Staying within your realm of expertise is challenging these days, but nonetheless still very important. Agents know they shouldn't get involved in a commercial transaction without the proper knowledge. The same goes for all other specialty areas of real estate, i.e.- vacant land, subdivision land, farms & ranches, etc. How about short sale and bank-owned transactions?
The agent that has no knowledge or experience in these areas shouldn't venture forth without assistance from an experienced agent or they will not only be violating the NAR Code of Ethics, they may well find themselves embroiled in litigation should anything go wrong. What could go wrong? That's the point - they don't know until they unwittingly make a mistake.
We now have two new specialty niches - Short Sales and Bank-Owned. They have their own language, acronyms, policies, procedures, and consequences. What started as a ripple has become a tsunami in our industry. They are pervasive in the market and require specific knowledge to properly conduct their business.
Short Sales were full of unpredictability, but that is changing as agents acquire their knowledge and skills. Last week we had three lenders try to say we weren't authorized to talk to them in the first minute of the phone call. With persistence they were compelled to look at the file, and it was game on after that for we were authorized and in their system. Interesting to note that three different lenders had the same technique. A small example, but one of many that occurs during the Short Sale process. Knowledge is necessary to achieve success.
Recently had a situation of a novice Short Sale listing agent sending the HUD-1 to the lender for approval. The approval came for the sale, but the HUD-1 was wrong. The agent hadn't reviewed it and the lender relied on it. The agent is giving up $7,500 of her $6,200 commission for the mistake. A cheap lesson if this closes on time and nobody is harmed. If it doesn't there is exposure from both the Seller and Buyer being harmed by the error.
Bank-Owned properties have fewer problems as the banks scrutinize their listing agents more carefully than does a Short Sale seller. There are many unique aspects to representing a REO property that the agent should be aware of before venturing forth. Agents representing Buyers should know the terms and conditions demanded by the bank/owner or their Buyer will not be competitive in the market.
It may be subtle, but these areas are indeed areas of expertise that agents must be cautious about engaging in. There are plenty of sources for knowledge including many wonderful AR blogs. If you are venturing into a specialty area get your special knowledge to better represent your customers and to save yourself from financial exposure.