Technology is moving at a rapid pace and new automation tools are appearing all the time.
Disclosure issues are a major reason that real estate licensees (and sellers) are sued. Automated Seller Disclosure Forms promise to help real estate professionals better manage this task… In this blog, we’ll explore the risks and benefits of using Automated Seller Disclosure Forms for real estate licensees.
What are Automated Seller Disclosure Forms?
There are legal requirements for disclosures in real estate that vary from state to state. Automated Seller Disclosure Forms enable those disclosure forms to be created, completed, and submitted electronically.
Keep in mind that automated forms go well beyond just a signable PDF. They guide the seller through the form step by step. Glide, one company that offers Automated Seller Disclosure Forms, provides information about the sellers’ disclosure obligations before sellers get to the forms. Sellers are then taken through the form question by question on various screens. If a question hasn’t been answered, sellers are unable to submit the forms. Instead, they are reminded about what questions remain. Explanations, images, and other help tools are integrated into the forms to help the seller complete it correctly. Once it’s all complete, the form can then be submitted electronically.
Benefits of using automated forms
It Removes the Licensee from Completing Disclosures
Licensees should never complete seller disclosures. Giving your seller access to Automated Seller Disclosure Forms may help keep licensees out of the seller disclosure process.
Efficiency
A key benefit of using automated forms is they can be completed and submitted much faster than traditional paper-based methods. There’s no need for printing, sending, signing, scanning, and the long wait times involved when documents are sent from person to person. A faster turnaround time may be the Automated Seller Disclosure Form’s biggest advantage.
Additional Support
The process of stepping through Automated Seller Disclosure Forms is often supported with additional information and help opportunities. This offers more support than a traditional paper-based form or a simple signable PDF. This additional help, built into the form, has the potential to provide more accurate and complete disclosures. If sellers are unsure about something, they can read the additional help information independently before proceeding. There is also still the option to ask the real estate licensee if they are unsure of something.
Sellers must complete the entire form
Automated Seller Disclosure Forms have various rules set up that require a seller to do certain things before the form can be submitted. This can alleviate issues where a seller might accidentally fail to check a box or leave something incomplete in the form. When these issues arise with traditional disclosure forms, it can delay things or leave the seller open to a lawsuit.
Risks of using automated forms
Licensees need to be very sure the automated form is the correct version
Disclosures and forms vary depending on where your real estate business is located. Real estate licensees need to check their Automated Seller Disclosure Form software provider is actually using the right form for their area. If there are changes to the forms, licensees need to check that their automated systems are updated to reflect this.
Potential for user error
Is it possible for a seller to accidentally tick the wrong box? Yes, sure. But, there is potential for user error in all aspects of real estate. It’s not unique to Automated Seller Disclosure Forms. Some software companies have integrated additional supporting information and help functions within Automated Seller Disclosure Forms to try and reduce errors from occurring.
Garbage In, Garbage Out
The back end of the system needs to be correct, so the Automated Seller Disclosure Forms are sent to the right person at the right time. If an incorrect email address is in the system, the form could go to the wrong person (or no person at all). This could result in costly delays to a real estate transaction.
What real estate licensees can do to minimize risk
Research options
If considering the use of Automated Seller Disclosure Forms, real estate licensees should thoroughly research the options available before making a decision. Check the company’s reputation and reviews. Make inquiries so you can be comfortable that the company you’re choosing is equipped to keep on top of any form updates and compliance issues.
Check accuracy
When inputting data into the system to set up a property for a seller, real estate licensees need to ensure the information is accurate.
Attention to detail is an important success factor for real estate licensees, and it’s even more important with Automated Seller Disclosure Forms. Don’t blindly rely on the system without having spot checks or audit processes in place. This will help you to identify issues early and ensure they are fixed.
Ensure identity issues are covered
One of the main concerns of an electronic system is that a person who is not the seller could potentially complete the disclosure form. Whichever software a real estate licensee decides to use, you should ensure you are confident that any potential identity issues are covered. You need to be sure that the signatory of the Automated Seller Disclosure Form is the seller.
Never complete the disclosure form for your client
Real estate licensees should under no circumstances complete Automated Seller Disclosure Forms on behalf of their clients. Licensees can advise sellers about the disclosures and help them to understand their disclosure responsibilities. However, it is the seller who must complete the form.
Protect Your Real Estate Business
Real estate E&O insurance can help you defend a claim if you do find yourself involved in a lawsuit. CRES specializes in real estate E&O and has done so for more than 25 years. As a CRES E&O + ClaimPrevent® member, you’ll even have access to qualified real estate attorneys to answer your legal questions.
As part of one of the largest insurance brokers in the world, we have access to more E&O options for real estate than just about anyone.
Contact the CRES team at 800-880-2747 today and we will help you to find the best protection possible for your real estate business.
