STRATEGY
RISK PERSPECTIVE
Real Estate: APeople Business
MINIMIZING RISK MEANS UNDERSTANDING HUMAN EMOTION
by Greg Slaughter, A Think Realty Resident Expert
T
he term ‘Risk Management’ in real estate often brings three
does. So, when things go south how do you minimize that risk? Real estate investors believe they are in the real estate business but are they really? Let us challenge that thinking! Regardless of your invest- ing strategy, everyday you work with homeowners, home buyers, contrac- tors, tenants, vendors, etc. What do they all have in common? They are all human. So, are you really in the real estate business, or are you in the people business? Why does that matter and what do people in your business have to do with mitigating risk? Almost every lawsuit or insurance claim is filed because a person got upset with something that escalated
into the lawsuit or insurance claim. Almost every time that issue could have been resolved and prevented from escalating to where it did. Why did the situation escalate? Why was it not resolved prior to it escalating? Human beings are emotional! When emotions are high logic is low. When you understand you are in the people business, then you put the systems in place and have the skills needed to help control those emo- tions and minimize your risk. The first general rule of any people business is to under-promise and over-deliver. Sounds obvious and simple enough but unfortunately in the real estate world it is extremely
things to mind: have good insurance, have a great attorney, and document everything in writing. It would have been easy to just focus and write about those three things, but you can find that anywhere. As an active real estate investor since 1999 and having been involved with well over 1,000 real estate transactions, I want to offer another perspective on risk management. We all know there is no way to eliminate risk, so the goal is to minimize it as much as possible because unfor- tunately in this business it is not if something is going to go wrong, but when, and what happens when it
60 | think realty magazine :: june 2021
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