The real estate market can ebb and flow. When inventory is tight, many buyers are facing competing offers, and a great buyer’s agent or broker is worth their weight in gold. On the flipside, when home prices drop, a great seller’s agent can help you showcase your property to its best potential and command a good asking price.
Buyer’s agents are responsible for helping their clients through the difficult process of finding a property that meets their eligibility requirements, supporting the client with due diligence on the property, helping the client write a strong offer and negotiate on conditions of sale, and ultimately seeing the transaction through to a smooth conclusion.
Seller’s agents are responsible for representing a property to buyers on their customers’ behalf, providing them with details about the property that help them make an informed decision, and helping the seller review prospective buyers’ offers to ultimately sign off on a strong offer.
In either case, real estate agents are likely to have access to a lot of customer information that falls under a confidentiality agreement - so it’s important to make sure that you’re putting safeguards in place to ensure the security of communication between you and your customer during the course of any real estate transaction and the entire agency relationship.
Fiduciary duties in real estate
Whether you’re a real estate agent, a real estate broker, a mortgage broker, or are otherwise involved in supporting a client with a real estate transaction, you have a set of fiduciary duties to your clients.
For realtors in particular, you have a defined set of six fiduciary duties:
- Duty of care - Agents have a requirement to act in good faith and to seek out expert advice to support their clients when needed.
- Duty of confidentiality - Agents must keep all information that a client provides to them confidential, especially if that information may be damaging to them in a real estate negotiation.
- Duty of accounting - The agent must keep all funds provided by clients separate from their own business or personal bank accounts, with no commingling of funds.
- Duty of disclosure - During the course of a transaction, the agent must share with the client any information they come across that will benefit the client’s position in a negotiation.
- Loyalty - The agent will put the client’s interests above their own.
- Obedience - The agent must obey any lawful orders that the client gives them.
In order to serve your clients well, and provide them with up-to-the-minute information pertaining to their real estate transactions, it’s important to have a real-time communication channel that you can use to ask questions and share information with your clients.
As a result, realtors are typically glued to their phones — but, while using voice calls and SMS messaging to discuss client contracts and negotiations can help you provide a high-quality “duty of care” by being responsive to your clients’ needs, these channels have the potential to serve as a breach of the “duty of confidentiality” clause.
In order to provide the best service to your customers without running the risk of revealing confidential information to outside parties, it’s important to put the right technology tools in place to protect your conversations and contract negotiations.Here’s a look at why and how to effectively protect your clients’ secure information.
The rise of cybercrime in real estate
The real estate industry is one of the most common targets of cybercrime in the United States, with 11,000 victims of real estate cybercrime in 2019, resulting in losses of $221.4 million. Cybercriminals also diverted or tried to divert nearly $100 million from real estate transactions into accounts that they controlled.
Hackers take a wide variety of different, often sophisticated tactics for gaining access to confidential information or financial accounts. For instance, they might impersonate a third-party vendor over the phone or email, in hopes of gaining access to a client account or your company’s payroll. Or they might hack into an employee’s email account and impersonate the employee so that they can email clients asking them to share bank details or wire money.
It’s important for both real estate firms and individual agents to take a vigilant approach to combating cybercrime, by putting processes and technologies in place that limit access to information to anyone outside of your firm.
Let’s look at some best practices for protecting client data and other confidential information.
Tips for data privacy and security in real estate transactions
First, make sure that all of the agents in your firm go through training on preventing cybercrime — your brokerage is only as strong as its weakest link, and if one agent’s account is compromised, a hacker will be able to easily access information that others have shared with them.
Agents should learn the basics of setting strong passwords for their email accounts and work-associated logins, using two-factor authentication, and avoiding accessing any confidential data on the internet on a public WiFi connection, such as one hosted by Starbucks or their local library. And when logging into your brokerage’s intranet remotely, it’s important to use a VPN.
Wire fraud is one of the most common types of cybercrime in real estate, so when sending wiring instructions to a client, it’s important to ask them to call your office to confirm that your instructions are accurate — as there have been many cases where a hacker will impersonate an agent or settlement office and request a wire transfer to their own bank account.
Beyond that, though, it’s also important to choose technology solutions that offer the best data protection for day-to-day communication on the platform that real estate agents use most frequently — their cell phones.
Protecting your real estate clients’ information via secure telecommunications channels
Real estate brokers and agents need a cell phone at their disposal at all times, and are frequently traveling around to meet with clients and visit properties — so they can’t rely on secure office infrastructure when they want to communicate confidential information to their clients.
That means they have a couple of options: Separating their work calls, emails, and text messages from their personal ones on a dedicated work mobile phone, or using available technology to create a virtual second phone line with encrypted messaging so that they can securely communicate with clients on their personal mobile devices.
Purchasing a second line for business allows agents to separate their personal life and business life, and makes it easy to provide only the required data in case of audit or compliance initiatives, without giving up personal data.
But it comes with a cost — literally. By carrying around two phones, you’ll need to double the cost of the phone purchase, monthly subscriptions, and other fees. Not to mention, it’s cumbersome and inconvenient to carry two phones around.
Instead, consider the benefits of signing up for a virtual second phone line through a mobile app like iPlum. iPlum is available for both iOS and Android platforms, and works over your mobile carrier, so it does not encounter the connectivity issues faced by ViOP providers. With iPlum, you can easily separate your business data from your personal communications to stay faithful to your confidentiality agreement with your customers.
How real estate agents can use iPlum
By signing up for iPlum on their existing phones, realtors will be able to get access to a virtual second line, with a different phone number and ring tone, so you’ll easily know when a client or business associate is calling you rather than a personal contact, and set up a business voicemail box if you’re not available to take a call.
If your real estate brokerage’s agents all use iPlum on their phones, you’ll be able to use the auto-attendant feature to set up a phone tree at a main phone number with different extensions, so that customers can be easily routed to the right real estate agent or staff member.
For sending text messages, rather than using your phone’s default text message app, you’ll be able to use iPlum’s encrypted messaging platform to send messages, photos, and other files to clients, and to receive them from customers and colleagues. The secure messaging platform can protect your business data from being hacked, even in the event that your phone is lost or stolen. You’ll also be able to remotely set up a PIN on the app to prevent unauthorized users from logging in.
iPlum also offers mobile call recording and text archiving, which is important for preserving records of your real estate negotiations and transactions for your own and your agency’s benefit. And in the event that you need to disclose real estate data in case of an audit or lawsuit, you’ll be able to easily separate all of your business data from personal data, ensuring that you’re not forced to share personal information with people who don’t need access to it.
When you need to share documents securely, iPlum provides a secure e-fax solution, which you can use for sending and receiving buyers’ pre-qualification letters, sellers’ disclosures, offer letters, and other forms of confidential information that you’ll be likely to interact with over the course of a real estate relationship with a client. The efax service enables you to easily store important documents in a password-protected digital dashboard, rather than risking making hard copies that may fall into unauthorized hands.
The importance of honoring your fiduciary duty
The Realtor’s code of ethics isn’t just there for decoration — real estate agents are expected to live by these duties.
If a real estate agent fails to honor their fiduciary duties, such as the protection of confidential information, they’re likely to see repercussions.
For example, if a client suffers a data breach due to an agent’s negligence, the customer can sue the real estate agent for compensatory damages, with the goal of compensating the customer for whatever financial damages they’ve suffered as a result of the breach.
If the event was especially egregious, or shows willful intent to breach fiduciary duty, the damages might also include punitive damages on top of the compensatory damages, which are designed to punish the wrongdoer.
After some types of breach of fiduciary duty, the agent may even lose their real estate license, making it impossible for them to maintain their career.
Building an environment of trust
While the legal implications of failing to protect your confidentiality agreement are important, it’s also crucial to maintain a positive agency relationship so that you can ensure client satisfaction as well.
By ensuring that your agency takes every effort to safeguard confidential data and prevent cybersecurity attacks, you’ll be able to win over clients who are concerned about protecting their data privacy.
Today, it’s not cost-prohibitive for real estate agents to go the extra mile when it comes to protecting client data. By implementing common cybersecurity practices, such as using strong passwords and VPNs, and using a virtual second line and encrypted text messaging solution like iPlum, you’ll be able to offer your clients peace of mind at an affordable price for your business.
Strong cybersecurity and data protection policies can help you win over customers, build trust with existing clients, separate your business and personal affairs, and protect yourself and your agency from potential legal problems.
To get started with a good data protection program for your brokerage, start training your agent team on the basics of cybersecurity, and download the iPlum app for secure voice communication, messaging, and efaxing.