Transaction Coordination: Why can’t we use an outside service that is not with us

Why can’t we use TC’s who work for themselves or other companies?

We get questions at times, about using independent TC’s who work for other brokers, or those TC’s building their business independently. I want to attend to these questions in detail here so it is memorialized, and will post it, so everyone can refer to it in our FAQ site:

To start, we have a fiduciary relationship with our buyers and sellers once they are in contract with us.  That relationship includes an expected standard of care, and confidentiality, as it relates to our client’s life situations that show up during the transaction, the documentation of the transactions, and extensive personal information.  By the nature of what we do, we are brought into the middle of, divorces, foreclosures, financial challenges, credit issues, difficult family dynamics, deaths, illness, pending litigations, and sometimes very high, potentially volatile or emotional unraveling between friends, or partners. Much of which gets documented in our files.

For many many years, it has been, and still is, the agent’s personal responsibility, as part of our service to handle all of the paperwork involved in each transaction. It is also expected in some cases like in those noted above, that issues will remain confidential between the parties to the transaction. In California, our transactions are held to a higher level of scrutiny, thus requiring stricter documentation, and disclosure, due to the litigious nature of this particular state.  And I am more than good with that.  I feel we are better, because we are held to a higher standard, to really watch out for, and protect the best interests of our clients.

As time has marched on, we have worked diligently as an industry to take some of the paperwork responsibility off the plate of the agent personally, so they can stay focused on the parts of the business that offers higher per hour compensation. Thus hopefully, giving the agent greater control over the balance between life and business growth. This is an important, and a really good thing. But of course, as you know, the broker of the office maintains the responsibility and the liability, which cannot be deferred.  All of that still sits with both the agent and the broker, no matter who is handling the paper work in any transaction we do.

So now, the question comes in:  Why can’t we just use anybody we want to handle files?

As of late, when more and more transaction coordinators are trying to build businesses to provide outside service to multiple brokers/agents.  Our company and agents are solicited with offers and opportunities to work with people who have launched this personal business on their own. They are looking to us to help them build it, and some have involved themselves rallying agents to remember they can pick who they want, which of course comes from a very limited understanding of our industry.  So we have to decide from every perspective, with everything being considered, where do we stand.

So I want to explain. Here are the potential issues and liability with we have with outside TC’s:

1. TC’s outside of our company, have their hands in the files for several brokers/agents all at once. They are involved in the whole transaction, on both sides.  Loyalty or confidentiality in the transaction is no longer with us, and on our side, and a very high potential for a conflicts of interest exists in this situation.  That TC either does not work for anyone but themselves, or they work for a broker with a different agenda. They also have your clients contact info, they have details on every issue in the file, they know when transactions fall apart, and sellers or buyers are not happy. And if you are trying to hold it all together.  That information is pretty valuable to a person who may have different loyalties than you do, would you agree?  I ask you to think this through…  What is the potential problem here?

2. We have no oversight control over how they manage the transaction, and what a TC is saying or doing on our behalf. We are completely responsible for it.  When a TC represent things incorrectly, we are absolutely and fully liable. Yet, we as the brokerage, may not know anything about the people who are involved in our transactions, the TC and who else they have working with them.

3. We don’t know if at any time, a TC is related or close friends with any particular buyer, seller, or agents we working with, in the transaction. Yet, we will give them access to communication logs, legal documents lender letters, etc..  At what point will your client contact an attorney because we added someone into their personal transaction they didn’t authorize, who they find out later, didn’t even work for us, at KW?  This is especially an issue if someone gets information they shouldn’t have had.

4. If the transaction becomes a lawsuit or is turned into the BRE/DRE, we are under extreme scrutiny on how we managed that transaction, and who was overseeing the process.  We will need to show our standards of practice.  We cannot do that with various TC’s out in the field that work for themselves.  I cannot imagine having to say to another attorney that we don’t really know the person who was in the middle of the process with us.

If you have ever been in a deposition, you know this; the opposing attorney’s job is to look for holes in systems and processes to make the lawsuit stronger. When they find a crack, they will attack it with vigor.  And outside unsupervised TC in our files who works for themselves is the perfect target. We will have to defend our position and our highest standard of practice to prove we were fully diligent and professional. We have to prove we handled this file with same standards, diligence, and care that we apply to every system and file in our office.  We cannot do this from a position of strength, if we have unsupervised TC’s in our files, that do not work for our company. That’s the bottom line.

If you are an associate broker, the liability is the same.  Ultimately you and I will both be involved together, because of our affiliation.  That’s just how it works.  So the same issue applies to brokers affiliated with our offices.

5. If we were to open the door, and outside TC’s, come pouring in, who are now logging into our files, via SkySlope a massive management issue begins.  Now the files are being given to various people, who aren’t well trained to our standards and processes. When you are upset because you can’t get paid, we are all hostage to someone we don’t have any control over. This becomes extremely difficult, and creates a big hole in our ability to protect our agents and clients, and adds a whole lot more stress into the equation, which I am, for one, not interested in.

6. Finally our errors and omissions insurance will not cover them, if they don’t work for our Brokerage.

I came across this statement most recently:

“We are independent contractors and we can hire whomever we want.”

I want to address that statement specifically:

While it is absolutely true, that you are independent contractors, it is also true, that oversight of the transactions must fit with-in the guidelines that are defined and monitored by BRE/DRE.  The BRE/DRE still does not let me assign full responsibility and oversight of your actions, and of your transactions, over to you.  Nor will any opposing attorney in a lawsuit. I am legally obligated to make sure you are handling files, contracts and paperwork correctly, and that the best interest of the clients are being served at all times, I am bound to this oversight process legally, and morally.  Therefore, I must be in full agreement with how it is handled, and who will be involved in that very important process.

To finalize;

I must be able to fully and professionally stand and voice how we handle every single file. I must be able to confidently vouch for all who are involved on our behalf. I must be able to vouch for how those parties were selected and approved.  I have to watch over how they are trained now, and how that continues. I have to be sure they are updated on the changes in our industry. I must be able to direct them via our staff on what they can represent, and what they cannot represent. I must be able to reign them in when there are concerns. I am expected to hold to the highest standard of fiduciary responsibility, along with you, for every client you work with.   In order to do that properly and respectably, I must hold the line here, on this topic.

Some of you have personal transaction coordinators that work solely for your team.  When a large number of transactions are closing each year, this is a great business decision, and we are fully on board with it. For those who are considering it, we are happy to coach you on that transition and will help you find someone.  We do require that we know them, have some part of the interview with them, once you’re ready to hire, and that they attend our updates and trainings. So we do need to be involved in the process when they are hired as is the case with any team member, including assistants, buyer’s agents, etc. who will have access to our office, our systems and/or our files, and who will represent this company and you.

I believe that many of you work with our company because you recognize we work diligently to keep our standards high, and to hold our processes and systems accountable for all of us. We are focused on how we can better advocate for our agents and your business. Our desire is to help each and every agent build a stronger and better business, and to find ways to make what you do easier, or better.

I know some other brokers allow it outside TC’s.  Some of you will also remember well, a time when the big issue was, why we wouldn’t let Agents also do Loans in our company.  We had lots of push back from some, and were advised how it was allowed in other places. Some people left because we couldn’t get them to understand the challenges to all of the parties involved.  Now, as you know, BRE/DRE has caught up on this, and it’s no longer allowed, for all the same reasons we stood firm on it.  Just because others do things, doesn’t mean it’s good business.  Frankly, It feels to me that this time, is a lot like that time.

In just a little over the past year we have rolled out: Moxi, SkySlope, Trend Graphics, Home Bids, and our newly launch FAQ site, as well the CHATT program.  We continue to keep looking for, and working on more ideas to support your business to the highest possible level, and have several new project on the drawing board for you, designed to enhance what you do.

All this being said, I hope you will take time to understand my position on this particular topic, and will come to respect it, and the reasons behind it.

I feel it’s always better to fully explain “why” decisions are made, as personally I much prefer that to: “it’s just the way it is.” So I want to tell you in my own words, to provide better support your questions you have had, and to support our staff as well.

You’re input on how to make us better is always appreciated!

Most sincerely and respectfully,

Beverly Steiner