Good Morning America
home inspector warning:
Go outside of real estate office for your home inspector
(The opinions and views expressed on
this page are those of Dennis R. Robitaille and many of the IHINA
home inspectors. They do not represent the views of all home
inspectors. The views and opinions expressed here may not
necessarily apply in all areas of the country. These comments are
based on personal experience, feedback from clients, conversations
with home inspectors, attorneys and real estate agents and written
correspondence from a former MA State Representative.)
What's Wrong With A Real Estate Agent
Recommending A Particular Home Inspector To A Prospective Home
Buyer? Most real
estate agencies work on an average commission of
6% paid by the seller of the property. On a house selling for $350,000 there is a
potential commission of $21,000. Sometimes a selling agent will recommend particular
home inspectors to a prospective buyer, sometimes a list of three is given out. Who are these recommended inspectors? How did they "qualify" to get on the "approved" list of the agent? Is the agent recommending a thorough non-bias inspector or is the agent recommending someone who will help protect the potential $21,000 commission? Unfortunately, some real estate agents view a thorough and non-bias home inspection as a threat to their sales commission.
Shouldn't a prospective homebuyer have the
right to use an inspector of their own choosing? If a real estate
agent tells you that you cannot use an inspector of your choosing, or insists that you
use one of their "recommended" or "approved" inspectors, you should contact your attorney. (You
should also wonder why they don't want you using an independent inspector of your
choosing.) A real estate broker or sales agent who tries to get you to use an inspector
of the agent's choice is trying to control the home inspector selection process.
Prospective home buyers must keep in mind that real estate agents who receive a
commission from the property seller, are working in the best
interest of their client, (the seller.) As the prospective home
buyer, shouldn't the home inspector you're paying for, be working
in your best interest?
What Is A "Deal Killer"?
The derogatory phrase "deal killer" is often used by real estate
agents to describe independent home inspectors who give buyers
objective information in an inspection report, which may lead the
buyer to renegotiate or to look at other properties. Many real
estate agents view independent home inspectors as a challenge to
their ability to generate income. They view these "deal killers" as
foes and will use a number of tactics to control the inspector
selection process to make sure that the prospective buyers do not
retain independent home inspectors.
How Does A Real Estate Agent Control The
Inspector Selection Process? There are many tactics
used, some subtle and some not so subtle. The agent may discourage
the potential buyer from using a certain inspector by making
comments like: "That inspector is a deal killer", or "that inspector
takes too long" or "we've had trouble with that inspector" or "we don't
allow that inspector to inspect any of our listed properties" or
"that inspector is too expensive." A twist on the fee tactic is to
advise the prospective buyer that they should expect a home
inspector to charge around $150 or $200. By advising homebuyers to
expect these low (unrealistic) fees, agents are trying to steer
homebuyers to certain inspectors, because the prospective
homebuyers might limit their search to the arbitrary price range set by the real estate
The tactics used to
encourage a prospective buyer to use a particular inspector
include: "We've had good luck with this inspector" or "this inspector
has the lowest fee" or "we use this inspector all the time" or "this
inspector can schedule an inspection on a day's notice" or "this
inspector only takes an hour and he gives you a report right on the
spot." For instance, in the first stage of discussion about having
the home inspected, the real estate agent may recommend to the
buyer a "good" home inspector with whom they have worked with for
several years. Some agents may have a list of three inspectors who
have been carefully screened not to be deal killers. The list, however,
will be long enough to protect the agent from any referral
liability should the buyer want to blame the agent for any inspection mistakes.
This gives the agent the perfect combination of: A) No liability for the referral; B)
The buyer "chooses" an inspector the agent prefers; and C) The buyer's choice is limited
to home inspectors who will not hurt the sale.
If There Is A Potential Conflict Of
Interest With Sales Agents Recommending Home Inspectors, Why
Doesn't The Government Do Something About It? A
home inspector licensing law has been passed in Massachusetts and
became effective May, 2001. This law, to some degree, does address
the potential conflict of interest of real estate agents referring
home inspectors. The new law amends Chapter
112 section 87YY of the MA Real Estate Broker and Salesperson
Licensing Law. It prohibits real estate brokers and salespersons
from directly recommending a specific home inspection company or
home inspector. Instead, upon request, the agents must provide a
complete list of licensed home inspectors prepared by the Board of
Home Inspectors. (So far, MA is the only state which has this provision.)
The prohibition does not apply if there is a written agreement between the buyer
and real estate broker that the broker is acting exclusively for the buyer as a
buyer's broker. Potential buyers must still be aware that regardless of who the real
estate agent claims to be working for, his or her commission is still
coming from the successful closing of the sales transaction.
Why Don't I Read About This Conflict Of
Interest Situation In The Newspaper? Very simple answer, money!
Look at the real estate section of any local or regional newspaper, lots of houses
being advertised by real estate agents. Those newspapers don't run those ads for free.
How many home inspector advertisements do you see in the newspapers? Almost
none. Do you think a newspaper is going to bite the hand that helps feed it?
Why Don't Home Inspectors Organize And
Change The Current Control Real Estate Agents Have Over The
Inspector Selection Process? You would think inspectors would want
consumers to have a free choice when it comes to selecting a home inspector.
Unfortunately many inspectors rely upon real estate agents to steer clients their way.
This is especially true for large multi inspector firms. There are some
home inspector web sites that have over 3,000 inspectors listed. As you can see from
the number of Independent Inspectors listed on this site, less than 2% of all home
inspectors claim that they do not solicit real estate agents for client leads. In a free
marketplace, companies that offer a poor product or provide a poor
service eventually go out of business. In the world of home
inspection, there is an artificial marketplace controlled by real
estate agents. This allows some "agent friendly" inspectors to stay
in business, regardless of their inspection abilities.
What About Inspectors Who Claim To Be
Independent, But Don't Belong To IHINA? Many
inspectors who claim to to be independent are not willing to sign
pledge. An inspector who claims to have no real estate agent
affiliations doesn't necessarily mean they do not solicit real
estate agents for client leads. The best way to qualify the
relationship is to ask the inspector whether he or she solicits
real estate agents for client leads. If you find that the inspector
or inspection company maintains brochures in real estate offices or
if the inspector or inspection company is on the real estate
agent's "recommended" list given out to prospective buyers, this
should tell you something.
Why Doesn't The American
Society Of Home Inspectors (ASHI) Code Of Ethics Prohibit ASHI Inspectors From
Soliciting Real Estate Agents For Client Leads?
Good Question! This question has been raised and discussed with
ASHI National. The response has been that ASHI does not want to
dictate to its members how they should obtain their client leads.
However, ASHI embarked on a "branding" campaign
spending millions of membership dollars to educate real estate agents that
they should refer only ASHI inspectors. This is unfortunate for the
home buying consumer. The following paragraph has been taken
directly from the ASHI web site: "ASHI is your
professional partner for home inspections. Your customers rely on
you for your advice on which service professionals to use in the
buying or selling process. You can trust that ASHI inspectors will
deliver exceptional service and expert knowledge, enabling smart
decisions and peace of mind to your customers, thus helping you in
your role as a trusted resource." Do you want an
inspector who "helps" the real estate agent earn a commission or do
you want an inspector who is going to fully disclose the condition
of the house?
What Can Be Done To Prevent This Potential
Conflict Of Interest? Contact the Representatives
and Senators of your own state. Send them e-mail with a link to
Home Inspectors Of North America web site. Do not ask the real
estate agent for the name of an inspector. Do not accept any short
list or recommendations from the agent. If the state you're buying
in requires home inspectors to be licensed, obtain the list of
licensed inspectors. Do a little research and choose your own
inspector. The best source for referrals will come from people who
do not have a vested interest in the sale, this includes your
attorney and past clients of the inspector. Remember, it's your
money and your potential future home. Choose your home inspector wisely!