Realtor Referrals

[Russ Porter]

I am not sure if Realtor referrals should actually be legal. Based on the home inspection report, the Realtor could possibly make thousands of dollars. This to me seems to be a conflict of interest. I know this is how it is done and has probably always been this way, but does anyone see the conflict here? I know in a perfect world the realtor would choose the best inspector for the client and would not care about the money. Do we live in a perfect world? To keep honest people honest, buyers should have to do there homework and ask questions ( the realtor could help with questions to ask) when they call Inspectors. Don't get me wrong, i'm sure there are many Realtors out there that care about their clients and not just a buck. A home inspector can't price and repair an electrical problem he has found, and that makes perfect sense to me. I just think it make it to easy to pick and choose an inspector with a soft report.

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[Ken Rowe]

This topic comes up over and over on here.

If you, as an inspector, believes there is a conflict with taking referrals from agents, then simply stop taking them. Stop marketing to agents, stop going to Realtor based networking sites, stop joining real estate associations and most of all stop taking inspection orders from agents. Russ, I'm not using the word "you" as you yourself. I'm stating "you" as in all inspectors who believe it's improper to take agent referrals.

I myself believe agent referrals are fine, as long as the inspector is ethical and does not sway the inspection in favor of the referring agent. I've stated previously that I receive approximately 80% of my work from agent referrals. Just last week I had to tell an agent that I would no longer do inspections for clients of hers after she outright told me that I was working for her and needed to stop killing the deal. (it was not a calm phone conversation)

I honestly don't see the problem as agent referrals. I see it as unethical inspectors trying to feed off of the agents. So why punish the ethical inspectors because of the actions of those unethical inspectors?

[Markus Keller]

As Ken mentioned this comes up over and over. Realtor referrals don't have to be inherently bad. Granted realtor / HI referrals can be bad. There are certainly a fair amount of agents who love to refer soft, checkbox guys. If the deal doesn't close, the agent doesn't get paid.
I don't get a lot of agent referrals. Agents don't like thorough inspectors. Agent referrals for me are usually for their relatives, picky clients or lawyer clients. On a recent inspection ...
Car pulls up, I assume its the client, I see a woman in the passenger seat who looks familiar; Client and agent get out of vehicle
Agent says, 'Hi Markus, I bet you thought I'd never refer you'. I've delayed her paycheck on a few other deals and I know she doesn't like me. I like her well enough though. She seems like a pretty decent agent overall. However, the problem is she doesn't get paid for another month or two if the buyer chooses not to buy the 1st house I inspect for them.
Luckily my business is based on client referrals rather than agent referrals. Make the client happy and the rest will follow.
It's also important to understand that the home buying process can be very stressful and complicated for new buyers. 1st time buyers often need all the help a good agent can provide. This can include getting an HI. Disallowing agents to refer HI's probably would not be a good idea in the long run for some buyers and the overall market.

[Scott Patterson]

Ditto what Ken and Markus have said.....

[Marc M]

I am not sure if Realtor referrals should actually be legal. Based on the home inspection report, the Realtor could possibly make thousands of dollars. This to me seems to be a conflict of interest. I know this is how it is done and has probably always been this way, but does anyone see the conflict here? I know in a perfect world the realtor would choose the best inspector for the client and would not care about the money. Do we live in a perfect world? To keep honest people honest, buyers should have to do there homework and ask questions ( the realtor could help with questions to ask) when they call Inspectors. Don't get me wrong, i'm sure there are many Realtors out there that care about their clients and not just a buck. A home inspector can't price and repair an electrical problem he has found, and that makes perfect sense to me. I just think it make it to easy to pick and choose an inspector with a soft report.

We're referred by over 300 agents all of which understand that we work for our clients and aren't interrested in closing their deal for them. If they're with that, cool. If not...., c-ya.

[James Duffin]

I think that Realtor referrals help protect buyers from not so good inspectors. If a Realtor knows of a good inspector that can be trusted it is to the buyers advantage to be aware of that inspector. Of course the buyer can still use who they want so the referral is just one name on a list of many.

[Ted Menelly]

I am not sure if Realtor referrals should actually be legal. Based on the home inspection report, the Realtor could possibly make thousands of dollars. This to me seems to be a conflict of interest. I know this is how it is done and has probably always been this way, but does anyone see the conflict here? I know in a perfect world the realtor would choose the best inspector for the client and would not care about the money. Do we live in a perfect world? To keep honest people honest, buyers should have to do there homework and ask questions ( the realtor could help with questions to ask) when they call Inspectors. Don't get me wrong, i'm sure there are many Realtors out there that care about their clients and not just a buck. A home inspector can't price and repair an electrical problem he has found, and that makes perfect sense to me. I just think it make it to easy to pick and choose an inspector with a soft report.

Hi Russ

Contrsay to my fired up speach on the does and don't of taking referrals I will start off by saying I agree whole heartedly

This is not about one not taking referrals from Realtrors

This is about what Ken mentioned in his reply. He had a Realtor that thought he was going to be working for her. He set her straight and politely told her or maybe even heatedly told her that he would not take referrals from her.

That was great and I applaude him for taking that stance

The idea that this changes anything is the furthest from the truth that it could possibly even imaginably be.

Again it is not "refuse the referral and you take care of the problem". You can take rfeferrals. Ken can take referrals and it may never cause a problem. You , he or I may never cause a problem or form any unethical bonds.

It is the guy after Ken that does kiss up to that Realtor. He will act as and even scurry around for her and polish her shoes and wax her vehicle to get the inspections. he is working for a living. You are working for a living. I am working for a living. It is based on money and no matter how much anyone wants to give you the heart felt "I do this because I like helping people" Well, thats great but in the end it is bull. He she and all the others are doing this to hopefully not just make a living but hopefully are working for our future. We might love what we do and we may love helping folks and giving the client kids bunnies and all but we are in it for the money.

Every single inspector on here, if they have been around for any time at all know the story Ken told all to well. It happens. It happens every day of the week. The only way to keep it from happening is to have an all out ban towards realtors keeping them from pointing in any direction to an individual or a group of inspectors. That will just about nip it in the butt.

Until then even I take Realtor referrals becuase sometimes it makes upwards near 20% of my work load. 20% is horrifying compared to others. Ken states constanly as well as many others that they get anywhere from 80 to 100% of their work from Realtor referrals. I wish things were not the way they are so I would market heavily to Realtors heavily and smooze my way to the top of the food chain but things are the way they are so I do not. I actually tell Realtors up front what the rules are in referring me. That may sound a might brash but hey, if they want to refer me then they know from the start that I do not and will not work for them and what I see at an inspection is what and how I write it. The Realtors that agree upfront with that refer me and keep referring me. The ones that do not agree get all huffy and say they would never refer me because if they are going to refer me then they are going to make the rules, not me. If they don't say it directly they sure do infere it. And of course some tink I am to abrupt and may kill the deal.

Anyway Russ. I agree completley about the possible and in many cases very probable ethics issues that can arrise when the Realtor stands to make 10,000.00 off of your 350.00 inspection. Until the day comes that this ban takes place (most likely not) I will take the few miserable referrals I get from Realtors. If I were to lose those referrals or if all inspectors were to lose those referrals, the inspections would still be there. Funny part about that. Then everyone would have to work for those inspections, and not just shmooz. It is not an easy road at all. Trust me. I have been doing it this way, well, forever! That is why most home inspectors will rally round to keep anythng like that from ever taking place.

My rant has taken enough of this thread. Good luck Russ. Trust me. You are, for now, fighting a losing battle as you have already been told or suggested to by others. Trust me on this as well. Keep it short and do not stand too hard on what you speak or this thread will go on for days from thjose defending their God given right to get Realtor referrals and you wiull hear from all that they all crank out hard reports and don't kiss up. Again, it is not them. It is the other guys that dont speak up that do all those things and it does, really does, happen everyday. Tell all the nice folks you are not talking about them but the other guys for the reasons why there should be a ban. They will love you for it and not attack back so hard but they will still tell you the best way to resolve the problem is for 'you' to stop taking referrals if you don't like it

Good night gentlemen

[Russ Porter]

I would like to thank everyone for their replies.I didn't know this was a subject that has been discussed many time before. I guess I should have looked around a little before posting. Anyway, I didn't post this to try and
"beat up" any inspectors or agents for taking or giving referrals. I think we would hope that all inspectors would handle a situation with an agent that is giving them an ultimatum the way Ken did. It was the right thing to do. I believe this referral process could possibly sway some inspectors the other way to get work, espcially in a slow market or tough economic times ( everyone likes to eat now and then). I'm not sure how often this takes place across the country, or North America should I say. And yes, there are many good ethical inspectors and many good ethical realtors out there. However, with this possible confict of interest/referral process, I still believe it leaves a hole...a hole in which one could easily fall in. And thats bad for everyone. I think Ted's reply stated what was on my mind better than I did. Anyway, no....I'm not going to round up a posse and head to the Capital and protest agent referrals ( from watching the news, the streets are too crowded anyway). I just wanted to see if anyone had the same view. Again, thanks for responding to the post.