Home Inspectors Face Ethical Dilemma With Referrals

In the letter to Barry Stone of Inman News, a new home inspector is concerned about how he can ethically perform his services and still keep the referring agent happy and not "kill the deal". This is a common issue for real estate appraisers as well. For the full story click here.

Dear Barry, I am a newly certified home inspector and have a question that involves professional ethics. When I attended home inspection school, my instructor told the class that we should not be "deal-breakers," or real estate agents would not refer us to their clients. I thought that home inspectors were supposed to disclose substandard property conditions and other serious defects for the benefit of home buyers. How can we perform this function in a competent and ethical manner without losing the support and recommendations of agents? --James

Dear James, You have invoked the most sensitive and controversial subject pertaining to the home inspection business. A central concern among professional home inspectors everywhere involves our relationship with real estate professionals. Home inspectors are consultants hired by home buyers. In essence, we are paid consumer advocates and should always perform our work for the benefit of our clients' financial interests. But the majority of our business comes from real estate agent referrals, and this poses a serious conflict of interest. Agents don't get paid for their time and effort if the deal does not close, and the findings of the home inspector can sometimes determine whether that closing actually takes place. Real estate agents, likewise, should properly consider themselves to be professional consumer advocates. That is why they are called "agents" rather than "salespeople." Unfortunately, many agents operate in a manner consistent with proverbial "used-car salesmen." They want the deal closed, regardless of the consequences to their clients, and therefore steer their clients away from thorough home inspectors as much as possible. Fortunately, not all real estate agents operate in this unethical manner. Let me say that again: Not all real estate agents operate in this unethical manner! I hope the good agents and anyone else reading this column get that point. It is an essential fact that there are good, bad and mediocre people in the real estate business, just as there are in all other professions. The best agents truly represent the best interests of their clients, and one of the ways they do this is by recommending the most qualified home inspectors available. Those who are commencing new careers as home inspectors will gradually learn where the various local agents stand on the ethical scale of business practices. Home inspectors who do quality work for home buyers will be recommended by the ethical agents but not by the others. Among the other agents, the better inspectors will be known as "deal-breakers" or "deal-killers." That's how it is in the real estate business. Many agents dread the most thorough and experienced home inspectors, but fortunately, the quality agents provide a sufficient flow of business to the best home inspectors and thereby represent the best interests of their clients. With regard to your home inspection instructor, hopefully he does not advocate pandering to the influences of unethical agents. It is one thing to warn fledgling inspectors against the practice of alarmist reporting to buyers. But inspection schools should not encourage their students to compromise the honesty and thoroughness of full real estate disclosure. To write to Barry Stone, please visit him on the Web at www.housedetective.com. Appraisal , Real Estate , Appraiser , USPAP ,RESPA ,FHA ,Illinois , Home Inspection