DEAR BARRY: What is your opinion about home inspectors who pay referral kickbacks to Realtors? HUD has said that these kickbacks are illegal, but they are still happening in the marketplace. What are your views of this practice? –Randy
DEAR RANDY: The legality of referral kickbacks may vary from state to state. But regardless of legality, the practice of paying referral fees to real estate agents is entirely unethical and is prohibited by recognized home inspector associations such as the American Society of Home Inspectors, the National Association of Home Inspectors, and similar state associations.
Any home inspector who pays referral fees and is a member of one of these associations should be reported to that association for violating their professional codes of ethics.
An ongoing problem for home inspectors has been the pressure that is placed on them by some real estate agents — pressure to avoid jeopardizing a sale. By no means, however, is this a practice among all agents or all home inspectors.
There are many honest real estate professionals who encourage and promote thorough disclosure of property defects. Unfortunately, there are also compromising agents who try to influence home inspectors to be less detailed in their findings. Whether or not a home inspector is persuaded in this way, referral fees cast an indelible shadow of suspicion.
Homebuyers should be careful when choosing a home inspector. The best bet is someone with many years of experience and a reputation for thoroughness. If kickbacks are a problem in your area, be sure to ask the inspector, point blank, if a referral fee will be paid to the agent.
DEAR BARRY: We just purchased a home and had it professionally inspected. But home inspectors can’t report defects that are concealed, and sure enough, when we moved in there were holes in the plaster where the walls had been covered by furniture.
What can buyers do to protect themselves from such surprises? Should there be a second inspection when the house is vacated by the sellers? And what about the sellers’ responsibility? Aren’t they liable for these repairs? –Andrea
DEAR ANDREA: Homebuyers typically do a final walk-through inspection, accompanied by their agent, prior to the close of escrow, after the sellers have vacated the premises. This provides an opportunity to discover some of the defects that were concealed from view on the day of the home inspection.
Apparently, this final review did not take place before you completed your purchase, or perhaps the sellers had not yet moved on the day of your walk-through.
As for the sellers’ liability, they must have known about the wall damage and should have included this in their disclosures. If they didn’t know about it when they submitted their disclosure statement, they must have discovered it when they moved their furniture. Failure of sellers to disclose known defects is illegal in most states, making them liable for repair costs.
Fortunately, holes in plaster are not likely to need expensive repairs. But you can ask your home inspector to evaluate the damage.