The process of buying or selling a house is a business transaction that holds just as much personal value as it does financial value. Real estate agents have a unique role that not only includes handling marketing, negotiation, advocacy and paperwork, but often also includes educating and emotionally supporting their clients. Because real estate agents juggle so many different responsibilities throughout the process of a real estate transaction, they face a large of amount of risks too.

While risks apply to every business, real estate agents operate in an industry that is particularly highly technical and regulated. Agents often have to balance risks that they are not even able to control, such as market price fluctuations, housing demand or availability and more. In addition, agents are tasked with an exhaustive amount of minutia to manage. Even the most organized agents face the risk of making a mistake that could be as simple as checking the wrong box on a form, resulting in a botched transaction and unhappy clients.

Because real estate can be such a big investment – both financially and emotionally – real estate firms have a lot to gain or lose during the buying or selling process. If anything at all goes wrong along the way, the real estate firm is most often the party that is held accountable. Liability insurance programs for real estate firms can help manage some of these risks, however. Here are a few key exposures that real estate firms face:


Market Fluctuation

Despite popular opinion, real estate firms have no control over how the market fluctuates. Factors such as economic trends, interest rates and changing demographics, among others, often contribute to the state of the housing market. Real estate firms are tasked with monitoring the market in order to advise their clients on when it is the best time to buy or sell a home. If that advice does not bode well for a client, they may attempt to hold the agent or firm liable for any financial loss they may have sustained.


Acts of Negligence

A number of actions can be considered negligent in the eyes of a displeased client. Real estate firms may be held liable for anything from negligence in promoting a property or advocating for a client, to negligence in following laws and regulations regarding the sale or purchase of a property or home.


Errors and Omissions

Real estate firms should take care in ensuring that their agents aren’t taking on too many tasks, an action that could result in egregious errors being made. Agents also need to be careful about what they promise their clients. Making a market prediction on a potential home or inaccurate statements about the property for example, could have adverse effects. If an agent tells their client that the value of their home or property will increase in value in the next 5 years and it stalls or goes down instead, they may find themselves in a professional liability lawsuit.