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What is file compliance?

File Compliance is a very important part of running and managing an ongoing business operation. Any company that has agents doing paperwork will want to ensure that the agents are filling out the right paperwork and filling it out right. Meaning that all the necessary forms exist and that they have signatures where needed, addresses in the right format, and so on.


The broker and business owner wants to ensure that they have files in compliance with their own company rules - generally for liability reduction, and in compliance with their regulatory commission’s rules, for example a state real estate commission body who has certain requirements of how real estate paperwork is completed and stored.


Why is file compliance important?

Reduced stress, reduced liability, and improved communication are three simple reasons that file compliance is important. As the agent or broker who is responsible for the contracts, knowing that everything is in order just feels ... good! Here are a few of the countless examples of when you want to have File Auditor on your side.


When a buyer calls and says “You never told me I should get a radon inspection!!”, it is comforting to log into, pull up the transaction address, and find a nicely labeled and signed document titled “Buyers inspection authorization form” that clearly encourages the buyer to get a Radon inspection. Not today buyer!


If you get the dreaded letter from your state’s real estate commission letting you know that you will be audited, it feels WAY LESS stressful knowing that you have been using to organize and review your files for compliance based on the rules that you set. Not today auditor!


Lastly, file compliance is the key to good communication between real estate agents, buyers and sellers, as written contracts are what is used to outline their agreements. If we can ensure that the documents are properly filled out and in compliance, then it helps to ensure that all parties are on the same page about what is being agreed to.


Motivated to get paid at closing, also increases communication with your Realtors®. In addition to frequently hearing about what is needed for their transactions to be in compliance, the broker or owner of the company is able to view reports about which contracts are having the most errors and problems, so they know where to focus their time on training. It's a win-win.


What is Smart Auditing?

Smart Auditing is a way to leverage technology to RIDICULOUSLY REDUCE the amount of time you or your staff must spend on file compliance. File Auditor is WAY MORE than a typical file storage and organization software – it actually does that audit.


File Auditor can check for so many things, but here are a few examples:


  • “This box was checked on the sales contract indicating that there should be an appraisal rider.”

    • Well, is it there?

    • If so, is it filled out?

    • Is it filled out correctly?

    • Is it signed?

    • Is it dated right?


  • This transaction is supposed to have documents such as a listing agreement, lead paint disclosure, sellers disclosure, MLS sheet, and tax records in it.

    • Well, does it?

    • Are they all there?

    • Does the price on the listing agreement match the original price on the MLS? If not, is there an amendment?

    • Does the owner on the tax records match the owner who signed the listing agreement?


  • That line that no one ever uses, but the state auditors want to be “not blank”.

    • Well, is it?

    • Is there something there, like maybe an “N/A” or “--”?


  • The Buyers Inspection Authorization form

    • Did my agent turn it in?

    • Is it filled out?

    • Was it signed by the buyer on or before the sales contract?


What can Smart Auditing do for you?

More like, what can’t it do? Am I right?


  • You could upload 1,000 sales contracts in one PDF and File Auditor will organize them into transactions based on address.


  • You could run all of the paperwork that your entire company did in the last year through our smart technology and know which files are incomplete and what information is missing from each.


How do real estate brokers limit their liability?

If you are a successful real estate broker, you likely have more than a handful of agents whose licenses you hold. They are out there on the streets doing deals, writing offers, and listing properties. From our experience, liability presents itself in a few ways.


Lack of Disclosure

Lack of disclosure is a real problem in terms of a realtor disclosing their agency type, lead paint hazards, other defects, what inspections are available, and broker disclosure forms. Lawsuits related to an agent not making proper disclosures will probably leave you filing an Errors and Omissions claim and paying a big deductible.



You most likely have governmental entities that have some sort of governance over what you do such as state real estate commissions, CFPB, and local real estate associations. All these bodies may have the right to look in at your files and fine you, shut you down, require you to spend more money in additional places (like hire a CPA for monthly bank reconciliations), and after all of that, they may complete a re-audit. can prepare you for an audit like this by looking through every single file you submit, and checking for rules that you set like “this line must not be blank” or “if this box is checked, then require this form”, and report back to you a list of problems, so you can fix them.


What is regulatory compliance in real estate?

Regulatory compliance in real estate refers to the process of ensuring that real estate professionals and their clients are adhering to all relevant laws, regulations, and ethical standards in their transactions and dealings.

There are numerous laws and regulations that impact real estate transactions, such as zoning laws, environmental regulations, fair housing laws, and tax codes. Real estate professionals are required to comply with these laws and regulations in order to avoid legal issues, financial penalties, and reputational damage.

Compliance can involve a variety of activities, such as conducting due diligence on properties, preparing and reviewing contracts and other legal documents, verifying the accuracy of property information, and ensuring that all parties involved in a transaction are properly licensed and authorized to participate.

In addition to complying with legal requirements, real estate professionals may also be subject to ethical standards established by their professional associations or regulatory bodies. These standards may include guidelines for handling conflicts of interest, maintaining confidentiality, and providing accurate and complete information to clients.

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