Risk Management

Question 1

Four Risk Management Strategies

Answer 1

Avoidance
refrain from risky activity
(e.g. assuring buyers a property will appreciate)
Reduction;
reduce profitability of loss
reduce severity of loss
share responsibility for a decision

Transference
pass risk to another party
get E & O insurance
by contact; insurance

Retention
accept risk
take responsibility for consequences
e.g., pricing strategy on a listing

Question 2

Contracting process

Answer 2

contracts for real estate must be in writing

inaccuracy endangers contract

avoid unauthorized practice of law
may fill in blanks on standard contract forms
do not give legal advice to public

Question 3

Antitrust

Answer 3

cannot collude on prices; fix prices

cannot conspire with other companies to restrict trade or unjustly impair a competitor

cannot create monopolies

cannot allocate markets among competitors

Question 4

Trust fund handling

Answer 4

mishandling of earnest money deposits

commingling trust funds

conversion of trust funds

errors in use of trust funds