Starting a new business comes with a good amount of risk. Most entrepreneurs starting out go into their businesses not knowing if they’ll make it or not, but excited about the possibilities. Certainly there is no way for you to remove all your potential risks, however, you can be smart and help control them. For a new real estate business, this would include things like talking to other people in the business to learn from their previous mistakes. And of course, ensuring that you have the proper insurances and business structures in place. Here are some of the most common mistakes made by real estate professionals and how to avoid them.
Negligence
Sometimes, a client might accuse you of being negligent for failing to meet their standards or interrupting their plans. They might sue you even if you didn’t do anything wrong and your delivered services were as specified. A client can also sue you if they are dissatisfied or if your work has negatively impacted them in any way. This could harm your business, but you can fight back if you’ve prepared for it. We are only human after all and we will always make mistakes from time to time. You can look into Balsiger Insurance’s guide to Errors and Omissions and know that realtors are not always in the wrong in these cases. You will get all the details on errors and omissions insurance, which can help you in case you have to pay for lawsuits and legal fees to defend yourself. In case the suit against real estate professionals is won, errors and omissions insurance will cover the damages.
Missing Deadlines
If you miss an important deadline, and the client is counting on you to deliver your services on that date, your client’s plans could be massively affected. This can encourage your client to deduct money from your revenue. Even worse, your client can file a suit against you for not delivering services on time. In that case, errors and omissions insurance can protect you. If your client wins the lawsuit, it can cover the costs of the defense and the damages you will have to pay.
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Inadequate Funding
If you are about to start a real-estate business, then you need to make sure that you have adequate capital to start. You should have at least some savings to support your business financially as it grows. If they aren’t enough, you can try business loans. In all cases, your money should support your business, not just at the beginning but throughout the first year. There are a set of options you can choose from if you are looking for a loan, like SBA loans, microloans, and hard money lenders.
No Business Plan
Any startup business requires a good business plan. For your plan to succeed, you should consider how you will get the capital for your business, your financial goals, predicted expenses, and your short and long-term goals in general. Setting a successful business plan is an important step for your business, so if you don’t know how to set a good one, consider getting help from a financial advisor or someone with adequate experience in real estate.
Mistakes are inevitable, particularly in an intricate field like real estate. Luckily, you can be well aware of the dos and don’ts before landing your first client. Make sure that you have coverage like errors and omissions insurance, as clients can easily sue you even if errors committed on your part are involuntary.
