Adapt Policies for a Smooth-running Office

Turn your office into a model of efficiency and profitability with some well-planned policies.

January 1, 2010

The most self-directed salespeople will be more productive if they understand what’s expected of them.

A policy manual takes so much strain out of managing an office. You don’t have to make decisions every time a situation comes up. You can just refer to the manual, says Greg Herb, CRB, CRS®, president of Herb Real Estate in Gilbertsville, Pa. I’ve also found that most salespeople prefer policies and procedures over a lack of them.

A comprehensive office manual functions as a one-stop spot where your managers, salespeople, and administrative staff can look for a how-to and a what-if. Yet, many brokers either believe they don’t need one or are hesitant to draft specific policies for fear that they will impinge on associates’ independent contractor status.

The role of the policy manual is to set boundaries in which sales associates can operate. We’re very aware of the independent contractor relationship with our agents, but that doesn’t mean you can’t have policies that show your expectations for professional conduct, says Kathy Baker, manager of RE/MAX United in Raleigh, N.C., and a consultant with coaching organization Judy LaDeur International.

Written policies are also a great recruiting and retention tool because they reflect a company’s culture. That, in turn, helps associates gravitate toward a company where they’ll fit in.

While some provisions will be specific to certain business models or management styles, it’s helpful to have general rules in mind as you draft your own office policy manual. Here are the essential components:

Policies on Compensation

The most important way to reduce conflicts between brokers and salespeople is to create a set of clear-cut rules about exactly how and when salespeople will receive their compensation. Is it when the contract is signed? When the sale closes? What happens if the salesperson leaves your company before the closing? When a decision is based on clear, written policies, fewer commission disputes and other conflicts will arise.

Requiring that all paperwork be completed when a transaction closes can cut down the hassles of backtracking; it also forestalls potential legal action in the event a dispute arises. Keep in mind, as well, that an incomplete file makes defending a lawsuit more difficult. Herb and several other brokers favor a policy that requires all mandatory legal documents—from agency disclosure forms to lead-based paint statements—to be in the transaction file before the company pays the salesperson’s commission. Requiring a complete file gives you leverage, says Herb. He provides a checklist to make the task easier. While he allows that this policy may sound a little harsh, the inconvenience is nothing compared to the potential legal hassles if the file is audited by the real estate commission and an item is missing.

Policies should also address the other major class of financial disputes: expenses. Be clear what salespeople are expected to pay toward errors and omissions insurance, MLS dues, and advertising costs, as well as their share of administrative expenses, such as photocopying and phone service. And be specific about when those payments are due.

Most brokers are running tabs for their salespeople, and they just can’t afford to in this market, says Carmel Streater, a real estate educator, who markets a downloadable policy manual template for $150 ( If you have a policy stating that all expense payments are due at the end of the month and what the penalties are if payments are late, you’re less likely to get into an argument, she says. If you are a franchisee, it’s still important that you establish your own policies on day-to-day operations. Franchise companies tend to focus instead on upholding brand policies and company identity standards.

Policies on Changing Technologies

The ever-evolving Internet and the rise of social media pose their own challenges for keeping office policies up to date, says Marcie Roggow, CRB, CRS®, owner of Creative Learning Concepts, a real estate training organization in Sioux Falls, S.D. Salespeople may not realize that they need to identify their brokerage affiliation wherever they promote their business online, just as they would in print advertising or a Web site, says Roggow, who offers a downloadable manual at for $99.

Policies should cover business-related blog postings, as well as content on Twitter and Facebook, even though most state real estate commissions haven’t yet addressed social media use. Keep in mind that postings about real estate are a form of advertising. You don’t want to have associates confuse the public by not identifying themselves, says Bill Neill, ABR®, GRI, sales manager with Prudential Gary Greene in Houston.

Admittedly, it’s challenging to identify your brokerage on Twitter where text is limited to 140 characters, but I’ve seen a number of brokerages lately that have their company logos as an identifier instead of the salesperson’s picture. It works great, says Roggow.

Brokers also need policies that prohibit salespeople who blog from making potentially libelous statements about other industry professionals or talking about commissions or business operations in ways that could violate antitrust or fair housing laws. NAR’s newly amended Code of Ethics addresses the duty of REALTORS® to publicly clarify or remove false or misleading statements that show up in electronic media in their control. If brokers knew what some salespeople are posting on social media, they’d be having strokes, says Streater. For example, avoid commenting on the pricing of other people’s listings or revealing details about a newly made offer.

To ensure that policies are being followed and to limit your own liability, Roggow advises brokers to monitor salespeople’s postings regularly or use technologies like Google Alert or Twitter Search to get updates on when the company’s or associates’ names appear in posts.

Technology policies should also aim to protect brokerages’ files from the chaos that a salesperson might inadvertently create by bringing a virus from another computer onto the office system. At the very least, brokers should have a policy that requires all salespeople to have up-to-date virus software on their personal computers, says Brad Nelson, director of marketing and technology for New Broad Street Realty in Orlando, Fla. We like Norton AntiVirus software because it provides a report that tells us whether associates have installed updates.

Apart from virus concerns, encourage associates to use the same software and database programs to make it easier to share information. How sales associates and employees use company e-mail is another area where a few well-planned policies can prevent headaches. Nelson requires salespeople sending marketing messages with more than 50 recipients to use the company’s third-party e-mail program. If you send too many e-mails through your mail server, you can get the company’s e-mail address blacklisted, automatically marking it as spam. That could wreak havoc, he explains. Well-regarded third-party providers include Constant Contact, Vertical Response and Exact Target.

It’s also prudent to have policies on keeping and deleting business e-mails, says Roggow, especially in light of a 2006 update in the Federal Rules of Civil Procedure. The amended rules govern the discovery of electronically stored information. The revised rules make it clear that all such data, including e-mails and attachments, instant messages, text messages, blog posts, histories of Web surfing, backup tapes, and voice mail, are subject to discovery in civil lawsuits. A good rule of thumb is to keep all data for two years, though some states may require that some information be maintained longer.

Policies that Define Roles

Having an independent contract or agreement that specifies that agents work on commission in your policy manual is pretty standard as a risk management tool. But it gets bumpier when you look at specifics. Policies need to define the types of agencies permitted, when exceptions will be made, and how the agency will be communicated to the client. Streater suggests that all manuals refer to the specific laws and regulations of your state that govern agency and disclosure. Policies also need to define other business activities not permitted by the brokerage. It may be wise to include information about complying with laws such as the federal do-not-call registry. If an agent willfully violates the law, your brokerage could face liability.

Don’t let manuals get dusty in the drawer. They need to be regularly revisited and revised to change with the times. Baker’s company used to have a policy prohibiting sales associates from providing property management services. There was too much liability risk, she felt. But with today’s higher home inventories, we’re modifying the policy so that associates can provide a needed client service and generate income for themselves. To protect itself, the company developed policies stating that associates must set up a separate limited liability corporation to handle management and comply with state authority. Correspondence with tenants can’t go out in the company e-mail or on its letterhead; nor will the brokerage accept rent payments.

How companies oversee the growing number of personal assistants and teams in the field is an often overlooked policy area that can be a huge danger zone for brokers, says Bruce Aydt, ABR®, CRB, senior vice president and general counsel for Prudential Alliance, REALTORS®, in St. Louis.

For licensed assistants or teams, it’s critical to establish in the manual that all team members are under the control of the broker, not just the lead agent, says Aydt, who’s also created a model office procedures manual for the Missouri Association of REALTORS®. For example, all contracts executed by a team member must be signed by the company’s designated broker, not just the lead agent. Policy should also state that a licensed assistant working as an independent contractor will be paid a commission percentage through the brokerage or the team’s sales manager, just like the principal agent. To reduce misunderstandings, Aydt has created a document that, he says, spells out the chain of command.

Still, there’s no single formula for procedures to keep your office running smoothly. Some companies provide 100-plus pages that restate license law regulations and NAR Code of Ethics provisions. Others are far smaller and focus on guidelines unique to the company. Many feel there’s no need to repeat what’s in the license law or NAR’s Code of Ethics.

But whether your manual is 20 or 100 pages long, it’s important to communicate and train sales associates on policies regularly. Send e-mail updates, spend five minutes of a sales meeting on a new regulation, provide a quick-start guide to the most used policies, and create an index to make your manual more user-friendly. There’s less pushback from the sales associates if policies are well communicated, says Baker. It also helps to explain that having written procedures reduces legal risk for both the company and the associate, says Neill.

Even more critical to keeping your office running smoothly is applying your policies consistently and fairly. Treat every associate—top performer and those just getting by—the same when it comes to enforcing policies, says Herb. Nothing else is as important to the success of your company.

21 Policies for a Smoother Office

If a policy manual still seems like too much work, take heart. You can purchase policy manual templates from several online sources. Or let us help you get started. While this list won’t cover everything you might want in a manual, it’s a great place to start.

Personnel policies

  • Independent contractor agreement
  • Dispute resolution procedures
  • Expense responsibilities and payment schedules
  • Termination

Technology policies

  • Virus protection requirements
  • E-mail policies: retention and personal use of company mail
  • Social networking language and a list of topics that avoid liability
  • Access and use of shared equipment; compatibility of personal computers

Operations policies

  • Agency disclosure and other required paperwork
  • Commission and referral fee structures and procedures
  • Sexual harassment and antidiscrimination
  • Insurance and affiliation requirements
  • Crisis management procedures

Advertising and marketing policies

  • Advertising submission and payment splits
  • Open housing procedures
  • Social networking—brokerage identification

Legal and ethics policies

  • Fair Housing
  • Do Not Call/CAN-SPAM

Personal assistant policies

  • Supervision and reporting
  • Payment and employee status
Mariwyn Evans

Mariwyn Evans is a former REALTOR® Magazine writer and editor, covering both residential brokerage and commercial real estate topics.