Takeaways:
- There are important ways you can protect your real estate business with a fidelity bond and leverage it in marketing.
- Surety bonds are a type of insurance a business provides for its customers.
- Fidelity bonds are sometimes also called employee dishonesty bonds. If one of your employees commits some act of misconduct in your company, the bond ensures that the customer will be compensated for their losses.
Real estate brokers need to be constantly on the lookout for advantages in this competitive field. Aside from the usual techniques, there are important ways you can protect your real estate business with an employee dishonesty bond (also called a fidelity bond) and leverage this bond for an edge in marketing.
For both protection and marketing, you’ll need to think creatively about how to communicate with your customers. Standing out starts by building trust with your clients, and that’s easy — just showcase that you’re looking out for them.
Here are your first steps:
What is a surety bond?
To start, you’ll need to learn what a surety bond is. Surety bonds are a type of insurance a business provides for its customers. Usually, they’re legally mandated.
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For many industries, you’ll need to provide proof of a bond to get a license. The real estate brokerage industry has few legal requirements for bonds, and that’s exactly what opens up the field. If you get a fidelity bond, you’ll be one step ahead of the competition.
If you’re weighing whether to get bonded, it’s important to know that you pay only a percentage of the bond to your surety agency.
Depending on your credit, you might pay between 1 and 5 percent of the total bond amount. For example, the cost of a $50,000 bond is usually around $500.
Once you’re bonded, if a customer files a valid claim against you, the surety company will pay the claim right away. That’s what wins customer’s trust — knowing that if something goes wrong, they’ll be fairly compensated.
Just remember, you’ll still be ultimately responsible for paying back the full claim amount to the bonding company, so try not to give your customers a reason to file a claim in the first place.
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How are fidelity bonds different?
Fidelity bonds are sometimes also called “employee dishonesty bonds.” They still might be required by law.
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But they are often purchased by insurance companies or brokerage firms even when not required because these bonds serve to protect your customers, and that’s something more discerning customers will demand.
How exactly do fidelity bonds protect your clients? If one of your employees commits some act of misconduct in your company, including fraud, forgery or some form of theft, the bond ensures that the customer will be compensated for their losses. These bonds even cover something as small as theft by cleaning staff.
How fidelity bonds can boost your business
You can leverage fidelity bonds to demonstrate your reliability and proactive attitude to your customers. Show customers how much you care by integrating your fidelity bond protection into your marketing and branding strategies.
If you’re purchasing a fidelity bond, whether it’s legally mandated, you’re providing a valuable service to each of your customers. Letting them know about this through advertising serves both to make them more aware of their rights and what you’re doing to ensure they’re always protected.
In particular, if you can offer a fidelity bond when your competitors don’t, you have a chance to point out this significant difference in your customer communications. But how should you communicate this distinction to your clients?
Bringing fidelity bonds into your advertising and branding
There are two basic strategies you can use. The first is the simplest: Place a small mention of your bond in a corner of your existing advertisements.
This mention could look similar to the “Member FDIC” mention, which is so ubiquitous (and legally mandated) in banking advertisements.
The issue with this strategy is that many of your customers likely don’t know what a fidelity bond is. For this reason, the best strategy might be to build a campaign around educating your clients about what this bond is and how it protects them.
Trust is at the heart of any good real estate brokerage, and for good reason: Modern advertising is built on it.
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If you can combine the visual elements of building trust with the background information and track record to back it up, you’ll be poised to build better relationships with your clients and a strong brand image that people can trust.
Eric Halsey is a historian by training and disposition who’s been interested in U.S. small businesses since working at the House Committee on Small Business in 2006. He has a particular interest in surety bonding and real estate, and professional certification, and he loves sharing his knowledge of the industry for JW Surety Bonds.