News & Information: Risk Management Resource

Communication and the Paper Trail

Monday, October 27, 2014  
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By Sherrie Gallina

Good communication skills are crucial for real estate success. Communication starts with a greeting and ends several years down the road when the transaction records can be permanently archived or destroyed. There are many self-help businesses available to improve speaking and writing skills, but that is only the surface of what is necessary to have a great real estate business. Combining knowledge and communication skills are key to long-term success. A complete and accurate paper trail can also help prove that an agent has done their due diligence in all aspects of the job.


Complete documentation for a potential new customer would include notes about their real estate needs, the date and location of the first meeting, and any personal interests or hobbies that may help uncover the type of property that may interest them. For example, someone who raises large dogs would probably be more interested in a home with a big yard. These notes should be updated regularly with each customer communication, and should include when and which properties were shown. It is also a good idea to follow up conversations with an e-mail to confirm the key elements of the conversation. Everyone is different and sometimes the spoken words are interpreted differently than intended. The written follow-up avoids misunderstandings or confusion and creates better understanding by all parties involved. This ultimately achieves better customer satisfaction.


When presenting contract paperwork, agents need to be very careful not to interpret the contract or give legal advice. It is, however, important to include all current and required disclosure information. Continuing education classes provide valuable information on current required documents and new updated forms. For example, the lead based paint addendum is required for pre-1978 housing and was updated in 2013. Along with this form is the lead based paint brochure. Although it is not required to be signed, keeping a copy of the brochure that the buyer has initialed and dated helps to document that the information was provided.

Escrow Tracking

Another key element to a successful paper trail is escrow tracking. Filling in the escrow agent information on the first page of the contract is required. When a bank-owned property requires the escrow information to be determined after the contract is executed, follow-up communication is necessary to make sure the escrow information is fully documented. In addition to listing the escrow agent, providing the date escrow was received, and offering written confirmation to the seller is required.

When a transaction is closed, there should be a record of all communications from beginning to end. It can be stored on paper or electronically. Computer programs have been developed and are continually improving to help make the paper trail paperless. Copies of all signed paperwork and disclosures; contact information for all parties involved; documentation of all required pamphlets, brochures, and disclosures; and a timeline of any key events should be kept and readily available as required by state and federal guidelines.

Whether it ends up on paper or stored electronically, effective communication and documentation helps with customer satisfaction and reduces many transaction risks. If there is a complete paper trail than it is harder for a buyer to deny receiving required information or to assert that the escrow was not properly and timely handled. In the event of an audit, there is no need to panic because everything is in order.

Sherrie Gallina, Watson Realty Corp, is a member of the ORRA Risk Management Subcommittee.

ORRA frequently schedules classes, workshops, and online offerings related to risk management. Check the ORRA Calendar often, as new classes are continually being added to the education lineup.


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