Compliance Simplified for Today’s Real Estate Brokerage

dotloop

June 13, 2018 | comments

Compliance in the tech age must be automated, standardized and fast

Four facts about audits every broker needs to know:

1. Some states randomly select brokers for auditing, while others audit all brokers every year.
2. State boards often review a broker’s compliance procedures following complaints or an audit.
3. Failure to maintain a compliant document trail can result in fines and even loss of licensure.
4. Complete transaction records must be kept 3-7 years, depending on the state.

They’re the unsung heroes of real estate — the managing brokers and admins who mind the details of the deals and often make the difference between a brokerage landing a million-dollar listing or potentially facing steep fines for non-compliance.

But behind every well-run brokerage there’s also a tool that manages compliance like a well-oiled machine — keeping the brokerage above-board with state and local real estate laws while humming along quietly in the background.

Compliance: It’s Your Responsibility

 
In the U.S., state laws govern brokerages, and while the particulars vary, they all essentially protect consumers on both sides of the real estate deal to ensure fairness and transparency.

Most agents and brokers who get into trouble over compliance issues make simple errors, fail to keep adequate records or don’t pay full attention to the management of funds.

As a broker, it’s your responsibility to maintain compliance to ensure the correct documents have been filled out and signed. The process is critical: The penalties for incomplete or fraudulent records can range from fines to even loss of license.

Compliance: Then and Now

 
Before there was dotloop, brokers and admins had to personally verify every detail in every paper transaction.

They worked off extensive manual checklists that included everything from counting the individual pages and double-checking the transaction to making sure it included all signatures and dates. After the deal closed, admins had to file dozens of pages for each transaction in long-term storage cabinets, organized in such a way that auditors could access requested documents for up to seven years. The required physical space alone presented a significant challenge.

Even brokerages who began to adopt scanning, emailing and eSignatures still faced a piecemeal compliance challenge with PDFs that required review one line at a time. And while backup drives and cloud storage existed, locating documents still posed a barrier.

The Single Platform Solution

 
As the industry’s leading transaction management platform, dotloop has streamlined the compliance process for brokers, agents and admins. Client data and property information are entered once at the beginning and then auto-filled thereafter, eliminating the need to re-enter data to ensure an accurate, expedited flow of data.

Transaction administrators can set up time-saving automated processes that lower the chance for errors, such as standardized listing packet templates, which contain all individual contract pages as part of a single electronic file.

Additionally, all document creation, editing, reading, signing and client email communication occurs within a compliant environment tracked within an accurate timeline that logs all activity.

After closing, this comprehensive record of the transaction is archived under the property address, so if an auditor requests the records for a transaction, the complete set of documents can be accessed within seconds.

Compliance Case Studies

 
Danielle Jones, the Lead Admin and Coordinator for Century 21 Beggins Enterprises, Century 21’s No. 1-rated firm in North and Central Florida region, has earned the nickname “Guardian of Compliance” for her role in providing transaction oversight for the firm’s 11 offices and 200+ agents.

Jones finds C21 Beggins’ agents — ranging from those who are completely comfortable with mobile technology to complete tech novices — really like dotloop, making her job that much easier since they’re engaging on a compliant platform. They particularly appreciate not having to create and add documents to the transaction each time, because it’s now automated for them, she says.

Ken Parchman, Broker with Comey & Shepherd Realtors in Cincinnati, has also found dotloop’s customized workflow templates an invaluable resource in helping his team achieve compliance quickly and efficiently. Whatever the size of a brokerage’s multi-tiered review process, the templates within dotloop Business+ can be customized to match the unique needs of an admin or broker.

Darryl Wikoff, the Associate Broker at the top-producing Omaha office of Berkshire Hathaway HomeServices Ambassador Real Estate, has more than 500 agents who in 2017 sold more than $2.1 billion in properties on 9,332 transactions.

Since Ambassador Real Estate started requiring all agents to use dotloop in 2016, Wikoff says they’ve seen a significant improvement in data accuracy.

Before dotloop, a random audit in Nebraska and Iowa would require someone to go to a large room full of filing cabinets and retrieve the requested records out of tens of thousands of paper files being stored for the required five years, says Wikoff.

Rather than hunting through drawers of file folders, they can now retrieve a requested transaction in seconds, quickly printing whatever pages the auditor requires, he notes.

From Wikoff’s perspective, dotloop has solved two big compliance challenges: First, it’s enabled Ambassador Real Estate to transition away from paper and the overwhelming task of storing it, organizing it, retrieving it and destroying it after five years.

Second, it’s streamlined the oversight process, allowing he and his team to get in front of any potential problems. They’re able to review most contracts within a week of signing, giving their agents weeks before closing to resolve issues.

Last year, Jeff Cohn of Omaha’s Elite Real Estate Group says his team was able to do 700 transactions with one full-time admin, a feat he says is:

For Cohn, dotloop’s autofill functionality has greatly helped the team become compliant while relieving the individual agents from having to deal with the tedious details.

By finding the right tools and people to manage your brokerage’s compliance, you can simplify this critical piece of your business and focus on other elements that actually grow your business, like leads, training, recruiting and great customer service.