Spend some time reading home inspector blogs and you will see that a common theme is the question of conflict of interest between realtors and inspectors. Some realtors pooh-pooh that claim, arguing that they also have the client's well-being at heart. Like most inspectors, I do see the conflict of interest. It clearly manifests itself in the way that realtors refer me. Most of the business I get from realtors is related to property they or someone in their family are buying for themselves. I also get referrals when a realtor has only his/her credibility (but no money) at stake. For example, someone calls a realtor friend and says, "I think I may have some foundation problems. Who can I get to look at it?" I get those types of referrals, but I rarely get the referrals when a potential buyer asks, "Who should I hire to inspect this house you're trying to sell me?" Realtors do not put me on their official "list of four recommended inspectors" that they present to those clients.
The conflict is real, but what do we do about it? Some inspectors call for laws that forbid realtors from recommending any inspectors. Others are trying to break the link between realtors and inspectors by promoting an organization where members pledge not to market to realtors.
http://www.independentinspectors.org/
I believe the problem is not with realtors or inspectors. The problem is naïve buyers. The vast majority of buyers have very little knowledge about the home buying process or the real estate market. They are clueless about important legal issues such as disclosure and agency. They have no idea what all those papers they are signing and initialing are all about. Maybe it's time we require buyers to be licensed!
I think it would be reasonable to require potential buyers to attend a two to four hour class that covers the basic process in buying real estate. (Savvy buyers, could skip this by passing a simple 20 question quiz demonstrating they understand the basic ideas and terms.) After taking the class or passing the quiz, individuals would be given a one-year license to buy real property.
What do you think?
David,
I agree with your assessment. The problem is that homebuyers do not know about the process of buying a home especially first-time homebuyers. They are looking at the Realtor/Agent for advice. Obviously a clean inspection report will not scare buyers but as we all know that even new homes can have some items that can come up in an inspection report. Then the buyers sign all these disclosures but they don't seem to even want to read them unless it talks about their payments and interest rate. As a Realtor I know it's my duty to explain all the disclosures and their rights. I recommend different home inspectors and I ask them if they know of someone or would like to research on their own to make sure it's a license and bonded inspector. The one company that I work well with has admitted to me to losing Realtor business because they were to thorough and scared certain buyers. The buyers get emotional and it's our job to explain the items that come up and settle their emotions so that they can make a good decision rather than emotional one. I like it when my inspection company is thorough because it gives me more peace of mind that when my buyers move in they are already aware of the items that need to be fixed if they hadn't already been fixed during escrow. I get less complaints this way and I've never heard a client tell me that the inspection company missed something.