Have you noticed an interesting trend?
It seems that more and more home buyers are hiring their own home inspectors rather than depending on the agent’s recommendations. In some cases, I have heard of buyers NOT using an inspector only because they were recommended by the Realtor. Although the vast majority of buyers still use the inspector recommended by their agent, it does seem to be slowly changing. As more buyers understand the true purpose of the inspection, they are learning that an inspector recommended by the Realtor may not be, or just as bad, may not appear to be, working in their best interest.
Despite what this article may seem to be, it is not an anti-Realtor rant. In fact, I firmly believe that one of the prime beneficiaries of this trend is the Realtor. If the buyer hires a poor inspector, they have no one to blame but themselves for not being diligent during the hiring process, or the inspector for being less than thorough. By not recommending an inspector, the agent can walk away from a disastrous inspection with clean hands.
Home inspectors market directly to Realtors because it is easy to do and they can get many clients if they spend all their time dropping off cards and brochures at brokers’ offices. In rare but documented cases, some inspectors have even stooped to paying a fee to be included in a broker’s list of “preferred inspectors”, an obvious conflict of interest. Many Realtors use these inspectors because they know that if the inspector wants repeat business he will make the inspection process short and sweet…for the Realtor. Most agents want the inspection to go smoothly and quickly. They want the inspector to find very few problems, the house to be sold, to collect their commission, and to move on to the next home. In the meantime, the buyers move into their dream home filled with the joy of home ownership only to discover that the plumbing is older galvanized pipe that will have to be replaced in the near future, the AC compressor is past its useful life and needs to be replaced, and the windows in the back bedroom don’t open because the foundation has settled excessively. Well, now it’s really going to hit the fan. The buyer blames the agent, the agent blames the inspector and lawyers are sure to become involved. But what if the inspector had been hired by the buyer? In that case, the inspector is solely responsible for his own mess, and/or the buyers can blame themselves for not doing a little more research.
The important questions in the scenario above are: Did the inspector really miss the defects, or did he ignore them, or “soften” them so that the deal will close quickly ensuring that the Realtor will continue to give him referrals? Did the Realtor recommend this particular inspector because she knew that the inspector would do a 1 hour inspection, write a quick “checklist” report pointing out a few minor defects and most importantly “not break the deal”. Unfortunately, this scenario occurs much too often.
How do we avoid this conflict of interest? Here are a few recommendations that can help avoid problems:
If you’re a Realtor, stay out of the inspection process and don’t recommend any inspectors at all. At the risk of sounding rude, the inspection is none of your business. In fact, most experienced inspectors make it clear to their clients that nobody, not even Realtors, have the right to see the report. It belongs exclusively to the inspector’s client and can only be released by the client. Realtors should let the inspector and the client hash out the inspection, and the client will let the Realtor know whether it’s thumbs up or down on the home. If it is thumbs up, you can help your client deal with the concerns found during the inspection. If it’s thumbs down, then the next step is simple- Find the client another home and be thankful that your client is not moving into a home that is in bad shape and that will burden them with costly, unexpected repairs.
If you’re an inspector, one of the most important things you can do is wean yourself off using Realtors for referrals. Learn to market yourself directly to homebuyers. It is not as difficult as it seems. The most important result from taking this step is that you can inspect homes without any pressure from Realtors to “not break the deal”. In addition, another good rule is to “write hard, and miss nothing”. A good, thorough inspection is the best way to ensure a satisfied client and reduce your liability. It is also very important to understand that your clients are most likely very nervous during the home buying process, especially if it is their first home. Their decision to buy or not is almost exclusively based on your comments and your report, so you have to tread carefully. UNDER-stating a defect will likely end up with an unhappy client, but OVER-stating a concern can scare the buyer unnecessarily, and may get you in hot water with the seller. What is critical is to forget making anyone but your client happy. You can only serve one master, and that should always be your client. If the Realtor is truly looking out for their client’s interests, a good, thorough inspection (even if it breaks the deal) should not be a concern for them. On the other hand, be aware that if you call a hairline crack in the garage slab “foundation failure”, you are not serving your client well, and you may see the seller reach for the phone to call a lawyer.
If you’re a buyer, I recommend that you take on the responsibility of hiring your own inspector. Look at it this way; If you are buying a used car, don’t you want your own mechanic to check the vehicle for serious damage? Sure a used car dealer may advertising their “500 Point Inspection!”, but really, how sure are you that they checked the vehicle as well as someone who is looking out for your interests only? While most Realtors are honest and do look out for your interests, many are competitive and are anxious to make the sale. They are only human, and it’s too easy to misplace their priorities.
Finding your own inspector is not difficult. Many home inspectors are now advertising on the web and a simple web search can yield many results. Making a little effort can make the home buying process easier, and less risky for everyone involved.