Archive for the ‘Ethics’ Category


Agent Gives Bad Inspection Advice to Buyers

May 22 2014

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  We are currently buying a home and are troubled about our recent home inspection. Our agent recommended this inspector as the one she always uses, and she advised us not to attend the inspection, saying that most buyers do not attend home inspections. We have since learned that most agents give buyers a list of three home inspectors, advising them to choose one. We would actually like to hire another home inspector for a second opinion, but we don’t want to offend our agent. We can’t afford to buy a fixer-upper and are wondering what we should do. What do you recommend?  Jenn

Dear Jenn:  Choosing a home inspector can be a problem when you rely on someone else’s choice rather than your own. When referrals come from Realtors, the results can be good or bad, depending on the agent. Some Realtors recommend qualified home inspectors and some do not. Some give a list of three qualified home inspectors, and some give lists of mediocre inspectors. Therefore, whether you were given a list or a single referral is not a determining factor.

The red flag in your situation was your agent’s advice not to attend the inspection. No knowledgeable, experienced agent who is honest and ethical would give such misleading advice to a client. Your presence at the inspection was not only a good idea; it was essential. You are on the verge of making an extremely expensive investment. Your home inspector is there to educate you about the condition of the property so that you can make a wise purchase decision. What your agent did was to limit your exposure to the information you need from your inspector. Again, this is not something that an honest and ethical agent would do.

A second home inspection is definitely a good idea, and you should not worry about whether this is objectionable to your agent. It is her job to protect your financial interests. If she doesn’t perform that duty, you need to do it for yourself. If a second inspection reveals defects not found by the first inspector, your agent should reimburse you for the first inspection.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Home Inspector Pans Remodeled Home

Apr 23 2014

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  We’re selling our house after spending $150K on a complete remodel. The place is in excellent shape, but the buyers’ home inspection report was hideous! The inspector said the toilets are loose and need new seals, but they were installed less than a year ago, and we can’t budge them. He also said the framing is rotted under the house, but we’ve had all of that repaired. When we asked why there were no foundation photos in the report, he said he “didn’t want to get his camera dirty.” We think the inspector wrote a bad report to help the buyers negotiate a lower price. Another related problem is that we wanted to be home during this inspection, but the buyers’ agent said it was illegal for us to be in the house when the inspection was being done. This is such a mess, but we don’t know what to do. What do you recommend?  Randi

Dear Randi:  If the home inspector’s findings are questionable, you should state your concerns in writing to the buyers, and the inspector should verify his findings with photos. If he doesn’t want to get his camera dirty, he should cover it with a plastic bag while he is under the house, or perhaps he can borrow your camera. Either way, he should show exactly what he saw regarding the alleged wood rot.

It is also wise to hire your own home inspector to provide a second opinion of the property’s condition. If the reports agree, you can have the defects repaired. It they differ, the one whose finding agree with the photos wins. If the buyers back out of the deal, the second inspection report will help to provide disclosure to future buyers.

As for the Realtor: The idea that it is illegal for you to be in your own home during a home inspection is preposterous. It is your home. You own it. You have the right to be there any time you want, regardless of home inspections or other circumstances. The agent can request that you not be home during the inspection, but no one can legally compel you to leave your home.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Agent Advises Buyers Not to Attend Home Inspection

Mar 14 2014

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  We are in escrow to buy a home, and we hired the home inspector who was chosen by our real estate agent. When my husband asked if he could attend the inspection, our agent told him there was no need to attend and that most homebuyers don’t. Not knowing any better, we agreed to hire her inspector and simply wait for the report. Since then, we’ve read articles that say an agent should give buyers a list of home inspectors from which to make their own choice. Now we want to hire an inspector of our own to do a second inspection, but we don’t want to offend our agent. At the same time, we don’t want to buy a money pit because we didn’t get a good inspection. What do you advise?  Jenn

Dear Jenn:  Choosing the inspector for you, rather than allowing you to choose for yourselves, may or may not have been a bad thing. Some agents choose inspectors who are competent and highly qualified, while other agents choose inspectors whose work is not very thorough. Likewise, there are agents who give their clients a list of competent home inspectors, while other agents provide lists of the less qualified.

Your agent’s big mistake was advising you and your husband not to attend the inspection. Agents who are honest and ethical do not give that kind of misleading advice to clients. Your presence at the home inspection was more than just a good idea: It was essential. You are on the verge of making an extremely high-cost investment. The home inspector was there for one purpose — to educate you about the condition of the property so that you could make a prudent purchase decision.

In advising you not to attend the inspection, your agent has limited your exposure to the information you need from your inspector. Again, that is not something that an ethical agent would do.

A second inspection by a home inspector of your choice is not a bad idea, and you shouldn’t worry about whether this is objectionable to your agent. It was her job to protect your financial interests. If she is not performing that duty, then you should do it for yourselves.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Seller Suspects Home Inspector Collusion

Sep 08 2013

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  The people who are buying our home just had a home inspection. After the inspection, I heard the inspector tell the buyer’s agent that he would change the report to what the buyer wanted.  Since the report will be used to negotiate the terms of the sale, we are very concerned about what appears to be some sort of collusion. The inspector seems to be “playing ball” with the agent and the buyer, rather than simply reporting what he sees. Isn’t he supposed to be impartial in his findings?  Dori  

Dear Dori: The conversation you overheard between the inspector and the buyer’s agent has a suspicious ring, but it may or may not be as bad as it seems, depending on the details. For example, if the buyer wanted the inspector to inflate the severity of defects in his report, or if the inspector was being persuaded to report nonexistent defects, that would definitely involve unethical and fraudulent practices, calling for some form of legal recourse. On the other hand, buyers sometimes notice defects that are missed by their inspector, such as water stains in a closet or a cracked window. In such cases, it would be reasonable for a buyer to want those defects added to the inspector’s report.

Another example might be a safety violation where the inspector noted the defect but did not specify that safety was involved. In those cases, a buyer might request that the inspector use the word “safety” in the inspection report. Then it would be reasonable to “change the report to what the buyer wanted.”

Home inspectors should definitely be impartial in their findings. They should disclose what is true and observable. In your case, it would be reasonable to express your concerns to the agents and brokers in the transaction, as well as to the inspector, and to insist on an explanation of the conversation that you overheard.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Agent Withheld Disclosure of Damage

Nov 16 2010

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: I am a Realtor and recently closed escrow on a bank-owned property. The bank insisted on an “as is” sale, which is customary with foreclosed homes. My buyers hired a home inspector but decided to forego a termite inspection. After moving in, they found termite damage in the kitchen and dining room. We’ve also learned that the listing agent knew about this damage but withheld disclosure because it was an “as-is” deal and because the seller (the bank) was not required to disclose defects. Do you think my buyers have recourse?  Karen

Dear Karen: People often misconstrue the term “as is” to mean a release from the requirements of real estate disclosure laws. In the case of lenders who foreclose on delinquent mortgages, there is, in fact, an exclusion from the requirement to disclose. But this exclusion does not excuse Realtors who withhold disclosure of known defects. The requirement to disclose all known defects is an ethical and legal imperative for all real estate agents. Withholding knowledge of a defect, such as termite damage, is not acceptable for an agent, even when the seller of the property is a bank.

In the situation at hand, the listing agent should pay to repair the undisclosed damages. If the agent does not accept that responsibility, the matter should be reported to the state agency that licenses real estate professionals. The complaint, however, should be filed by the buyers, not by another agent.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Teaching Disclosure Ethics to Realtors

Feb 16 2010

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: As a real estate instructor, I teach many programs on ethics and disclosure to agents and people preparing to become agents. These same subjects are often addressed in your column. From your perspective, what can we Realtors do to enhance our ethical approach to real estate disclosure?  Janice

Dear Janice: Realtors are often advised, in seminars and trade journals, to disclose defects and recommend home inspections to clients. The reason given for this advice is to reduce liability and avoid lawsuits. That recommendation has merit, but it offers a narrow view of the issue. Reduced liability is a fringe benefit of disclosure. It is not the primary motive to disclose.

The best reason to disclose property defects is simple: It is the right thing to do. It is the way each of us wants to be treated in business. The focus, instead of liability, should be promoting the best interests of clients. Agents who pursue that approach, rather than a legalistic one, enjoy three primary rewards: They build a lifetime reputation for honest, ethical business practice; they receive the repeat business and referrals engendered by a solid gold reputation; and they reduce the likelihood of claims and lawsuits for undisclosed defects. From that perspective, here are some simple ways to put this into practice.

Agents should determine which home inspectors are the most experienced and most thorough, and they should provide a list of those inspectors to all of their clients. Articles and seminars often advise agents to provide inspector lists as a way to avoid liability, but the competence of the inspectors who appear on such lists is rarely mentioned. The problem here is obvious. If the list contains mediocre inspectors, then it fails on the ethics scale, while increasing the agent’s liability. If the client chooses an inexperienced home inspector from the agent’s list, disclosure will be incomplete, and disputes may occur after the sale.

Real estate brokers should be proactive about disclosure, even when they are not directly involved in transactions. Many brokers are laissez faire in their approach, uninvolved in the home inspector choices made by agents. This lack of oversight increases a broker’s liability. When a lawsuit for a faulty home inspection is filed against an agent, the broker is usually named in the suit. To avoid this liability, brokers should influence the inspector referrals made by their agents. The message should be, “This brokerage cannot afford disclosure related lawsuits. If you work for this company, you must recommend only the most thorough home inspectors available. Here is the list of inspectors we have found to be the most qualified.”

Brokers who wish to maximize this approach can test local inspectors to see who qualifies for the referral list. Inspectors can be hired to inspect a representative home, and the findings can be compared to see which inspectors provide the most complete disclosure.

Real estate professionals are in a service business. Success in any service business comes from treating customers the way you want to be treated. Homebuyers want to know what they are buying before they buy it, not after the sale is closed. Agents and brokers who approach their profession from this perspective will build reservoirs of repeat business for years to come and will simultaneously reduce their liability.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Conflicts of Interest: Realtors vs. Home Inspectors

Nov 26 2007

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: In a recent article, you stated that it was an agent’s responsibility to recommend a home inspector. I argue that such a recommendation is a clear conflict of interest. The agent’s interest is in closing the sale and getting a commission check. The home inspector’s interest is in future referrals from the agent. No matter how you cut it, that kind of relationship compromises a home inspector’s integrity. I’ve had two bad experiences with home inspectors who were recommended by real estate agents, and that has taught me to shop for my own inspector. That’s the kind of advice you should be giving your readers. Al

Dear Al: The article you refer to involved an agent who advised her buyers not to hire a home inspector. The subject of that column was to condemn that kind of unethical practice. The point was not that an agent should “recommend a home inspector,” but that agents should advise every buyer to have a home inspection.

A repeated subject of this column has been the complex issue of inspector referrals by agents and brokers. Some articles have discussed agents who advise against having home inspections, while others have shined the spotlight on those who refer marginally qualified inspectors to their clients. The referral relationship between agents and home inspectors is not what compromises an inspector’s integrity. Referrals merely test the integrity that an inspector may or may not inherently possess. Inspectors who skew the findings of reports to promote future referrals are condemned by their own lack of common decency, not by the conflict of interest posed by real estate agents. Home inspectors with well-founded values serve the interests of homebuyers, not the pressures imposed by agents.

These same ethical standards for disclosure can be applied to agents and brokers. Those who are truly honest and ethical promote full disclosure and recommend the most qualified inspectors. Those who lack these values betray the interests of their clients by recommending unqualified inspectors or by convincing their clients to forego an inspection; all for the sake of a commission check.

In the real estate marketplace where I do business, there are sufficient numbers of ethical agents to fill the schedule of an honest and meticulous home inspector (most of the time). Whether this is true everywhere is difficult to say. But the bottom line is this: Any home inspector who abbreviates the thoroughness or accuracy of an inspection report for the sake of agent referrals has essentially stolen the money of the homebuyers who paid for the inspection. Likewise, any agent who advises against having an inspection, or who recommends marginally qualified home inspectors, or who labels the best inspectors as “deal killers,” is no better than a bar room grifter in professional clothing.

The practice of uncompromised defect disclosure is the ethical heart and soul of real estate related professions. It measures equally the moral worth of agents, brokers, and home inspectors. Anyone who devalues that practice should do some serious soul searching or should simply find another line of work.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Competence & Ethics in Real Estate Disclosure

Aug 20 2007

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: As a buyer of homes in several states, I find the practice of real estate disclosure to be an unethical mess. In some states, disclosure is mandatory for sellers and agents, while in others, the laws are full of loopholes. Sellers rarely know what defects to disclose, and the agents wouldn’t recognize a defect if it was labeled. But the real slap in the face is from agents who recommend incompetent home inspectors. I never know the true condition of a home until I move in. If I then complain about the lack of disclosure, the sellers claim that they didn’t know, the agents pass the legal buck to the home inspector, and the inspector recites a list of disclaimers in the inspection contract. Disclosure, it seems, is a sad joke, but everyone is safe behind the letter of the law. This may be a rhetorical question, but what ever happened to disclosing defects simply because it’s the right thing to do? Harold

Dear Harold: Defect disclosure is hampered in two significant ways, and you have raised both issues. The first is the inability of many sellers, agents, or home inspectors to provide adequate disclosure. The second is a failure of some to recognize the ethical importance of disclosure.

Sellers in most states must provide a written statement of known defects. These disclosure statements rarely contain pertinent information because the majority of residential defects involve issues that homeowners seldom see and probably wouldn’t recognize, such as improper wiring in a breaker panel or a chimney defect in the attic. Sellers who are serious about disclosure should hire a qualified home inspector for a presale inspection.

Realtors in most states are required to disclose what they know. Degrees of compliance vary from one individual to the next, depending on what they learned in kindergarten. But the real litmus test of disclosure ethics involves the choice of home inspectors that agents refer to their trusting clients. Agents become familiar with the relative abilities of local inspectors. They know which inspectors are more or less thorough in their findings, and these impressions are widely discussed within real estate offices. For the agents who are truly ethical, only the most thorough inspectors will do for their clients. For the ethically disabled, those who had problems learning sandbox etiquette, the best inspectors are known as “deal killers.”

Home inspectors vary widely in their abilities to discover and disclose defects. The reason for this disparity is that home inspection is a learn-as-you-go business. It is not possible to be qualified at defect discovery without having been a full-time inspector for several years. This means that new inspectors must learn their trade at the expense of the first customers. After several hundred substandard inspections, the new inspector begins to catch on. After a few thousand, true competence begins to manifest. To paraphrase an old adage, “There are new home inspectors and true home inspectors, but there are no new, true home inspectors.”

Buyers can obtain adequate disclosure if they understand these realities. When you buy, don’t expect much in the way of disclosure from sellers or agents. They probably don’t have much to disclose and may or may not be committed to the ethical demands of the disclosure process. Instead, try to find a home inspector who is truly qualified: someone who has many years of experience, who has inspected thousands of properties, and who has a reputation for detailed, uncompromised thoroughness. A top-gun home inspector will provide the disclosure you’re seeking, and for once, you’ll know what you’re buying, before you buy it.

The House Detective is distributed by 1000WattConsulting. Do not republish without written consent. To purchase reprint rights please contact marc@1000wattconsulting.com

Questions regarding home inspection please email Barry Stone at questions@housedetective.com

Barry Stone

Barry StoneKnown today as "America's House Detective," Barry advises readers from coast to coast about home inspection and real estate disclosure, providing honest clarity, fresh wit, consumer protection, and even-handed fairness in his responses to real estate questions. Read more.

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