House Detective

The House Detective by Barry Stone, Certified Building Inspector

Dear Barry: I’ve been a Realtor for over 10 years and am a strong believer in home inspections. But recently, I had a situation with another agent who does not share my view. This agent represented a buyer for one of my listings, and the three of us were together at the property. The buyer had waived the right to a home inspection in the purchase contract. So I asked her, “Are you sure you don’t want a home inspection?” A few minutes later, the agent cornered me in another room and said, “Don’t you ever say that to one of my clients again!” She was visibly angry and let me know that home inspections create nothing but trouble. She said it was up to buyers to beware when buying a property. I can’t believe there are still agents who think like this and would appreciate your comments. Catherine

Dear Catherine: It is difficult to believe that an agent today could hold such long outdated views. Since the late 1980s, home inspections have been the focus of articles and seminars by the National Association of Realtors and by many of the state regulatory agencies that license real estate professionals. Home inspections have been promoted as an essential component of residential purchase transactions. The emphasis on legal liability, codes of ethics, and the need for disclosure has been unrelenting. Yet some agents remain unconvinced.

When agents advise their clients to forego a home inspection, the problem is two-fold: First is the issue of professional ethics. Some agents argue that they are not required to protect the interests of their buyers because sellers pay their commissions. That is a separate legal issue. Advising buyers to protect their financial interests is simply the right thing to do. It is the way that each of us wants to be treated in business. Agents who advise against home inspections should consider how the picture would look if they were the buyers and were being misled in this way.

For those who are not persuaded by moral arguments, there is a good selfish reason to recommend home inspections: the avoidance of liability. When undisclosed defects are discovered after the close of escrow, financial claims and lawsuits can result. A thorough home inspection reduces the likelihood of this kind of liability. Realtors who have no interest in protecting their buyers should consider this for their own financial wellbeing.

As for the “buyer beware” cliché — it is outmoded and unjustified. In essence, it declares that “I, your agent, am here strictly for the commission check. It is your job, as buyers, to protect your own interests; so don’t look to me for assistance in that pursuit. I’ll smile warmly, shake your hand, and give every outward appearance of working on your behalf, but as far as I’m concerned, you are totally on your own. If you discover major defects after the close of escrow, don’t call me. It’s not my problem. It was your choice not to hire a home inspector. Never mind that I advised you to make that choice.”

In another respect, however, the “buyer beware” policy has some validity. It should be invoked as a warning to beware of agents who say, “buyer beware.” Whether they realize it or not, they are jeopardizing the financial interests of their clients while exposing themselves to possible litigation.

The House Detective by Barry Stone, Certified Building Inspector

Dear Barry: I’m trying to sell my home and my agent presented an offer that sounds fishy. The proposal is to have the house appraised for more than I am asking. The buyer would get financing for the inflated price and I would refund the excess money to him after the close of escrow. What’s your take on this? Anne

Dear Anne: Don’t even consider doing this. It’s an old trick that allows a buyer to purchase a property with no down payment. The practice is totally fraudulent and could get you into serious legal trouble with the mortgage lender and the IRS. Any agent who would present an offer of this kind should be reported to the state agency that licenses real estate professionals.