Thread: Ethical Question

I have a builder that wants me to do a walk thru (no report) of a new construction and then the realtor has buyers coming next week and will have them hire me to do a full inspection. They want to make sure everything is up to par before the buyer sees the home. Does this smell OK.
Thanks

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• NACHI Ethical Standards reach new low.

I would let the buyer decide if it is okay with them to do a pre-inspection a week before the final inspection. The buyer would have to pay for both inspections if I were to do it. I would not do a walk-through with the builder. I would do a full inspection both times. The buyer has to be in the loop during the entire inspection process.

I don't see an ethical problem with that.
But I do see 2 other problems
1 The builder and Realtor may be surprised when they see the report for the purchaser. That report will likely have items that were not included in a casual walk through.
2 The buyer may be told by the builder/ Realtor that you have performed a complete inspection and that an additional inspection is a waste of money.

I do "walk around" inspections a lot for investors. Its usually when they only want a couple things looked at. If I do a "home inspection", I'm required by the State to produce a report (that follows the SOP). If I do a walk around, i'm really just a consultant. Walk and talk - no report.

There were a few builders in Knoxville that would hire me to look at their houses before they were "finished" - kind of a punch list thing. Almost all of the builders wanted the full inspection including a report, but not always. Most of the time I ended up doing an inspection for the buyer.

I don't see a problem with what they are asking you to do.

Originally Posted by Paul Johnston

I have a builder that wants me to do a walk thru (no report) of a new construction and then the realtor has buyers coming next week and will have them hire me to do a full inspection. They want to make sure everything is up to par before the buyer sees the home. Does this smell OK.
Thanks

It probably smells fine now, but how will it smell 3 months from now when the pit in the backyard starts to plug up?

I see your dilemma. If there are no real standards for the builder to follow, he needs some guidance as to what is good or good enough. He wants to get that info from you for free? I can't say whether that's ok or not. It could lead to a happy relationship with local builders and sellers, but there is potential for conflict of interest.

On many of the mid-size to larger homes I did, typically the ones 5,000 sf to 25,000 sf, I would do quality control (construction monitoring) inspections during the construction process for the builder, then the builder would have me do the "final walk through" inspection for the client.

After beating the builder up during construction, and them correcting MOST (but not all) things, I would beat the house up yet again, and list the things the builder did not correct (it was the builder's choice to correct or not correct things which met minimum code but were still 'not right' for that quality house), then I would let the builder explain to the client why those things were not corrected.

Sometimes the builder wished he had made those corrections, sometimes he was able to convince the client (buyer) that those things were okay.

Either way, the client knew what we all knew and found during construction, it was up to them to beat the builder up for not correcting those things.

As long as you give every inspection your BEST inspection, and don't try to ignore things from the client (buyer) for the builder, I see no problem in doing that.

If you help the builder try to cover things up ... then, yes, that would raise ethical questions.

Personally, I'd inspect for either the builder or the buyer - not both. I just don't like the idea of being in the middle, nor am I that "desperate" for the income.

Originally Posted by Eric Barker

Personally, I'd inspect for either the builder or the buyer - not both. I just don't like the idea of being in the middle, nor am I that "desperate" for the income.

If one does not try to hide what they are doing from either party, then there is no "being in the middle", being as you deem it as "being in the middle" ...

... sounds a bit like your implication that one who does things in the light of day is " "desperate" for income", even without knowing what the level of income was, which leads me back to ... possibly not doing things in the open and exposed to the light of day with all work known to all parties - and not doing things in the open and exposed to the light of day may very well leave one feeling as they are "being in the middle".

Just in case you missed it in the above, when one attempts to make judgments and rush to try to degrade others without any knowledge of the others, one opens themselves up for a response making sure that everything is done in the light of day and is exposed to all parties.

Or maybe that is simply beyond one's grasp to comprehend what doing things out in the open, in the light of day, and exposed to all parties is and amounts to?

Paul, if you are asking, that may be indication enough that you would have a difficult time with this.

The way I look at it is this. If any part of anything doesent feel totally comfortable, don't do it. In the case preseted in this thread, I would tell the builder to give my contact info to the buyer and if they like my pitch, then can hire me directly for whatever services I may have to offer.

Walk and talk for a developer is fine, done plenty. However I wouldn't do the purchase inspection on the same property. Too much potential conflict. In smaller markets I can see the need to do both. Without disclosure to the buyer, I would consider it scummy.
How are you going to handle observed construction defects? You saw them while working for the developer. Now working for the buyer you can't see them because they have been covered with drywall. Going to mention those items in your report as potential problems, recommend the buyer ask for written confirmation those items were properly repaired? OR are you going to forget about those, assume your 1st client fixed that pesky stuff and hope it doesn't come back to bite you in the _ss with the buyer.

I've done my share of "progress inspections" and I enjoyed them. Usually I set the contractor at ease by showing them I was not the owner's spy, or a nit-picker, but a quality control guy who was retained to confirm the plans and codes where followed. After a couple of inspections most builders found me useful and we had no problems. The few contractors that resented me were world-class wood butchers and 2 of them were fired by the owner soon after they began the job.
The good news is a progress inspection is not a home inspection and doesn't fall under California Civil Code 7195 to 7199. I never did a home inspection for a buyer because I only inspected custom home construction/ remodels & additions for the owners who had no intention of selling.

As an aside, any of the home inspectors on this BB who were former builders ever get retained to inspect a home they had built in the past? And if so, did you disclose you were the builder to your client?

Actually happened to me on two separate occasions and yes I fessed up. In both cases luckily no problems.

I can see there are varying opinions on this one. Personally I would choose one or the other because there can be problems with working with both parties.

I see no ethical dilemma as long as are true to the standards of the profession and there is transparency in the relationships. The builder is being smart to try and nip any problems in the bud. If you are introduced to the buyer I would let them know you did a walk through. They can decide for themselves if hiring you falls inside their comfort zone.

Originally Posted by Paul Johnston

I have a builder that wants me to do a walk thru (no report) of a new construction and then the realtor has buyers coming next week and will have them hire me to do a full inspection. They want to make sure everything is up to par before the buyer sees the home. Does this smell OK.
Thanks

I think ethically you should be ok as long as you disclose the relationship (that you were hired by the builder to do a walkthrough) and you can remain objective and honest. I liken it to a Realtor working for both the seller and the buyer simultaneously. I personally wouldn't do it if I was the buyer. If I was the buyer I wouldn't go for something like this no matter what story you gave me (I would never hire an inspector or realtor who I wasn't sure had my best interests in mind / playing both ways; I would prefer them to be comfortable enought to "break the deal" as they say).

I have always found that working for anyone other than the Buyer seems to end up with me having to take a stand. Agents are the worst to work for unless you know them and They respect your findings, NOT YOUR OPINION. I have one that wants me to write her words on a report. Talk about UNETHICAL. My favorite thing is to tell them I'll pretend I did not hear that. Rather than argue with them. If you think about it GREED is our biggest cause of pollution.

I don't see an ethical problem as long as you're up front and honest with all parties concerned, and you take the role of the neutral inspector when dealing with all involved. The danger I do see is not getting to do the promised home inspection for the buyers when the place is finished - then you're out altogether.

If this is a "buyer to be determined later" deal, then I'd recommend having the builder pay you for your walk through work. If the buyers are known now, I'd get them under contract now for the home inspection to be performed later when the place is done, but add some extra to cover and include the walk through checks as the build is in process. That way you're working for the buyers all along, you're helping to insure that their house is being built correctly while things can more easily be corrected, and you're getting paid for the extra work they're asking you to do.

For those who think there is an ethical problem with what is being discussed, I ask you this:

- Do you feel there is an ethical problem inspecting a house you inspected for the seller when they bought the house a few years earlier?

- Do you feel there is an ethical problem inspecting a house you did for a previous client, who sold the house (there is another seller now), and you are now inspecting the house for a new client?

If no to either, please explain why.

If no to either, please explain the difference between that and what is being discussed ... other than the amount of time which has passed between inspection.

I'm trying to figure out the ethical problem (presuming you are doing the same thoroughness inspection for both clients).

I guess I'm just having difficulty figuring out what is different between: a) inspecting the house for one client and then inspecting it for a second client;, and b) inspecting the house for one client and then inspecting it for a second client ... and why one is okay and done all the time and the other is taboo.

Originally Posted by Jerry Peck

For those who think there is an ethical problem with what is being discussed, I ask you this:

- Do you feel there is an ethical problem inspecting a house you inspected for the seller when they bought the house a few years earlier?

- Do you feel there is an ethical problem inspecting a house you did for a previous client, who sold the house (there is another seller now), and you are now inspecting the house for a new client?

If no to either, please explain why.

If no to either, please explain the difference between that and what is being discussed ... other than the amount of time which has passed between inspection.

I'm trying to figure out the ethical problem (presuming you are doing the same thoroughness inspection for both clients).

I guess I'm just having difficulty figuring out what is different between: a) inspecting the house for one client and then inspecting it for a second client;, and b) inspecting the house for one client and then inspecting it for a second client ... and why one is okay and done all the time and the other is taboo.

If it is typical for a person to do all the inspections or even a large amount of the inspections for the builder .... that is building the home .... that you rely on for a considerable amount of income over the course of a year then there is that overhanging cloud of "thank you lord for all those inspections from John the builder." ( before you take a bite of your food) then there is that bit of influence that would be in question on an everyday basis.Yes you can remain objective. Yes you can still do a good inspection. Yes you can still look out for your clients best interests. But there is always that question in someones mind "But he does all the builders inspections"

Could there be an influence? Maybe not.

Could there be that influence? Maybe so.

Will it cloud the reasoning of an inspector here and there? Maybe not.

Could it cloud the reasoning of an inspector here and there? Maybe so.

But without a doubt , if you are doing all the builders inspections, There is that background noise..

It is kind of like doing every inspection you get thru Realtor referrals.

Could there be? Maybe not, maybe so but the background noise and possible heavy influence is always in that background noise. There are many an inspector and or builder or Realtor that will use that influence in possible bad ways.

Remove the temptation. Remove the possible influence. No reason for one to try to exert influence. No reason to ask to possibly do something to influence.

Originally Posted by Ted Menelly

But there is always that question in someones mind "But he does all the builders inspections"

Maybe it was the education and class of people buying the houses I was inspecting, or the fact that they knew I was putting the builders through the ringer to make sure that all work was done such that "code" was a starting point on which one placed the ladder to do better, or ... for whatever reasons there were, that question which you said is always there was not there.

I guess if one makes sure they get in and out in 2, 3, 4 hours so they can go to their next inspection may make that question a greater possibility, but when one is prepared to, and does, stay as long as necessary to complete a thorough inspection, then I suppose that question goes away.

Just offering up some suppositions as to why I never had those questions ...

The ethical issue is subjective...Some will see the matter as unethcical and others will not. You follow either a State mandate SOP or a recognized governing bodies CoE, or it is simply a matter of conscience.

I see the matter as being more of a potential liability issue. Performing a 'walk-thru' with the builder and later providing a full inspection for the buyer, opens the door for conflict of interest question if the fit hits the shan, in the future. I don't think any adjudicator of fact - if the issue went that far - would look on you favorably knowing the potential for something being 'overlooked' on a quid pro quo basis, while on the builder's payroll. Certainly it's an issue the buyer would raise if serious defects were discovered at a later date.

If choosing to do both...disclose, disclose, disclose and get signatures.

Jerry (Mc)...I think you are referring to CA Business and Professions Code(s) 7195 - 7199. However, if you look at the wording of 7195 (a) (1) - Home Inspection definition, it states "...Home inspection also includes any consultation regarding the property that is represented to be a home inspection or any confusingly similar term." Which could, conceivably include 'progress inspections' but open to interpretation.

Sounds to me like a smart builder.

Get the inspector in to find those things wrong so he can have them fixed before the "real" inspection.

I don't see a problem with it.

Dear builder: Here's the things that I'm going to nail you for during the "real" inspection if you don't fix them.

As long as the builder and the buyer both agree, where's the problem.

No Report on the builder walk-through? Videotape the walk-through and then there is no question what issues were present the week before and, the buyers can also see what was incorrect that week and they'll also be able to hear what the builder had to say about corrections at that time. IMO, I'd choose one or the other, but I wouldn't do both - it's kinda like a listing realtor representing both parties to the transaction, how can a Realtor be impartial when that $5k-$10K commission is hanging there in front of their nose like a carrot on a stick in front of a donkey?

I see a couple of things going on that need to be cleared up, at least in my opinion;

First,
As long as you dislose to both parties what you are doing, meaning that everything is put on the table, then there shouldn't be a problem thically.

Secondly,
There shouldn't be a difference in what you are looking at inspection wise when doing either. Ultimately, we are to look providing information with regards to health, safety, welfare, and in some instances cosmetics. So, with that being said the factual informationshouldn't change.

Now as far as what is looks like, it might not be viewed very well by the client if you provide your expertise to teh builder at no cost, and charge the Buyer a typical inspection fee.

A good builder will respect your time and expertise.

And finally;
In the interest of keeping things on the table, the information talekd about during your walkthrough should be made available to the Buyer.
My two cents

In our bailiwick as a large home builder in Texas and other states, we hire a third party ICC Certified Code Inspector group to inspect every home we build at all stages of construction. This is in addition to any municipal code inspections performed. They then perform a QA inspection before closing to make sure we didn't miss anything. However we would take issue if that company then became the buyer's agent/inspector and came back with another list that he had not given us initially. We inform our buyers that these inspections were performed at every step and will provide copies of the inspection reports if they request them. However we never discourage a buyer from hiring a Real Estate Inspector if they so desire. It's their money.

Paul, the OP, is in Costa Rica, so his situation was very different and his question was understandable. They are not working under any code regulations that we are familiar with.

I believe the consensus was that the inspector should be working for the buyer right from the start, simply doing a preinspection to head off possible problems. As long as that is clear to all parties, no problemo.

It only becomes an issue when the seller or builder does the initial hiring. Then you want to take care how you proceed if the buyer wants you to reinspect.

Originally Posted by Joe Richmond

if you provide your expertise to teh builder at no cost,

Joe,

Just curious as to why you think an inspector would provide their expertise to the builder at no cost?

Originally Posted by Llewel Walters

However we would take issue if that company then became the buyer's agent/inspector and came back with another list that he had not given us initially.

I suspect that ALL of use would agree to the extent of your statement, but what is being discussed is the inspector doing quality control inspections for the builder and then the final inspection for the builder/buyer (depending on the builders preference - I've had builders have me do all inspections for them, and other builders have me do all inspections for them except the final and that final inspection is for the buyer), all items reported to the builder during construction and not corrected by the builder would, obviously, be on the final in$pection report.

Likewise, any item installed after the last inspection SHOULD be reported to the buyer (presuming the final inspection is for the buyer) even though the builder has not been given that item - if the builder had the final inspection done for them then they would have received those items, and then a followup final inspection for the buyer could be performed for the buyer.

If the inspector did a final inspection for the builder and then a follow up inspection for the buyer, any corrections made by the builder to their last inspection which was not made correctly SHOULD be on the buyer's in$pection report. In this case, think of the final inspection for the buyer as a re-inspection.

Yes, during my inspections for builders the various builders would decide NOT to correct some items, and those items SHOULD be brought to the attention of the buyer, and it is up to the builder to satisfactorily explain to the buyer why they (the builder) did not correct those items.

Originally Posted by Joe Richmond

First,
As long as you dislose to both parties what you are doing, meaning that everything is put on the table, then there shouldn't be a problem thically.

Secondly,
There shouldn't be a difference in what you are looking at inspection wise when doing either. Ultimately, we are to look providing information with regards to health, safety, welfare, and in some instances cosmetics. So, with that being said the factual informationshouldn't change.

Originally Posted by John Kogel

It only becomes an issue when the seller or builder does the initial hiring. Then you want to take care how you proceed if the buyer wants you to reinspect.

John,

If done as I have been saying, and as Joe said above, there is nothing which can "become an issue".

If the inspector tries to sneak around and not do things that way, yeah, then it could become fishy smelling ... but no more so than an inspector who is supposedly working for the buyer and who produces "lightweight" reports so as to "not alarm" the buyer.

Thus, it is not that the inspector is doing the inspections for both - it is that the inspector is not ethically looking out for the client (like with the "non-alarmist" lightweight reports, even though that inspector may have never seen the house previously).