You're 'too scary for my buyers'
Why some agents don't refer best home inspectors
By Barry Stone, Monday, August 11, 2008.Dear Barry,
As a real estate broker, I read your column regularly and with great interest. But some of your articles trouble me. They suggest that Realtors routinely avoid the most thorough home inspectors and that they even label good inspectors as "deal killers." This charge seems unfair and in poor taste. Good agents, whether they represent buyers or sellers, want an inspector to perform a thorough inspection. Would you be willing to rethink your position on this? --Terry
Dear Terry,
Let's both give some thought to this issue.
The articles you mention were never intended to offend, but to shed light on an entrenched ethics problem that infects not all but many in the real estate profession: namely, the conflict of interest when Realtors refer home inspectors to their clients. Some will flinch at the voicing of this matter, preferring to deny its existence. But there is an elephant in the room, and it cries to be recognized.
The trunk of the problem is this: Agents don't get paid until the sale is completed, and defect disclosure can make buyers change their minds about the sale. Since the best home inspectors disclose more defects, a large number of real estate agents regard the best home inspectors as "deal killers" -- not because those inspectors actually kill deals, but because their thoroughness engenders the fear that they might kill a deal. As a result, some agents do not refer the best inspectors to their clients. Meanwhile, unwary clients assume that they are getting top-notch home inspection referrals from their agents.
Fortunately, there is also a positive side to this portrait. While some agents are avoiding so-called "deal killers," there are other agents who truly represent the interests of their clients and who recognize the value of total and unabridged disclosure. These agents are the shining stars of the profession, the ones who recommend only the most thorough and qualified home inspectors to clients. Agents of this caliber deserve praise and recognition for the exemplary work that they do.
Thus, we have two dissimilar groups of agents -- the compromised and the committed -- separated by an ethical divide that tarnishes the public image of the real estate industry, while jeopardizing the financial interests of trusting home buyers.
A sophisticated response to these charges has developed among the compromised agents, and it goes like this: Because real estate commissions are paid by the sellers, agents must represent the interests of sellers only. Thus, an agent is justified in recommending a mediocre inspector. From a legalistic standpoint, that may be an arguable position. From an ethical perspective, it is inexcusable. As for liability, it is foolish and risky. After all, how does a substandard inspection benefit the sellers or their agents if faulty disclosure produces a lawsuit after the sale? Obviously, it does not.
The more common justification for avoiding thorough inspectors, however, is the ad homonym approach: Just label the best home inspectors as "nit-picky," "too scary for my buyers," or just plain "deal killers." Thus discredited, those inspectors are no longer "worthy" of referrals.
Home inspection may be the only profession where good work discourages referrals. If that were not so, only the best inspectors would be recommended by Realtors. Instead, many referrals go to inspectors who are inexperienced and less than thorough in their findings.
Articles that expose these facts are thought by some to be in poor taste. What is more distasteful, however, is misleading a trusting home buyer in the choice of a home inspector. If such practices were not so common, there would no need for articles such as this one. Hopefully, this will be addressed once and for all by leaders within the real estate profession.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.
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Submitted by Emmanuel Scanlan on August 12, 2008 - 4:17am.
As usual, Barry is providing exceptional insight into what occurs within the Real Estate industry! It is disconcerting that what he has indicated here is actually occurring. What is even more troubling are the number of Real Estate Inspectors who will follow the path of "Soft Soaping" (not performing their entrusted duties to report issues) inspections for the opportunity to garner an RE Agents business.
One of the solutions for this issue is a strong emphasis, and genuine concern, by the RE community on the importance of disclosure and real estate inspections. Another component is the enforcement of current laws, rules and regulations that prevent both Inspectors and RE Agents from furthering this practice. It is unfortunate that our regulatory bodies choose instead to create new, confusing and restrictive laws, rules and regulations that hinder efforts to prevent this (Re: The new proposed Texas Standards Of Practice for Texas Real Estate Inspectors).
RE Agents and Inspectors both need to understand that they are on the same side and that is the protection of the consumer. If this can be realized by all, then we can place the industry back on the right track!
knowledge is power, but sharing knowledge brings peace!
www.psinspection.com
Submitted by Phillip Jones on August 12, 2008 - 6:33am.
This proves that the "old" way of selling property is in need of some updating.
An agent can spend days, weeks or even months showing a buyer property only to be kicked to the curb and abandoned for no good reason. Perhaps he was on vacation, in church, with another customer and unable to call the prospect back in 30 minutes or less...Again, the agent needs to be compensated for their time, skill, advice and value provided (access to listings, showings,etc) at the time of service. Waiting for all the tumblers to fall into place and avoid all the pitfalls (inspections, appraisals, loan approval, insurance, buyers remorse,etc) on a deal and get paid at the finish line (closing) seems rather foolish.
We have value and we are not volunteers. It's time we as an industry began a shift to this mindset, we will all be better off as a result. Have a great day!
Regards,
Phillip Jones, Broker/Owner
Your Choice Real Estate, Inc.
151-18 College Drive
Orange Park, FL 32065
Phone: (904) 298-2679 Ext 501
Toll Free: (888) 490-0671 Ext 501
Fax: (866) 923-9990
Email: pjones@ycre.net
Website: www.ycre.net
The only time success comes before work is in the dictionary.
Submitted by Stanley Nichols on August 12, 2008 - 10:15am.
Right On, Barry!!
That is why I am searching for development assistance for "ZipCodeHomeInspectors.com".
The planned project provides an online national banner for registered home inspectors where buyers and agents can review experience, fees certifications, inspector presentations through site referrals and make an informed selection from local inspectors.
Stanley Nichols, Realtor/Appraiser
stanleynichols@hotmail.com
Submitted by Jed Lane on August 12, 2008 - 10:19am.
I think that Barry is using a very wide brush to paint something that may happen for many reasons as being duplicitous and unethical.
Let me make a few observations on the industry of home inspectors from my perspective. I was in the trades before I went into real estate. I've worked with many contractors, engineers, architects, and real estate lawyers. My specialty was defective construction analysis and expert testimony in defective construction lawsuits.
Now I’ve had the wonderful experience of sitting in on many inspections as both the selling agent and the listing agent. I, in these situations, am not a contractor or construction expert, I am just the Realtor.
So here I am listening to the inspector espouse his knowledge and in all too many cases I know they are wrong. If you have any experience in the construction business you know the type of person that first becomes a carpenter. Some are born with skill and apply the trade with class and skill. Most do not.
So who leaves a successful contracting business to become a home inspector? The answer is pretty obvious from my experience. The good ones are tired of the physical demands of the construction work. The bad ones couldn’t make it in the trades.
So how does this fit with Barry’s comments. If I represent the buyer I want two things. First I want someone to tell my client how the house works. Show them where the gas & electrical shut off are, etcetera. Second I want an honest investigation and evaluation of the property.
What I don’t want, and don’t have any respect for, are misleading opinions. Claims that the cracks in the driveway means “the lateral sewer is falling” when in actuality it’s because there was no steel rebar or wire used in the slab. Or “there needs to be z flashing over this sliding glass door” when the door itself has flashing that prevents water intrusion. Over and over I hear these guys give opinions as fact. It seems to me that we are paying to give a failed contractor a chance to strut his stuff and act the expert.
There are, in fact, home inspectors that are scary. They think that it’s their job to call out everything that they think is wrong. They never put a solution with the finding. Now many will say “that is their job”. I say they need to be right and they need to have a bedside manner that is open and helpful.
I once had an inspection for a buyer on a nice house that had lots of deferred maintenance. I was in first back up position and the previous buyer backed out because of the amount of work needed. Our inspector showed up in one of the worst rain storms we’ve ever had in San Francisco. The streets were flooding downtown from the run off. There was water everywhere in that house. I was in attendance with the father of the young woman buyer. At the end the inspector said “well after you put on a new roof and replace the windows you’ve got yourself a very nice house”. That is a good inspector. Thorough and a deep understanding of the situation he’s in.
Let me give some more examples of “bad inspectors” One gets very comfortable talking about how he’d remodel this and that. So comfortable that he must think he’s on the job site and starts using words that you hear very often on job sites. I had to step in, change the subject and get him back on track. I apologized to my clients for his behavior and never called him again. Another young man, starting out tells the buyer that the furnace is at the end of its life and will be 10K to replace. We call for a furnace inspection, lo and behold the inspector was wrong. Another time I had a very well respected inspector go over a flip house my clients were buying. He goes on and on about moisture barriers in the crawl space but missed completely the fact that the water heater wasn’t vented correctly. He missed a life / safety issue but produced a beautiful 75 page report right from his truck with color photos and everything.
The brush that is used in this article colors the industry as not using the scary inspectors. An inspector should not be scary. They should point out the things they see, apply their knowledge as to why it’s so and advise to further inspect or what steps to take to fix or maintain the system. But most importantly they should realize that they are there to give the client information not to espouse, pontificate or scare the client.
Let me make this very clear. Worst case, inspector finds a corner of the house is undermined by water. A corner of the foundation is sitting in the air. Should they jump up and down and scream OMG or should they say I found a situation and I think this is the cause and here are two solutions. One costs this and the other costs that.
Who are you gonna call? The “scary inspectors” paint themselves as victims when they are really just unskilled. When an inspector tells you that no one will hire them because they are too scary you can bet they have absolutely no people skills.
Jed Lane GRI
Broker, Sales Manager
Star Real Estate Brokerage
http://www.FogCityGuide.com
415.425.9810
Submitted by Gail Bucker on August 12, 2008 - 12:32pm.
My husband and I are real estate brokers in Sandbridge Beach, Virginia. I am a 3rd generation real estate broker. There are scary home inspectors and we avoid them. When we say scary we don't mean thorough...we mean scary. Scary in that they sensationalize and enjoy their little power trip knowing that perhaps what they say could throw the whole sale.
A good home inspector is thorough but he doesn't sensationalize or puff himself up as someone who is here to save this poor buyer from purchasing a home with these issues. All homes have issues. We could have a home inspector inspect Barry's home and make it sound like a wreck.
We don't want lawsuits any more than the next person and we encourage our home inspectors to find issues or termites. To say that agents hire home inspectors who are not thorough, on purpose, is just flat wrong.
Are you telling us, Barry, that there are home inspectors who tell agents they won't find much wrong with a house if they don't want them to? Are there crooked home inspectors who conspire with agents to jip buyers? I haven't met them if they exist. If they do exist then they deserve the lawsuits they'll get and maybe lose their professional licenses. But it isn't the norm!
Most of all...we resent the commissions discussion. The commissions comment comes from the underlying belief that Barry possesses that we real estate agents make "too much money." We hear it all the time. As a contractor, Barry has had many agents and paid a lot of commissions. Did those agents represent you and not the buyers? Did you conspire with the agents and the home inspector to jip clients? Now maybe we're getting down to the real ugly truth here. You know what psychology says, "People only accuse others of the things they do themselves..."
Submitted by Joe Hildebrand on August 12, 2008 - 2:03pm.
Wow Barry! Would you call this article journalism at any level?
This by far is the biggest piece of unadulterated bull feces I have seen. I am very surprised it is even associated with Inman. Truthfully, I just lost a ton of respect for Inman and especially you, Barry.
Were you too busy to be bothered with facts or research? All I read was a blatant accusation with 0 justifcation, citations, sources, facts or proof.
Take for example the last paragraph. It reads: "Articles that expose these facts are thought by some to be in poor taste."
Well, Barry, where are the facts you are talking about? I didn't see one fact in the article! I heard a bunch of whining and generalizations. But I digress.
The last paragraph continues with: "What is more distasteful, however, is misleading a trusting home buyer in the choice of a home inspector. If such practices were not so common, there would no need for articles such as this one. Hopefully, this will be addressed once and for all by leaders within the real estate profession."
I like how you accuse the whole Realtor community of blatantly misleading their client. Do you suppose that kind of attitude is not prevalent among inspectors. Why would Realtors refer someone who is accusatory to begin with?
I hear a ton of inspectors whine because they don't know how to go out and drum up business! In fact that is the problem with the inspection industry. Like another poster commented above, many are inspectors by default because they failed at everything else or just can't quite work with others. Not to mention many aren't choose not to affiliate with ASHI or NAHI- because "they are only there to take money!"
Finally, if inspectors were so great at what they do why does every single inspector have a damage waiver clause equal to the cost of the inspection? If they are so great, know so much, and truly are good at what they do, why bother?
How many agents have you spoken to around the country for this article? Are all 50 states represented here, Barry? What about inspectors?
Like you I could paint the home inspection industry with a broad brush, based on a limited amount of examples from one area, and cite it as facts. I could state as fact like you did that the inspection industry is ripe with former and current drug addicts, inexperience, and crooks.
By the way, why is it up to leaders within the real estate industry to address home inspectors problems? I would think it is up to the inspection industry to fix itself.
Finally here is the gimme attitude I am used to from inspectors:
"Home inspection may be the only profession where good work discourages referrals. If that were not so, only the best inspectors would be recommended by Realtors."
I have seen better logic from 3rd graders, Barry. I know a lot of secret agents in this business along with a lot of secret inspectors. Your statement again highlights the gimme attitude among inspectors. They want the fee but they only want referrals and recommendations. They don't want to have to advertise or market themselves. More often than not the inspectors I run into the most are the ones that know how to market and advertise along with inspection practices. Maybe Realtors should start crying that we send all of our business to inspectors but rarely, if ever, see referrals from them. Inspectors just sit on the sidelines waiting for their handout.
The bottom line here Barry is you have done the Realtor and inspector communities a great dis-service by running with this article and using little or no facts to supports your so called "facts!"
The truth is I have done a lot of business. I have seen good inspectors and bad, I have seen good agents and bad but I HAVE NEVER SEEN OUTRIGHT AGREEMENTS TO USE CERTAIN INSPECTORS OR HEARD OF ONE LABELED AS A "DEAL KILLER."
Like David Knox says you can be good but it doesn't matter if you aren't there!
Joe Hildebrand
Denver, CO
Submitted by Lenn Harley on August 13, 2008 - 3:04am.
Utter nonsense!
If agents referred only to the "easy" home inspectors, we'd have buyers haunting us long after settlement.
The only way to have a successful settlement and lasting relationship with home buyers is to make sure that you refer to competent experienced home inspectors who will do a thorough job and write a home inspection report that backs up their findings so the agent can get the necessary repairs made.
Look to the affiliated relationships for easy inspections, not independent fiduciaries
Or, why don't home owners maintain their homes in the first place rather than play hide and seek with defects.
Agents in my network refer to tough, experienced home inspectors and we get the repairs made.
Otherwise, our buyers walk, which the buyer must be prepared to do if they write on homes that clearly have not been maintained. Then our buyers have a home warranty to protect them for a year.
In 25 years selling homes I have never known an agent who referred to home inspectors because they were "easy". All that would do is lead to after settlement problems and that's every buyer's agent's worst nightmare.
Lenn Harley
Broker
Homefinders.com
http://www.homefinders.com
Submitted by Will Decker on August 13, 2008 - 10:01am.
As a professional, licensed and experienced home inspector, I always try to do a thorough job for my clients. i have many Realtors who refer me, some exclusively, and some Realtors who have told me that they would never refer me.
In discussions with both types, the main difference I find is that the Realtors who refer me like my thoroughness, but also like that I put the problems I find in context. "You have no GFCI protection, but to have it installed is relativly inexpensive." Their chief complaint is that some inspectors call out defects, and give the client the impression that every little thing is a major (i.e., expensive to fix) issue.
The Realtors who say that they would never refer me (although, many do use me when they, or a family member, by a house)state two reasons:
1) They believe that the Realtor should totally control the entire transaction and a thorough inspection, even put in context, is too complex for the client to understand. "It just confuses them."
2) Their agencies dictate what inspectors they must use. Usually, these are the inspectors who are paying "advertising" fees to the agency, but there are also inspectors (who I know) who are new and "moldable" so that they prepare the inspection just the way that the Broker likes it.
As stated in the article, there are ethical and unethical agents, just like there are ethical and unethical inspectors.
To my mind, beyond a certain level of compitence, honesty and ethics are the most important thing to seek in an inspector, or an agent.
Submitted by Nick Ostrowski on August 17, 2008 - 6:33am.
There are two kinds of home inspectors out there: good ones and bad ones. But even the good ones who are reliant on realtor referrals for their business to survive can be guilty of acting as an "extended sales force" for the realtor. What is an extended sales force? It may be a home inspector, who does his job well, but also makes sure to throw in all kinds of positive affirmations about the house that have absolutely nothing to do with the home inspection process:
"You've got a diamond in the rough here".
"These views from the deck are fabulous".
"This house has good bones".
These are examples of fluff statements some inspectors may pepper into their verbal comments to the buyer. Why do they do this? They are dependant upon realtor referrals to keep their business running. No realtor referrals = no business. A few months ago, a realtor contacted me to inspect a 2 year old $600,000 house for her buyer. The house was constructed by a builder in my area that does not have the best reputation for quality control during the construction phases. I found many defects, some significant but nothing that couldn't be fixed. In the end, the buyer had misgivings about a 2 year old house with so many issues and did not buy it. In the aftermath of the failed sale, the realtor e-mailed me to say "I don't fault you for being thorough. I do fault you for not giving the 'emotional OK' to a nervous buyer". She later went on to state that she is used to inspectors complimenting a house whenever and wherever they can and not once during the inspection did I extol the virtues of the house having three furnaces. Again, see my reference to many inspectors needing realtor referrals to survive and you'll know why this realtor said what she did to me.
Good realtors know the value of recommending thorough home inspectors and do so with the understanding that if the sale of the house falls through, you just get back to work and help your buyer find another home that better suits their needs.
Nick Ostrowski
Strong Foundations Home Inspections
www.strongfoundations.com