6 min readBuying a home is one of the most significant purchases people make in their lifetime. And it’s also one of the most complicated. People look to real estate brokers for help because navigating regulatory challenges is complex – even for the pros who have done it many times before.
As a busy real estate agent, you want to close as many deals as possible, and real estate compliance can seem like a burden to keep up with. But rules, regulations, and local/state laws are constantly changing. So, creating a culture of compliance is a must to avoid hefty fines, legal trouble, and damage to your reputation.
A “slow down to speed up” approach is advised to help you navigate regulatory challenges and avoid the pitfalls. But most importantly, clients will notice your commitment to compliance in real estate. It’s no secret that trust in real estate brokers is essential, and a commitment to property compliance shows that you are an ethical and responsible realtor.
Common regulations and challenges in real estate compliance for brokers
- Licensing – Brokers require an up-to-date real estate license, and requirements may vary from state to state.
- Data – laws have tightened up in recent years, with the arrival of the Health Insurance Portability and Accountability Act (HIPAA) in the US and the General Data Protection Regulation (GDPR) across Europe.
- Disclosures – any defects/potential defects, environmental hazards, and other key information regarding the property must be disclosed to the client.
- Fair housing laws – there can be no discrimination based on race, color, sex, religion, national origin, disability, or familial status.
- Anti-money laundering – there are anti-money laundering laws (AML) to be wary of when making high-value transactions.
- Property management laws – security deposits, maintenance, rent payments, and tenant rights must be adhered to.
- Record-keeping – all records and transactions must be organized and secured as they may later be used as evidence in legal proceedings.
Establishing a culture of property compliance at real estate brokerages
1. Set the standard
Management and senior members of staff should embody your culture of compliance, leading by example. Even for the most experienced, it’s common to seek guidance when navigating regulatory challenges. You could consider working with a real estate compliance consultant to review your processes, find any non-compliance issues, and advise on best practices.
2. Build compliance into your training
Starting a new role can be overwhelming, so it’s a big ask for new starters to learn the latest real estate compliance information right away. They already have many tools and processes to learn. But compliance can’t afford to be an afterthought: it should make up a large part of your training, where staff can review it at any time.
3. Create policies, procedures, and standard operating procedures (SOPs)
Take the time to document the steps, advice, and real estate regulation guidelines for staff to follow. Even though people may read about them, they may be interpreted differently. Creating documents that inform and direct agents step by step may save them from making mistakes.
4. Encourage open discussion
Confusion leads to problems, so a short discussion could prevent a costly blow to your brokerage’s reputation. It’s important that your team knows they can voice any questions or concerns. As some members may not feel comfortable asking questions regularly, an anonymous report process may be helpful.
5. Invest in technology and third-party service providers
Information can get lost in companies. If it’s buried in software that staff don’t like using, they might miss it. Invest in a CRM, processes, and productivity tools that are easy to access – preferably with a mobile app available too. With SignMore, the 24/7 answering service means you won’t ever miss a call again, and all call and live chat information is also synced with your existing software. Make sure you never miss an important update and keep accurate records – even while you’re out meeting clients and closing deals.
6. Stay up to date with regulatory changes
It’s up to realtors and brokerages to stay up to date with the local and state regulations. Join industry newsletters and follow the social media accounts of regulatory bodies, legal teams, and local authorities. It’s also wise to attend training sessions and seminars, in person and online, to keep learning and stay ahead of the curve.
Creating a culture of property compliance is crucial for real estate brokers, as buying/selling a property is a complex transaction. With a commitment to compliance and phone lines open 24/7, you can help prevent many issues that arise when navigating regulatory challenges in real estate.
