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How the Red-Hot Housing Market Is Exposing Real Estate Agents

​Homes are selling like hotcakes—and while the cakes may be beginning to cool off slightly compared to this spring, the intense market still means real estate agents need the insurance coverage to match.
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how the red-hot housing market is exposing real estate agents

Homes are selling like hotcakesand while the cakes may be beginning to cool off slightly compared to this spring, the intense market still means real estate agents need the insurance coverage to match.

Zillow forecasts that U.S. home values will go up 13.6% by the early fall of 2022, which is a decline from the 17.7% increase the average home saw from August 2020 to August 2021—but still steep. While Zillow describes the market as transitioning “from white hot to merely red hot," a lack of home inventory and supply chain issues are holding back construction and restricting the supply of homes, which means real estate agents won't necessarily be catching a break soon.

“With the recent boom in the housing market, real estate agents are seeing an increase in the number of showings they conduct since some clients may be less comfortable attending open houses given the pandemic, and many clients realize they need to quickly see a house due to the speed at which houses are selling," says Bill King, underwriting director at Progressive Insurance. “Increased risks include slip, trip and fall hazards throughout a house and property during individual showings, as well as open houses."

“Given the increased speed and high volume of business transacted in this recent market, there is an increased importance of professional liability insurance," King says. “Some home buyers are relying heavily on their agents by purchasing houses sight unseen, sending their agents to do virtual video walkthroughs, or purchasing houses by waiving home inspections."

Another concern in a brisk housing market, “real estate agents could find that they have increased exposure for not acting quickly on their customer's behalf, whether that be submitting a bid or responding to a bid," he adds.

Further, real estate agent clients who stage houses should also consider a business owners policy, “as it can help protect their staging materials in addition to their liability," King says. And if real estate professionals are driving homebuyers around to show houses, “they should ensure they are appropriately covered with a business auto policy."

One emerging coverage need is cyber liability. “Due to the increasing amount of paperwork that is completed online, real estate agents need to ensure they are taking the appropriate measures to protect their clients' data and information," King says. 

Winter brings yet more risks to the party, meaning insurance agents should make sure their real estate insureds are taking seasonal risk mitigation measures. “With wet weather, especially snow and ice, the exposure of slips, trips and falls only increases," King warns. “It is recommended real estate agents and their clients remove their shoes before walking through a house to avoid slips, trips and falls, as well as damaging or dirtying property."

Looking ahead to the new year, King emphasizes that “real estate agents should ensure they are taking the proper precautions with protecting themselves and their clients in this pandemic. Most insurance policies have communicable disease exclusions, so they should be sure to take the necessary precautions in accordance with their company or office guidelines as well as considering local, state and federal guidance."

“We also recommend doing an annual checkup on insurance coverage to ensure real estate agents understand what coverage they have and that they are adequately protected," he adds.

AnneMarie McPherson is IA news editor.

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Thursday, January 6, 2022
Professional Liability