Up-tick in Housing Market Means Increased Risk
The good news is that April typically marks the busy season for home sales and the housing market continues to gather strength. The bad news is that increased activity may mean additional professional liability risks face architects and engineers, designers, agents, inspectors and all real estate professionals. With all signs suggesting that the housing market is picking up momentum, and that trend is expected to continue, real estate professionals will find themselves with more work but they must proceed with caution.
According to the National Association of Realtors, existing-home sales continued to rise in the first-quarter of 2013 and have increased dramatically since 2011. Sales in February 2013 were at its highest point since 2009. Freddie Mac projects that home sales will rise 8 to 10 percent in 2013 when compared to last year.
During the buying and selling process, real estate agents face any number of liability risks, such as negligent referral. When selling a home, agents may recommend a home inspector to a buyer. Should this inspector commit any errors that cause the buyer loss, the referring agent could face liability as well. (The risk of negligent referrals face all professionals, including accountants, attorneys, and architects who recommend a professional to his/her client). Real estate professionals face other risks such as failure to detect defects, unreliable appraisals, or failure to advise of restrictions upon the property.
In an effort to make-up for a down year, real estate professionals must not rush into the season hastily. Rather, take a moment now to reevaluate internal risk management criteria to prepare for the imminent rush of activity.