despite the financial strain they may be feeling in today’s troubled economic environment.
“Many are focusing more on the money than on the value of protecting themselves from post-transaction litigation,” Lombardo explains. “When you look at the big picture, the cost is such a small percentage compared to the liability reduction we create for people. It’s hard to measure the costs of a lawsuit you prevented. And, more often than not at the brokerage level, if home warranties are being endorsed, they’ll reduce the E & O premium.”
While many agents and brokers are tempted to be led by price alone when buying insurance, Candler stresses that how the insurance company performs is more important. “We have the ability, through our strong relationships with our insurance carriers that if we have a claims issue, we can get to the right people immediately and resolve the problems for our customers.”
Candler recommends firms never buy a policy worth anything less than half a million dollars. “You need to purchase a limit that is realistic for your area,” he adds. “That is the biggest message we’re trying to get across. Money is sensitive, but you don’t want to skimp on what you’re buying.”
According to Lombardo, in today’s real estate climate, seller’s E & O insurance is also gaining popularity. “We are in a cycle now where seller’s E & O insurance is making a resurgence,” he explains. “This provides the seller coverage in the event they are sued.”
In addition to promoting effective liability coverage, Candler stresses the importance of taking the proper risk-reduction steps throughout the real estate transaction.
“From a risk management standpoint, E & O is always going to be there as an umbrella, but real estate agents need to educate themselves to make sure they are providing the proper disclosure and making inspections and warranties available, and communicating all the information they can to buyers,” says Candler. “There are so many properties out there being sold as-is—agents need to disclose what they know about the property’s condition but also should disclose the homeowner’s financial condition and whether the lender has approved the short sale. All of these steps are necessary to keep themselves out of litigation.”
For more information, visit www.onlinehsa.com. / By Maria Patterson / Printed by permission of RISMEDIA. June 15, 2010. |
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| This week’s headlines from the NATIONAL ASSOCIATION OF REALTORS® include: free articles on how to sell to four personality types through NAR’s Right Tools, Right Now initiative; save on a Virtual Rooms annual license with REALTOR Benefits® Program Partner, HP; and see how many visitors view your listing on REALTOR.com®. |
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 Right Tools, Right Now – No Cost Article on How to Sell to Four Personality Types
Take advantage of this FREE article through Right Tools, Right Now and learn what motivates the four most common female buyers. By knowing which of these personas your female buyers most closely align with, you may be able to narrow that huge inventory of homes for sale and help her find the place that’s perfect for her. Visit REALTOR.org/RightTools for this article and more.
Meet Face-to-Face Live from Your PC with HP Virtual Rooms
REALTOR Benefits® Program Partner, HP is offering REALTORS® an exclusive deal on HP Virtual Rooms, a 20% discount off an annual license. HP Virtual Rooms allows you to exchange ideas one-on-one, meet with small teams, conduct presentations and participate in training classes, all while reducing your employees’ overall carbon emissions by replacing travel with virtual collaboration techniques. For details on this offer and free U.S. shipping, click here.
How Many Visitors See Your Listings on REALTOR.com®?
According to recent statistics, REALTOR.com® continues to be the most popular real estate site online with more visitors who search the site longer and return more frequently than any other site. Find out how many of those buyers have viewed your listings with a free traffic report from REALTOR.com®.
For more information, visit realtor.org / Printed by permission of RISMEDIA. June 23, 2010. |
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Times have changed. Long passed is the time when brokers doled-out the business and agents chased it to a conclusion.
Yes, times have changed. Now, it is you, especially in these trying times that uncovers a prospect, acquires the listing, and brings the transaction to fulfillment. |
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 It is your lead, your customer, your listing, your business and you deserve the commensurate rewards!
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O You receive 100% commission and pay no other transaction fees whatsoever.
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O Except for a small errors and omissions insurance premium, you pay no other fees regardless of the number of transactions throughout the year.
O If you are licensed in multiple states in which NextRE operates, the same fee covers you at no additional cost or lost commissions.
O If you bring along other agents you will receive two months worth of fees (up to $650 for each agent) removed from your annual fee.
O You will have your own, custom MLS / IDX website from the first day.
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-- Click HERE for a brochure of NextRE's 100% Agent Commission Program.
-- Use this APPLICATION form to become a NextRE Associate.
The solution for keeping money in Realtors’ pockets instead of the brokers’ |
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NextRE, Inc. - 221 North Broad Street, Middletown, DE 19709 (877) 994-6398 / associate@NextRealEstate.com |
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