Thread: Examining Agent-Inspector Relationship

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Examining Agent-Inspector Relationship
By Isaac Peck

The home inspector’s relationship with the real estate agent is a topic often discussed among home inspectors and agents. Some home inspectors tout strong relationships with real estate associations and agents as the best way to grow an inspection business. Others say the reliance of the home inspector on agent-referrals is a key problem when it comes to keeping the home inspection profession honest, ethical, and professional.

The fact is, a large percentage of home inspectors rely on agent referrals to bring in work and keep them in business. While this is not necessarily a negative thing, many inspectors argue that there is an inevitable conflict of interest inherent in such a relationship, as ambitious and unethical real estate agents select home inspectors who aren’t thorough and don’t find problems. Some inspectors complain that on numerous occasions they’ve had realtors combatively ask them if they are “deal killers,” sometimes right in front of the buyer!

Those who follow the relationship between real estate appraisers and mortgage brokers, agents, andlenders may see some similarities between the way the appraiser is pressured into meeting “value” and some home inspectors are encouraged to “sign-off” on a home after a quick hour inspection. Sean Wiens, a home inspector from Vancouver, Canada sees agent referrals as a threat to the integrity of the profession, saying that those home inspectors who are the most successful are the ones “who caterto the agents.” The result, according to Wiens , is that inspectors end up not looking out for the buyer’s best interest and as a result the standards of the profession are lowered.

Dennis Robitaille, Director of Independent Home Inspector’s of North America (IHINA), believes that the home inspector’s reliance on agent referrals creates a serious conflict of interest and this belief is what led him to found IHINA. Robitaille says that some agents have a list of two or three home inspectors who have been prescreened as not being deal killers. “The list, however, will be long enough to protect the agent from any referral liability should the buyer want to blame the agent for any inspection mistakes.” This results in no liability for the agent for the referral- the buyer "chooses" an inspector the agent prefers but the buyer's choice is limited to home inspectors who will not hurt the sale, says Robitalle.

On the other hand, there is a strong argument for why an ethical agent’s referral adds value to the buyer and benefits all involved. A seasoned real estate agent has years of experience and expertise in the local market and an agent who is honest and has integrity will save a buyer a lot of time, money and frustration by referring a competent and thorough home inspector. Lenn Harley, a real estate broker serving Maryland and Virginia, says that good agents have learned to recognize good home inspectors and other service providers to home buyers. “Our buyers rely on our experience for matters as important as a home inspection,” Harley says. According to Harley, there is a trend in the real estate industry for agents to avoid risk by not making referrals and not attending home inspections. But her position is that the agent referral actually adds value to the buyer. “When homebuyers ask me for a home inspector referral, I refer them to the most competent and thorough inspector I know,” says Harley.

Serving the Client
Dick Greenberg, a real estate broker from Colorado, says, “We never hesitate to make recommendations, whether they are inspectors, lenders, handymen, carpet cleaners, etc. Our reason is because what we care most about is the client's satisfaction. Our favorite inspector has ‘killed’ several deals for us, and we and our clients were grateful.” In other words, for the ethical agents and brokers out there, it’s a question of serving the clients and building strong relationships. “Our commission comes from our clients, not a particular deal, and it has never made sense to jeopardize a client relationship by recommending an inspector who would do less than serve his client's needs," says Greenburg.

As far as there being aconflict of interest when it comes to agents referring home inspectors, Greenburg says, “For that concern to be valid, you'd need at least two people to ignore their duty to their client - the agent and the preferred inspector. While it’s certainly not an impossibility, those are the same agents who bend or break the law and code of ethics as a matter of routine. The answer is to clean up our act by getting rid of them, not by limiting the service we provide on the presumption that we're all like them,” says Greenburg.

In other words, for the many honest and ethical real estate agents, brokers, and home inspectors—building strong relationships and referral arrangements is a way to help all involved. It provides the home inspector with business, the real estateagent/broker with a knowledgeable, reliable, and thorough home inspector to refer to home buyers and helps home buyers by providing them access to a dependable home inspector.

Of course, not all realestate agents/brokers are honest and ethical, so perhaps the best route a home inspector can take is to diversify. Work closely with and market to real estate agents/brokers and find the ones who want ethical work, while also building up other avenues of business through direct marketing to home buyers, building a presentable website and working to optimize it on search engines, engaging in online marketing, and other marketing techniques that directly target the homebuyer. This is the best safeguard against an inspector becoming too reliant on agent-referrals by building a diverse business that is arguably more sustainable and profitable in the long run.

About the Author
Isaac Peck is the Associate Editor of Working RE Magazine and MarketingCoordinator at OREP.org, a leading provider of E&O Insurance for appraisers, inspectors, and other real estate professionals in 49 states. He received his Bachelors in Business Management at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347-5273.


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Serving the Client
Dick Greenberg, a real estate broker from Colorado, says, “We never hesitate to make recommendations, whether they are inspectors, lenders, handymen, carpet cleaners, etc. Our reason is because what we care most about is the client's satisfaction. Our favorite inspector has ‘killed’ several deals for us, and we and our clients were grateful.” In other words, for the ethical agents and brokers out there, it’s a question of serving the clients and building strong relationships. “Our commission comes from our clients, not a particular deal, and it has never made sense to jeopardize a client relationship by recommending an inspector who would do less than serve his client's needs," says Greenburg.

That has always been my thinking. Good agents will understand their clients needs and best interests and understand they will not always close a deal.

These are the agents I like to have a working relationship with! Good on Mr. Greenberg!

Clients will be happy and are most certain to use the agent and inspector again and refer the agent and the inspector to others.

Very good article. Let me know where this article gets posted, I'd like to link to it.

I've been saying this for years:

As far as there being aconflict of interest when it comes to agents referring home inspectors, Greenburg says, “For that concern to be valid, you'd need at least two people to ignore their duty to their client - the agent and the preferred inspector. While it’s certainly not an impossibility, those are the same agents who bend or break the law and code of ethics as a matter of routine. The answer is to clean up our act by getting rid of them, not by limiting the service we provide on the presumption that we're all like them,” says Greenburg.

In other words, for the many honest and ethical real estate agents, brokers, and home inspectors—building strong relationships and referral arrangements is a way to help all involved. It provides the home inspector with business, the real estateagent/broker with a knowledgeable, reliable, and thorough home inspector to refer to home buyers and helps home buyers by providing them access to a dependable home inspector.

Of course, not all realestate agents/brokers are honest and ethical, so perhaps the best route a home inspector can take is to diversify. Work closely with and market to real estate agents/brokers and find the ones who want ethical work, while also building up other avenues of business through direct marketing to home buyers, building a presentable website and working to optimize it on search engines, engaging in online marketing, and other marketing techniques that directly target the homebuyer. This is the best safeguard against an inspector becoming too reliant on agent-referrals by building a diverse business that is arguably more sustainable and profitable in the long run.

It's a good article, with a positive outlook. People are very savvy these days. If the house is half-way decent to begin with, a thorough detailed home inspection gives them the confidence to go ahead. They know there is a bit of fixing to do, but they can budget for it. Everybody benefits.

Now and then, we discover some unforeseen or maybe hidden problem with the house that will cost major cash. Anyone who calls that "deal killing" is just plain ignorant.

Originally Posted by Ken Rowe

Very good article. Let me know where this article gets posted, I'd like to link to it.

I've been saying this for years:

KR,

Here is the URL: Examining Agent-Inspector Relationship

Thanks for the positive feedback!

Isaac,
Nice article. Good at not poking the eye of any profession. The issue revolves as you state "...unethical real estate agents select home inspectors who aren’t thorough...". And I am sure no Agent nor Broker would say that they want an Inspector that will pass over deficiencies so that the deal will proceed to closing. But the reality of the mater is that Brokers are only interested in a sale going through. The Brokers stress to the Agents that the Agents 1st and foremost job is to make the sale. No sale no income. All selling environments are driven by making numbers and the sale. Regretfully there is not a divining rod to separate an agent that is putting the client 1st and foremost above the Agent's interests and above the Broker's interests. Subsequently the only answer is to negate the ability of an Agent to influence the choice of a Home Inspector in any manor. No Home Inspector can serve two masters without sacrificing their integrity and work product.

There is a great difference in referring Title Companies, Carpenters, Plumbers or Lenders. Their cooperation with Agent does not put the client at a disadvantage by servicing , quid pro quo, to the Agent's benefit.

"There is a great difference in referring Title Companies, Carpenters, Plumbers or Lenders. Their cooperation with Agent does not put the client at a disadvantage by servicing , quid pro quo, to the Agent's benefit."

Of course they can and do. Trades and service companies give referral kick backs then do shoddy work. The client was put at a disadvantage.

The referral was based on the size of the kick back, not the quality of the product/service.

Darrel,
Should have better stated the differences. Sorry.
The client has more recourse when dealing with Title Companies, Carpenters, Plumbers or Lenders. The HI is insulated by many things including their state licensing. Most states have created a system protecting the HI in limiting the scope of the inspection. It is also much more difficult for a client to demonstrate collusion between the realtor and the HI. As it is difficult to demonstrate that the HI failed in their duty to the client.

The client may not come to understand what was understated or left of an inspection for years.

Title companies are better regulated, carpenters and plumbers can be taken to small claims court and/or a licensing board for their work. A shrewd HI can cloak themselves in the law or SOP and then operate in concert with the agent.

There is always two sides to all thoughts.

Some pick up on this article as , Oh my, I have been saying that forever and others pick up on it as a great story about both sides.

Of course anyone that leans toward one side or the other will try to make the argument that .....see, this is the way it should be and referrals are for the best interst for all and others will see this as, well, this is why there should be no referrals.

I can only see this one way and one way only but I do not damn either side for their thinking. There are fantastic Agents out there and fantastic Home Inspectors out there. Fact is that just because the idea that aagents have inspectors in their pockets and of course the inspectors counting on the absolute vast majority of their income from agents always leaves that door so wide open then as far as I am concerned there is only one end to this all.

It is long long past due that marketing as far as advertisement of your business come back to light. As far as marketing your business to Realtors and thinking of that perfect catch phrase and that right smile and Realtor meetings and getting your face in front of as many as you can or belonging to a referral group where you are the only inspector being referreed etc etc etc needs to stop.

The phrase, "Then we just have to get rid of them" or " I am honest and think only of my clients best interest and that is the best way to make this all go away" or "If everyone out there starts doing their part to make sure this comes to an end", well, that is just happy dreaming. There will never be an end to it. There will never be an end to an inspector looking at losing 100,000.00 in his pocket a year from direct agent to inspector referrals if this does go away.

Facr is I know some wonderful agents.

Facts is I have known countless not so wonderful agents.

Fact is I know some wondeful inspectors.

Fact is I know some, well, wonderful inspectors that would do anything to keep that 100,000.00 coming into their pocket from direct agent referrals. Fact is they say and do believe that they have absolutely no influence over them from Realtors. Fact is they may and in m,ost cases probably right that they keep as ethical and along thhe lines of straight and narrow no matter what.

Then you have the simple fact that.............from those direct agent referrals they make that............. 100,000.00 a year. I know teachers of CE that quote "Realtor friendly phrases" in their reports. Teach the Realtor friendly phrases. Are advocates of honesty and ethics and integrity. But soften what they write to a point that makes it very, very easy for the Realtor to say "see, even your inspector thinks its no big deal or he would have written it up a lot tougher".

Or "the inspector even knows that sellers don't do any of these maintenance items or he would have put them in his summary for repairs. It is not my place to make light of anything. It is not my or the Realtors business to tell a buyer what they should or should not ask for in a repair addendum. It is their decision alone after reviewing the report AND what they may have see that they want remedied, like filth on the carpets or pic any other "maintenance item" that they may wish to ask for. I am constanly told by my clients that the realtor says that "buyers never fix those kind of items" or "well the AC condenser is working and as long as it is they are not going to give an allowance on thiings like that........thousands in almost immediate outlay from your clients.......and the Realltor says that "it will go sooner or later and the warranty will cover that". How many times have all of you heard that?

I do not do summaries. I constantly have clients say that the Realtor does not understand why I do not do "repair addendums" meaning summaries.

My report is my summary.

Anyway, way to long winded and I appoligize. Realtors do have a tremendous amount of money at stake in the sale going thru smoothly. Inspectors have a tremendous amount of money at stake to lose all those Realtor referrals

Is their a conflict of interest with you? Is there a conflict of interest with any of the realtors or any of the Inspectors you know or have known in the past? Is there a chance that there are a lot of folks conflicted with the whole ethics issues no matter they are honest or not?

Time for the referrals from Realtors to any home inspector or home inspect group to go away? How does it stop the ethics and conflicts of interest you say. Have the Realtors get that one more piece of paper signed that states that they cannot give Inspector referrals to them do to a conflict of interest. Then lets see them say to their client "But this is te guy I would use!" Then when there is a problem later and the client comes after the realtor and inspector and other Realtors see their associate lose their licence and an inspector lose his license. Just maybe that will start throwing a reality check into all those that wish to throws ethics out the windoow to make a buck.

Just saying!

Ted, congnraulations on not giving a summary,I also do not give summary and have been taken to task by agents, but I tell them that my report is my summary. The agents in the RE business have changed oRC68YMHUBNJWQ7Yver the years and for ned agents is just a job and some will run over anyonete g

Ted, congnraulations on not giving a summary,I also do not give summary and have been taken to task by agents, but I tell them that my report is my summary. The agents in the RE business have changed over the years and for new agents is just a job and some will run over anyone getting in the way of thier commission. Don't get me wrong, lots of good agents. I started my business in 1974 and lots and lots of changes, I booked 4 inspections a day, One hour for inspection and 30 minutes drive time, Each inspector had thier own version of a report and most used NCR paper with two copies, would go by realtors to get keys for house then dropped off after inspection along with inspection report. Today consumer gets a much better report by better trained inspectors using better and more modern tools. (also, our prices today beat the $45- $60 we charged for average house). I'm winding down my career and only do 2 to 3 inspections a week. Under the pre-recession days about 60% of may business came from realtors and the remainder from referrals from other sources. HOMEGARD INSPECTION.

there you go again ted--if you take even one agent referral----like you admit--stop the contradictions-and being a hypocrite. you dance around the subject--but in fact you TAKE AGENT REFERRALS

CVF

Originally Posted by CHARLIE VAN FLEET

there you go again ted--if you take even one agent referral----like you admit--stop the contradictions-and being a hypocrite. you dance around the subject--but in fact you TAKE AGENT REFERRALS

CVF

You leave me absolutely speechless charlie. You have a nice confused day