In our previous blog, Why Some Deals Don’t Close, we explored some of the reasons why real estate deals can fall apart. We acknowledged what a massive challenge this is for the realtor involved, who has in effect just worked for free.
It got us to thinking, is there some way that real estate agents can protect their hard earned commissions. We investigated this and have found some ideas.
Of course the simple an easy way is to really stay on top of your deals. Simply getting you clientson board by way of an offer is no enough. Good realtors work hand in hand with their clients all the way through to closing – so that if issues come up, you can deal with them. Of course this will not always work – as a surprise may suddenly show up; and of course there is the other side of the transaction!
We found something called ‘commission protection.’ This is something to consider in order to protect your investment of time and effort put into any property deal. We also found ‘home closing protection’ which is a way for realtors to protect their clients from the potential disaster of a collapsed deal.
For the sake of transparency, I must disclaim that I am not an insurance agent or broker, so any of these ideas need to be explored with the help of your insurance agent or company. Moreover I am in no way whatsoever endorsing any company that sells this insurance. I take no liability whatsoever for any failure to have such policies paid out. Please do your own due diligence.
ResRX are online at www.resrx.com. Among their varied services they offer the two that we mention above. Here’s a bit about the offerings.
ResRX is dedicated to real estate transaction protection in that they help you mitigate the risks that are inherent in any real estate transactions.
Commission Protection, which is one of their proprietary products, is a tool to cover your commission losses if and when your deal falls through. The available commission protection limits available are $5,000 and $10,000. There is a policy deductible that is set at $500.
Premiums vary with the limit chosen, but they appear to be reasonable for a business expense sure to protect you at some point. With a policy in effect, a claim can be made when a real estate transaction falls through for reasons beyond the real estate agent’s control.
Note that commission protection is different from a commission advance, although the two can be used in tandem.
Home Closing Protection, another one of RESRX proprietary products is useful in order to protect the buyers and sellers that an agent is working with. In cases where a transaction is delayed after the closing date, this insurance offers up to $25,000 for up to nearly six months. This is meant to make up for expenses that the buyer or seller has incurred and that will never be recovered due to a delay beyond his or her control.
Delays can occur when a buyer or seller has a personal or family emergency; when an unforeseen event occurs such as property damage due to flood, fire or natural disaster; when an unforeseen event occurs that causes the financing to fall through. There are as many reasons for delay as are imaginable. Delayed closes cause massive inconveniences, and lost money.
For those who are buying property, expenses that this protection can offer include: storage fees, moving costs, lodging costs, unforeseen legal fees, etc.
As always, make sure you read the fine print, and consult with your legal and insurance teams.