House Detective: Making the Most of Home Inspection

The House Detective:  by Barry Stone, Certified Home Inspector

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; 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 mention of this matter, preferring to deny its existence. But there is an elephant in the room, and its presence demands recognition.

The trunk of the problem is this: Agents do not 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.

On the other hand, there are many excellent agents who truly represent the interests of their clients; who recognize the value of total and unabridged disclosure. Those agents are the shining stars of the profession, the ones who recommend only the most thorough and qualified home inspectors to clients. Realtors of this caliber deserve praise and recognition for the exemplary work that they do.

What we have are 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 homebuyers.

A sophisticated response to these charges has developed among the compromised agents, and it goes like this: Since 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 to mislead a trusting homebuyer 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 problem will be addressed once and for all by leaders within the real estate profession.