House Detective

The House Detective, by Barry Stone, Certified Building 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 by Barry Stone, Certified Building 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.