Real Estate Blog - Fight the good fight

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Fight the good fight

I have decided to post this blog across all areas of Active Rain due to the seriousness of this issue. There have been many posts on here concerning this issue and it has brought up a great deal of controversial opinions from both sides. (Realtors and Inspectors). The fact that there are so many different opinions concerning this matter should only illustrate how big of a problem this really is. There have been a select few of us here on A,R that have been trying to convey this message to everyone and help them all understand the importance of this issue. What I am speaking of is the Inherit conflict of Interest between Realtors and Home Inspectors.

There is another post here on A.R. that concerns this very issue called "Are we next". In that post (down the page) is a link to an article of a new law trying to get passed in Kansas. I will post it here for those of you who have not seen it.

http://cjonline.com/stories/031008/opi_255434546.shtml

It appears that the Realtors there are actually trying to take control over the inspection Industry legally, and I think it is time we all try and do something about it.

I have already sent out this letter to my 3 state representatives, 2 congressmen, the Mayor and the Governor of the state of Indiana. I URGE anyone and everyone out there who feels the same way to do the same. It only takes a few minutes of time to do so. All you need to do is Yahoo or Google " State representative and your state" It took me a total of 15 minutes to type this up and copy and paste to my representatives. This is our bread and butter people, and we need to stand up and do something about the injustice in this industry, before we are on the wrong end of the stick. If we all just sit around and do nothing about this, we will have no one else to blame but ourselves.

Please feel free to copy and paste my letter to your state representative.

Mr Steve Buyer,

I am writing to you to express my concern over the conflict of interest that exists between real estate agents and home inspectors. I would like to see some kind of law entered in Indiana that would prohibit real estate agents/brokers from being able to recommend home inspectors to their clients.

The reason being is that agents have a vested interest in the sale of a property. The current norm is they hand out a list of 3 recommended home inspectors to their clients. Not in all cases, but in MANY, the inspectors on that list have either paid money to be on the list, or they are known as being "soft" so that the sale of the property goes through, the agents get their commissions, and the home inspector gets to remain on the list. Either way it is a serious code of ethics violation on both parties.

There is, in my opinion a great conflict of interest with the way the current system is. The biggest problem in my opinion is that a lot of real estate agents act as if they own the inspection industry (they certainly do have a huge influence on which inspectors get the most work) and now they are even trying to pass a law in Kansas #HB2315 that would give THEM certain control over the inspection industry. That is wrong. A home inspector's duty is to act as an independent, unbiased and objective third party and provide pertinent information to his/her client (usually the buyer) during a real estate transaction.

Being an independent home inspector myself, this is an issue of great concern for me and my family. Anything you could do to bring this to the forefront would greatly be appreciated by me as well as my peers that share the same belief.

Thank you for your time.

Mike Chamberlain
MC2 Home Inspections
317-605-3432

Posted by MC2 Home Inspections Indianapolis Avon Plainfield Brownsburg Indiana on 03/10/2008 08:26 AM

Comments (13)

home inspection, inspections, inspector, inspectors, conflict of interest, realtors, agents, law, bill, kansas, indianapolis, congress

13 Comments on Fight the good fight

MAR

2008

I have a feeling you arent making it onto peoples lists? I put inspectors names on there that I know and dont know that bring stuff to our office. I give them brochures and lists and say here are some that I have used and not and you can also go on to ashi's website for a list of inspectors. I tell them I cant recommend anyone but I would get a few quotes. I cant take money from anyone that's illegal (kick back). I will say most people go with someone on my list but not always it's their choice but they look to the realtor who is a perceived expert in their field to give a list of people that have like ideals and standards as their realtor. Maybe the inspection industry should do more advertising to get the word out on how to find licensed and reputable inspectors so home buyers dont have to ask us.

Maybe the inspection industry should do more advertising to get the word out on how to find licensed and reputable inspectors so home buyers dont have to ask us.

That is exactly what some of us are trying to do Heather, thanks for the comment

I've been in Real estate for nearly 15 years and have yet paid or received payment from an inspector to be referred. I do have a list of attorneies, inspectors, Pest Control people, Surveyors and so on. This list is not written in stone and is fluid. Folks get on our office list due to their individual performance. If they render good, solid reports and performance in a timely manner they are place on the list. Which the Client then chooses from. It doesn't matter to me if the report is negative or not. If the service provider can provide sound documentation of what he or she is reporting one that is what counts. But I have dropped service providers for faulty logical assumptions without real hard facts. Show me the photos, the chemical analysis, not your gut feeling or experience dictates.

Here in Georgia Home Inspectors are currently certified but unregulated as far as licensing is concerned. There is currently a bill before the house to require certain educational criteria and the passing of a state test for licensure which is a good thing. Regulation can be a benefical thing.

We are also Certified AND licensed here in the State of Indiana, but that does not stop what is going on out in the trenches. The regulation that should be in place is to stop the recommending of Inspectors by Agents, and that will eliminate the controversy all together.

Thanks for the comment

Okay Mike, I am a Realtor licensed in NH and MA and hears what I think. You are correct that many Realtors give out the names only of Inspectors that they feel are good (or soft) on doing home inspections and that is not right. I also have personally been involved with Home Inspectors that have out right killed deals, because of the way they handle home inspections. These inspectors go through the home and tear everything apart and make it sound like its going to cost the buyer thousands of dollars to fix the problems they are pointing out. The problem is they make themselves look good, their definitely covering themselves, but they also just killed a transaction and cost the buyer thousands of dollars!

Your probably asking how this can be and hears the answer. First they paid the Home inspector about $350-$400 and if septic is involved there is an extra $100 to $200 cost, then because many states like NH have a clause in the Purchase and Sales agreement that reads (I'm paraphrasing) "The buyer has the right to a Home Inspection at their cost and if substantial defects not previously disclosed to the Buyer by the Seller are found then the Buyer at their option can ask the Seller to repair the damage, if the Seller refuses then the Buyer and cancel the contract and get their money back". Now remember the important part of this clause is "substantial defects not previously disclosed etc..." When the Buyer comes back with their laundry list of "defects" the vast majority of which do not fall under the above criteria, the Buyer will try and get the Seller to fix the issues or reduce the price of the house and when the Seller refuses they then find out that if they try and back out of the deal, the Seller won't release their deposit and most likely will be able to keep it if the Buyer tries to pursue the matter.

The Buyers Realtor (once the Buyer gets the alarming report back from the inspector) has almost no say or influence over the Buyer, since the Buyer is now very emotional about all the work that needs to be done. What I think should be done is that Realtors (like you believe) should have no say or influence over the Home Inspection Industry, but that all inspectors should be licensed and certified in their industrry (many states don't require a license or certification) and just like MA, Realtors should be required to give a list of Licensed/Certified inspectors that has been gathered by their State or Town government, and they cannot recommend anyone on the list since it would be illegal for them to do so.

Hey Christopher,

I hear you loud and clear my friend and I could not agree more!!

Hi Mike,

I've read that letter from Mike Greenwalt (President Kansas Association of Residential and Commercial Inspectors), and Mike Pritchett (President National Association of Home Inspectors, Heartland Chapter). The letter seems a little misleading compared to the Bill being proposed to the Kansas Legislation, (HB 2315). Especially the part of the letter where they say:

"It would create a board influenced by Realtors to control what home inspectors are and aren't allowed to tell home buyers..."

From what I've gathered from the Bill; is a creation of a 5 member board. 3 being home inspectors, with at least 1,000 Fee-paid inspections, and 5 years experience. 1 Licensed Real Estate salesperson, or broker. Finally, 1 member of the general public.

I'm sure Illinois, and Indiana's Licensing Acts are pretty parallel, and the rest of the Bill in Kansas address some of the same requirements we follow. (Required Training, Continuing Education Requirements etc. etc) Although what is being proposed in Kansas seems to have even tougher requirements, addressing liability for the Inspector. I can't speak for every home inspector (and won't), but I feel tougher licensing requirements, will result in more quality inspectors. Not just rag-tags that take an online test, and get certified, and think they know everything. Those are the kind of inspectors that make our profession look bad.

I do disagree with the Bill where it is required to be a part of ASHI, NAHI, or NACHI (INTERNACHI). I feel that is too much. It should be up to the Inspector to decide if he/she wants to join an organization.

I also agree with you, that it should be the clients decision, to chose their inspector. In my area, offices have approved lists of inspectors. Individual salespersons are not suppose to be of any influence in the clients decision, but if there are some sub-standard inspectors out there, who could blame them...

Frank Peters
Home Inspector
Champaign, Illinois

MAR

2008

Thanks for shedding some light on that bill. I guess even if that is the way they are going to form it, I am not so sure that a Realtor/Broker has any business being on the board at all.

I do agree with you on the tougher licensing requirements and yes I think that is a good thing as well. I know that here in Indiana, it was a bear to get licensed, and anyone who thinks that it is easy is dead wrong.

Like you I also disagree with the bill mandating to be a part of ASHI, NACHI, NAHI. Many here in the rain that have listened to me rag before, know how I feel about those organizations already, but I won't get into that again as it caused quite the stir last time I said anything about them. But yes, Inspectors should be free to choose whichever organization (if any) they want to. Much like the consumer should have the right to choose whichever Home Inspector they want, and not be influenced at all by their agents.

Which leads me to the last comment you made. "In my area, offices have approved lists of inspectors. Individual salespersons are not suppose to be of any influence in the clients decision"

See now this is what I am talking about Frank. I hear agents say this ALL the time and to me, it makes no sense. If the salesperson's are not supposed to be of any influence on the clients decision, why is there an approved list of Inspectors at all? It would seem to me that would be considered a pretty big influence on someone if you hand them an "approved" list of Inspectors. The client 80% of the time choose someone off of that list. That is pretty influential. How is that right? There are hundreds of other professional, quality home inspectors in everyones area to choose from, yet clients are always given this list of 3 to choose from.

Thanks for your comment

Mike, I am totally ignorant about the Inspectors "List" process. How do inspectors get on an offices approved list?

Hey Gary,

Well there are several ways inspectors get on these lists. Some of the more ethical real estate offices place home inspectors on these lists due to past experiences they have had with the inspector. They know that the inspector on the list is qualified and competent to do the job.

What has been becoming more and more the norm in recent years however, is that Broker/Agent offices are charging a fee to home inspectors to be on this list. They are taking advantage of the fact that they have a pretty influential position when it comes to the home inspection process. Some unscrupulous home inspectors see this fee as "advertising" (that's what they have decided to call it anyway). Personally I do not view this fee as advertising. I view it as a form of "you scratch my back, I'll scratch yours". Advertising to me is placing an ad in the Yellow pages like everyone else does, and let the consumer come to me.

Some of us see the fee and these lists as a violation of ethics. And really either way, if these inspectors are on these lists rightfully or wrong, it is not right for agents to influence their clients by giving them these lists. As I stated above 80% of home-buyers will go with someone off of these lists. It is morally and ethically wrong. There is no other industry that I can think of that operates this way.

To quote another inspector on A.R, what other business markets to a middleman?

Thanks for the question

I commented earlier, but I either missed comment or it was not posted yet that "Realtors charge a fee" for inspectors to be on their list. First I think this is wrong too, whether it violates the Realtor Code or not, Second if these Realtors are charging to be on the list are they disclosing this? I think not and that in itself tells you its wrong. If I were a Buyer and was told that Home Inpectors have paid to be on the list I was given, I would be going out and finding my own.

What's that old saying about follow the money....!

Hey Christopher,

Excellent question! Are they disclosing the fact that some of the inspectors have paid to be on the list? The answer is, I am quite sure...probably not.

Thanks for the comment!

Hi Mike,

Sorry it took me a while to get back to you. Just started a mini-vacation and I've been traveling all day.

When I said approved lists, that was a poor choice of words on my part. The way I perceive these lists in the Realty Office, is like an equivalent to them opening up the Yellow Pages to the Home Inspectors page. An inspector can go in and leave their name, and contact info, and when they make up a new list (usually once a month) the inspector should be on it. I know sometimes somebody from that office could add to the list, for example somebody's cousin's neighbor who just got licensed. I'm told that this is suppose to keep them unbiased to an individual company or inspector. Also it keeps inspectors from stock piling the office with brochures, and business cards.

I don't know a whole lot about Illinois Realtor's SOPs or Code of Ethics, but I know if I was ever asked to pay to get on their list, I would be steamed, and write a letter also.

I commend you, on your letter to your State Rep. It shows you are concerned about our profession. Well so am I. I'll have some free time, and I want to look into Illinois Realtors SOPs and Code of Ethics, to see what their policy is about conflicting interests when it comes to recommending/not recommending certain Inspectors.

Frank Peters

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