Thread: Who pays for the inspection!?!

I have my views, but would like to hear others. Someone forgot to tell me when I scheduled an inspection for tomorrow morning that the buy/sell agreement states that the seller agreed to give buyer $2500 credits toward all closing costs including inspection and prepaids. That means the buyer expects the seller to pay my inspection fee - possibly at closing.

1. My long standing policy has to never accept payment at closing. Too many chances that I will never get paid - either because I find some deal-breaker information during the inspection so there is no closing, maybe the buyers financing doesn't go through at the last minute so there is no closing, or the title company forgets to pay me.
2. If the seller pays, then who is my client? The buyer would have no legal right or recourse to the inspection report. (Yes, I have done seller pre-listing inspections before, but extremely extremely rare.). And my pre-listing inspection report states that a buyer can not rely on my inspection report and should pay an inspector (me or someone else) to do their own inspection.

How do you handle this request?

I take care of it this way.
I do not take payment at closing (for the reasons you listed). Period!

I do not care who pays me as long as the buyer and seller agree on it (this is covered in the ASHI SOP). I still only give the report to the buyer, and the buyer is the one signing my contract. I'm just paid by the seller.

No big deal.

I will, on rare occasion, accept payment through escrow. However, I charge an extra $75 to do this. I also get all of the escrow information, send the company my invoice directly and call the officer to ensure they received it prior to sending out the report. Most folks balk at the fee and pay up front. I was missed by the escrow company once and contacted the buyer who paid. It is a bit of a pain to track the AR, so I don't like to do it.

Just like Jack, my client signs the contract.

Had several clients over the years explain the seller was crediting the buyer the inspection fee. Great for the buyer.

Buyer pays me and I provide them with a receipt they can submit at closing. No money, no report.

If they do not like my policy, hire someone else.

Originally Posted by Bruce Ramsey

Had several clients over the years explain the seller was crediting the buyer the inspection fee. Great for the buyer.

Buyer pays me and I provide them with a receipt they can submit at closing. No money, no report.

If they do not like my policy, hire someone else.

Ditto

I agree with Bruce and Steven ...

The buyer pays.

It's then up to the buyer to get their money from the seller.

Let's say that the deal falls apart and the buyer doesn't pay you ... how do you plan on getting paid?

Buyer's not going to pay you at that point.

Seller's not about to pay you either.

Agreed with all of the above. No payments at closing accepted for me. Payment is due at time of inspection. The buyer can have the seller reimburse them after the fact. I don't care what the buyer and seller have agreed to. As long as I walk away from the inspection with payment in hand.

I also agree with above. Your client is the buyer who pays you. The fact that the seller may reimburse them is not your issue. I have very rarely agreed to accept payment at closing or settlement (as is is called in PA), but only when it was going to take place in a reasonable time and with the understanding that I would be paid regardless. It is a risk, but was typically done as a favor to an agent that I knew very well. Still would not recommend it.

I would interpret that if there is no closing then there are no credits for the seller to give the buyer. ..."seller agreed to give buyer $2500 credits toward all closing costs including inspection and prepaids."

Buyer pays for the inspection then at closing gets a credit for that payment. It is an insensitive to get to closing for the buyer.

My client is the one who signs the contract and pays me - it's always the same person. Having one person sign the contract and another pay muddys up the waters and I want no confusion as to who I am working for.

The only time I've been stiffed for a payment is when I have gone against my rules.

Rule number one: No payment, no report.

Rule number two: refer to rule number one.

Rule number three: I don't care who pays but refer to rules number one and number two.

The client is the person named on the report and on my inspection agreement which is not necessarily the person who pays. Many times, mom, dad, etc. pay but I never know until after the inspection is pretty much complete but I still only deal with the client (except to accept payment.)

My definition of 'bill to closing' and 'payment at closing' was that when the front door closed behind me as I left ... I had the payment.

Okay, I admit to a few exceptions, and as Jim L. said, the only times I've been stiffed (not many and not for much) over the 17+ years inspecting was when I didn't follow my rules.

I do get the occasional buyer who runs out to get to the inspection and realizes part way through that they have forgotten their checkbook. I tell them to just pop a check in the mail and I still send them the report the next day.

I have also had agents say that they would be paying for the inspection. It didn't matter to me as the buyer was still the person signing the agreement and I got paid.

Best practice - the person who needs the report pays for the report , not mom or dad , not the broker - I like a clean paper trail . If Mom or Dad is going to pay for it , they can give the money to the child, the real estate agent is going to pay for it , he or she can reimburse the buyer (or seller). But the client is who ever actually pays the bill. The rest is for someone else to decide

It makes no difference to me who pays my fee but the buyer or whoever the inspection is for is the one that will sign my agreement as they are the one that will be calling if they have a problem. Over the years I have had Realtors, Mortgage Brokers, Mom & Dad's, Uncles, Aunts, Grandparents, Church Pastors, an Elks Club for a member, and right before christmas I had a local VFD attempt to pay for an inspection on a home for a local family who's home burned and they were getting a new one(Once I found out, I donated the inspection).

So payments can come from so many sources that I see no need to worry about who is paying my fee, it has no impact on the inspection, the agreement or the final outcome.

Originally Posted by Nick Ostrowski

I do get the occasional buyer who runs out to get to the inspection and realizes part way through that they have forgotten their checkbook. I tell them to just pop a check in the mail and I still send them the report the next day.

Yep, that's what I've done before too, I got hit twice that I recall, once for around $2200. Fortunately, though, before I realized I was getting stuck by him, I had already received a few referrals from the scumbag that far more than offset that loss.

I didn't care who paid.

I also frequently did inspections without a signed contract ... my reports included my contract and the footer on each page stated that anyone who uses or relies on the report agrees to the terms and conditions of the contract and further agrees to hold the company, the inspector, and assigns harmless (I don't recall the exact wording, but attorneys liked it and I had no problems using it.

Originally Posted by Terry Beck

I have my views, but would like to hear others. Someone forgot to tell me when I scheduled an inspection for tomorrow morning that the buy/sell agreement states that the seller agreed to give buyer $2500 credits toward all closing costs including inspection and prepaids. That means the buyer expects the seller to pay my inspection fee - possibly at closing.

1. My long standing policy has to never accept payment at closing. Too many chances that I will never get paid - either because I find some deal-breaker information during the inspection so there is no closing, maybe the buyers financing doesn't go through at the last minute so there is no closing, or the title company forgets to pay me.
2. If the seller pays, then who is my client? The buyer would have no legal right or recourse to the inspection report. (Yes, I have done seller pre-listing inspections before, but extremely extremely rare.). And my pre-listing inspection report states that a buyer can not rely on my inspection report and should pay an inspector (me or someone else) to do their own inspection.

How do you handle this request?

Legal advice given to me stated that my client is the person(s) who pays me. I should not let anyone else sign the contract. The client is the only person(s) that receive a report from me.
Clearly defining the client clearly defines who if anyone could be harmed in the eyes of contract law.

Originally Posted by William Kievit

Legal advice given to me stated that my client is the person(s) who pays me. I should not let anyone else sign the contract. The client is the only person(s) that receive a report from me.
Clearly defining the client clearly defines who if anyone could be harmed in the eyes of contract law.

Hello William, are you saying if Dad produces a roll of cash, he has to give it to his son or daughter, the home buyer and then they give it to you? That seems a bit extreme.
If Dad pays for the inspection, it is a gift to your client, the home buyer. You don't ask Dad to sign.

What I am saying is that in court the only party that can be harmed by your report is the one who paid for the report.

Originally Posted by wkievit

What I am saying is that in court the only party that can be harmed by your report is the one who paid for the report.

Incorrect.

The party which could be harmed the most is the party which signed the contract (most likely the party which bought the house).

The party who paid for the report is only harmed, at most, and if at all, for the amount paid for the report.

Someone was not thinking when they told you what you heard ... or was it what you thought you heard ...

Originally Posted by John Kogel

Hello William, are you saying if Dad produces a roll of cash, he has to give it to his son or daughter, the home buyer and then they give it to you? That seems a bit extreme.
If Dad pays for the inspection, it is a gift to your client, the home buyer. You don't ask Dad to sign.

I address and deliver my reports only to the person that pays for it.

Originally Posted by wkievit

What I am saying is that in court the only party that can be harmed by your report is the one who paid for the report.

Sorry, I'm not buying that an attorney would give that opinion. I would love to see it in writing.

Since I won't allow anyone but the person I sell report to to sign the contract I don't have that problem.

The only person having a contract with me is the one who pays for it.

William, please post the legal opinion supporting your post. Off hand, I'm thinking you are incorrect.
While you can do whatever you like, you make the claim that you are following legal advice.
I'm not buying it.

I will check on it with my lawyer and get back with his take. I will see him late February.

[QUOTE=Nick Ostrowski;253209]I do get the occasional buyer who runs out to get to the inspection and realizes part way through that they have forgotten their checkbook. I tell them to just pop a check in the mail and I still send them the report the next day.
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I used to get that "I forgot my checkbook!" line, most often from doctors. Of course, to a doctor getting paid any time in the next 6 months is normal cash flow, so getting a check from them is like pulling teeth, even worse if they're proctologists! So I was really glad when I could tell them, "No problem, I can accept your MasterCard, Visa or AMEX!" No more receivables! Yes, I lose a couple of percent on those transactions, but it's worth the convenience.

Financial arrangements between the buyer and the seller are their concern. Our agreement is with whoever signs the inspection agreement, and they are responsible for payment. We will gladly provide an invoice/receipt.

As do some above, we avoid payment at closing for the usual reasons. If asked we charge $50 and require a CC # or post dated check. Nearly all come up with the payment.

We have even encountered a few times where a client thought the Realtor's guess of what we charge as gospel. We feel no obligation to honor these guesses.

Ok, I have one that just came up.. I seldom if ever look at the name on the check and this morning while putting a deposit together I happened to look at a check from last Friday and the persons name on the check is not who signed the agreement. The last name is different and they are from Texas and my clients have lived in Nashville for three years….. I'm pretty sure it is one of their parents.

So what would those purest that only take money from the person that signs the contract do?

Me, it's going to be in the bank in about an hour…….

Never having been afraid to cut across the grain... I promote getting paid at closing from escrow. Probably do 8-10 a year that way, as some agents get it and some don't. I have my client sign my regular contract, and then I also have them sign a contract addendum that makes clear that the value was received at the time of the inspection but we have agreed to be paid at closing from escrow. We also collect credit card info at the time of inspection, and the addendum authorizes us to charge the card if closing doesn't happen. We also bump up our fee by $50 to cover our cash flow and tracking time. We send a bill and then track it every couple of weeks. The agents that get this approach are good about keeping me in the loop. If it's not going to close, I charge the card. Haven't been burned yet, although I did once have a mortgage officer who forgot to submit my bill pay me directly.

Originally Posted by Tom Iovanne

Never having been afraid to cut across the grain... I promote getting paid at closing from escrow. Probably do 8-10 a year that way, as some agents get it and some don't. I have my client sign my regular contract, and then I also have them sign a contract addendum that makes clear that the value was received at the time of the inspection but we have agreed to be paid at closing from escrow. We also collect credit card info at the time of inspection, and the addendum authorizes us to charge the card if closing doesn't happen. We also bump up our fee by $50 to cover our cash flow and tracking time. We send a bill and then track it every couple of weeks. The agents that get this approach are good about keeping me in the loop. If it's not going to close, I charge the card. Haven't been burned yet, although I did once have a mortgage officer who forgot to submit my bill pay me directly.

Take advice from a fool; that credit card number is not worth the paper it is written on if the card is maxed out!

Originally Posted by Scott Patterson

Me, it's going to be in the bank in about an hour…….

My bank is closer to me than that.

I have accepted payment through escrow, without incident, on several occasions but not of general practice. i have submitted my invoice to the escrow company and paid within a day or two of closing. On the odd occasion the sale did not go through, I was either paid out of the client's earnest deposit money held in escrow or the client paid by separate check. On one occasion even the buyer's realtor paid me and was later reimbursed by our mutual client.

Going back back to the original post...The agreement the seller made to deposit money in escrow for the buyer's benefit doesn't change who you have a contract with, assuming the contract is with the buyer. The buyers is, in effect, in receipt of that money to pay for services. Escrow simply facilitates the transaction by distributing the funds. The buyer, of course, has to agree to the funds being released for payment. If the escrow company makes a refund, minus the inspection fee, the buyer's claim is against escrow. In the instant scenario, the seller's $2500 deposit would typically only be available for disbursement if the real estate transaction is complete. There would be a good argument, however, if this money was used to pay for the inspection even if the sale fell through. However, that money is usually only set aside for disbursement out of proceeds of the sale, unlike the buyer's earnest money usually deposited with the offer.

Buyer/Client or their relative pays, i.e. Mom, Dad; I don't have an issue with that
Won't accept payment from a Seller; actually had that situation about 2 weeks ago; Buyer and Seller had agreed Seller would pay for the inspection because he wanted a copy of the report. Told Buyer he had to pay and he could give the report to anyone he wanted since it was his property.
Won't accept payment at closing; never have, can't imagine I ever would
However since I do a lot of commercial work I do billing for corporate clients.

Many years ago, when I was much newer and largely ignorant of the rules of the game, I had a client tell me at the time of the inspection that the seller agreed to pay for the inspection. The roof covering was crap and he backed out of the deal. No one wanted to pay at that point. The Realtor for the buyer eventually paid for about 3/4 of the fee out of his own pocket.

When I am told that the seller is paying for the inspection, I simply tell them that is an arrangement between them but I am to be paid at the time of the inspection. They need to seek reimbursement per their side agreement.

When necessary, we have gone to closing for payment. on a case by case basis. We charge an additional $50 for that.