Preferred Vendor Program

[Rick Bunzel]

Anyone familiar with Keller William's Preferred Vender Program. We have a new office opening in our area and when I went in I was ask if I was in the program.
The manager implied they only use people on their list.

Is this one of those pay to play programs?

//Rick

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[Nick Ostrowski]

Yes. Here is the verbiage I have on my website regarding this type of arrangement............

"The Pennsylvania Home Inspectors Coalition, Inc. (PHIC) has become aware of the implementation of a preferred vendor program undertaken by several key area real estate firms across Pennsylvania.

In short, these preferred vendor programs provide that area real estate brokerage firms and their realtors are agreeable to actively promote the home inspection services of those inspectors who have paid 'participation fees'. Ostensibly these fees are portrayed as a means to underwrite certain promotional costs incurred by the brokerages in preparing written marketing materials offered to the general public which highlight the ability of the brokerage to work closely with home inspectors. Hence, consumers are advised by such materials that brokerage firms can offer comprehensive services, including home inspection services, by referring business to known and "approved" home inspectors. No methodology for assessment of a home inspector’s abilities are known other than the payment of the 'participation fees'."

What this means to you as a consumer is that some realtors may be attempting to steer you towards using a specific home inspection company based upon that company's financial contributions towards their office. To an unknowing consumer who views this as a realtor looking out for his/her best interests, this takes control of the home inspection process out of the consumer's hands where it rightfully belongs. We view this as a conflict of interest. Strong Foundations Home Inspections does not participate in or promote preferred vendor lists in any way and encourages you as a consumer to exercise your right to hire the home inspection company of your choice. As long as you are the one paying for the home inspection services, the decision as to which home inspection company inspects your home is yours.

[Ted Menelly]

Anyone familiar with Keller William's Preferred Vender Program. We have a new office opening in our area and when I went in I was ask if I was in the program.
The manager implied they only use people on their list.

Is this one of those pay to play programs?

//Rick

In short you give them money. They do next to nothing to promote you. You may be listed on a wall in the office somewher. But, as you know Realtors have there own preferrences for home inspectors which outways the offices list ten fold and wipes your efforts almost out all together.

You may very well get some referrals from being on the "preferred vendors list" but nothing substantial unless you are a serious schmoozer to Realtors and then they will pass your name around.

[Garry Sorrells]

And what are the HI organizations doing to get this practice outlawed???

[Ted Menelly]

And what are the HI organizations doing to get this practice outlawed???

Absolutely nothing

I know several leaders that teach others to use realtor friendly terms and exactlt how to market them and what words to use in your marketing. I know of one association pres that after his first year as an inspector he was the pres of the association and boasted of 45 realtors that used him solely as an inspector referral and he would teach anyone that wanted to know how to get in with the Realtors. It certainly was not from his inspection experience

[Michael Thomas]

I guess this fits as well here as anywhere...

I don't think they're going to put me on the preferred vendors list at any price .

Still, since I've gotten the reputation of being a "deal killer" in certain offices, (I recently had a client tell me he'd selected me because he had heard agent describe me as "the last person you would want inspecting a house if you were the seller") I've been thinking a bit about what this means.

I do know a few home inspectors who absolutely glory in the description, including one entire multi-inspector firm here in Chicago who seem to believe that scaring a client to death is how they demonstrate their value, independence and competence.

I've never felt this way: I feel strongly it's not my place to give clients advice about what they should or shouldn't do, but rather to give the most accurate information I can about their options to deal with problems I find.

My opinion is that there are few if any defects I discover that can't be corrected if your are willing to undertake the expense and inconvenience of doing so - that most properties I inspect could be a sensible purchase for some buyer at some price - and that it's not my place to be making decisions for clients with regard to their tolerance for expense and inconvenience.

That doesn't mean that I'm pulling punches in my reports, or that I'm shy about pointing out the clients just how much expense and inconvenience they might be signing up for - I wouldn't be "killing" as many deals as I do if I was soft-pedaling my findings.

But it also means that I spend a good deal of time putting "scary" problems in perspective for clients, even when it might be easier (and might generate income from an additional inspection) to let client misconceptions cause them to walk away from a property they might otherwise have purchased. (An example would be directing them to objective sources of information on the hazards of asbestos containing materials).

So it seems to me that my opinions about how inspection should be conducted and reported cuts both ways:

There were times when I'm seeing things that some other inspectors might miss, and/or my reporting methods might make it more clear to clients what they're getting into them someone else's report.

But if the deal falls apart as result, I'm not the perp, I just attended the autopsy.

OTOH, I'm not (as I know some other inspectors are doing) writing my reports as an exercise in liability control by maximizing client concerns about what I find.

Now, I don't spend much time worrying about what real estate agents think about me, or my inspections or reports.

But sometimes I wish more of them understood the difference.

[Nick Ostrowski]

And what are the HI organizations doing to get this practice outlawed???

That's exactly the problem I have with the national organizations and their "code of ethics" stuff. By their code of ethics, you can't perform any work on a house you inspected.....BUT......you can buddy up the realtors who are responsible for setting up the majority of inspections, drop food at their office, and generally lick their boots to get work. Just because a company isn't outright paying money to be on a list doesn't mean the other stuff is OK.

[Scott Patterson]

IMVHO, I do not have a problem with the preferred vendor programs like Keller Williams does. It is open to anyone that is willing to pay the fee to be listed, they do not limit how many folks can be listed under a specific profession. It is a business and ethical decision if a person wants to pay to be listed.

I look at it as a form of advertising. Agents are not forced to recommend folks off the list, I have several Keller Williams agents that refer me and I;m not on any preferred vendor list.

The preferred vendor program is different than "pay to play" type programs from what I have seen. As long as it is open to anyone who wants to pay the "advertising" fee then it is legal I think under just about all laws.

Personally, I have never seen the need to pay anyone or anything just to be listed on a list or to receive referrals.

[Steven Turetsky]

I guess this fits as well here as anywhere...

I don't think they're going to put me on the preferred vendors list at any price .

Still, since I've gotten the reputation of being a "deal killer" in certain offices, (I recently had a client tell me he'd selected me because he had heard agent describe me as "the last person you would want inspecting a house if you were the seller") I've been thinking a bit about what this means.

I do know a few home inspectors who absolutely glory in the description, including one entire multi-inspector firm here in Chicago who seem to believe that scaring a client to death is how they demonstrate their value, independence and competence.

I've never felt this way: I feel strongly it's not my place to give clients advice about what they should or shouldn't do, but rather to give the most accurate information I can about their options to deal with problems I find.

My opinion is that there are few if any defects I discover that can't be corrected if your are willing to undertake the expense and inconvenience of doing so - that most properties I inspect could be a sensible purchase for some buyer at some price - and that it's not my place to be making decisions for clients with regard to their tolerance for expense and inconvenience.

That doesn't mean that I'm pulling punches in my reports, or that I'm shy about pointing out the clients just how much expense and inconvenience they might be signing up for - I wouldn't be "killing" as many deals as I do if I was soft-pedaling my findings.

But it also means that I spend a good deal of time putting "scary" problems in perspective for clients, even when it might be easier (and might generate income from an additional inspection) to let client misconceptions cause them to walk away from a property they might otherwise have purchased. (An example would be directing them to objective sources of information on the hazards of asbestos containing materials).

So it seems to me that my opinions about how inspection should be conducted and reported cuts both ways:

There were times when I'm seeing things that some other inspectors might miss, and/or my reporting methods might make it more clear to clients what they're getting into them someone else's report.

But if the deal falls apart as result, I'm not the perp, I just attended the autopsy.

OTOH, I'm not (as I know some other inspectors are doing) writing my reports as an exercise in liability control by maximizing client concerns about what I find.

Now, I don't spend much time worrying about what real estate agents think about me, or my inspections or reports.

But sometimes I wish more of them understood the difference.

Many of your words are my own, and I agree that it is not my place (in most circumstances) to qualiy or disqualify a home. Almost anything can be correced. It is more a matter of if the buyer wants to get invoved with the process of correcting what is there, and if it is worth the trouble.

Most of any deals that have fallen apart because of what was discovered during an inspection that I conducted was because the seller did not wish to negeotiate.

[Stuart Brooks]

Don't need it and I won't pay it. When I have agents that want real inspections who provide referrals, prior clients referring me, and even contractors asking me to inspect there homes or purchases, I don't need or want referrals from bottom feeders.

[Barry Signor]

The problem with scott's reply is, although the preferred vendor programs may be open to all, if you don't pay the fee you can't display cards or brochures in the office. As a preferred vendor you are allowed access to agents through meetings, presentations, etc. So although they may refer someone out of the program, it's about the access. In some states that this type of affiliation is not allowed under the licensing laws, so they have just performed a bit of word smithing and continue with the practice.

[David OKeefe]

It is against the New York State code of ethics for licensed home inspectors.

Section 197-4.7 Conflicts of Interest

(e) Home inspectors shall not directly or indirectly compensate, in any way, real estate brokers, real estate salespersons, real estate brokerage companies, lending institutions or any other party or parties that expect to have a financial interest in closing the transaction, for future referrals of inspections or for inclusion on a list of recommended inspectors or preferred providers or any similar arrangement.

[David OKeefe]

It is also against InterNACHI code of ethics.

Duty to the Public

6. The InterNACHI member shall have no undisclosed conflict of interest with the client, nor shall the InterNACHI member accept or offer any undisclosed commissions, rebates, profits or other benefit, nor shall the InterNACHI member accept or offer any disclosed or undisclosed commissions, rebates, profits or other benefit from real estate agents, brokers or any third parties having financial interest in the sale of the property, nor shall the InterNACHI member offer or provide any disclosed or undisclosed financial compensation directly or indirectly to any real estate agent, real estate broker or real estate company for referrals or for inclusion on lists of preferred and/or affiliated inspectors or inspection companies.

[David OKeefe]

It is also against ASHI code of ethics.

1. Inspectors shall avoid conflicts of interest or activities that compromise, or appear to compromise, professional independence, objectivity, or inspection integrity.


C. Inspectors shall not directly or indirectly compensate realty agents, or other parties having a financial interest in closing or settlement of real estate transactions, for the referral of inspections or for inclusion on a list of recommended inspectors, preferred providers, or similar arrangements

[Rick Cantrell]

I do not see a problem with an inspector that "advertises" in a Realtors magazine or otherwise. However I don't think he should do so if it is promoted as "preferred" or "recommended".

[Scott Patterson]

In my area many agents have left KW due to the fees they charge to their agents and also to the home buyers. I think CB was the first to have this type of pay to be listed program and it pretty much fizzled after a few years.

Personally I really do not care if a person pays to be listed or not. It does not impact my business or the way I do business, heck if I depended on a silly list for business I would have been out of business 15 years ago!

[Hank Spinnler]

IMVHO, I do not have a problem with the preferred vendor programs like Keller Williams does. It is open to anyone that is willing to pay the fee to be listed, they do not limit how many folks can be listed under a specific profession. It is a business and ethical decision if a person wants to pay to be listed.

I look at it as a form of advertising. Agents are not forced to recommend folks off the list, I have several Keller Williams agents that refer me and I;m not on any preferred vendor list.

The preferred vendor program is different than "pay to play" type programs from what I have seen. As long as it is open to anyone who wants to pay the "advertising" fee then it is legal I think under just about all laws.

Personally, I have never seen the need to pay anyone or anything just to be listed on a list or to receive referrals.

Scott, I am surprised that you did not take a position against these pay-to-play programs as a violation of ASHI's CoE. This topic has come up time and time again in the ASHI Reporter and website. The problem with KW is that they don't care about what inspector associations require of us because they demand the revenue for use with various KW programs. Each office wants $300 to $500 to gain access to their agents via quick face-to-face introductions at meetings, attending functions, being included on various on-line and printed lists, being able to display brochures and cards. This is all done with the expectation of receiving referrals from agents who are encouraged to work off the list to support their preferred vendors who paid a fee. Many tow the company line and will not venture off the list. Otherwise, they are pressured to try "X" company or refer three of them.

At their discretion, they will limit the number of inspectors on the list. One office has 4-5. In my area, they use no criteria to qualifity anyone. There are several non-ASHI or NACHI members without code certifications, E & O, etc. on their list. Just as long as they are vouched for by one or more Realtors and they are in under the cut off on numbers, they're good.

[Scott Patterson]

Scott, I am surprised that you did not take a position against these pay-to-play programs as a violation of ASHI's CoE. This topic has come up time and time again in the ASHI Reporter and website. The problem with KW is that they don't care about what inspector associations require of us because they demand the revenue for use with various KW programs. Each office wants $300 to $500 to gain access to their agents via quick face-to-face introductions at meetings, attending functions, being included on various on-line and printed lists, being able to display brochures and cards. This is all done with the expectation of receiving referrals from agents who are encouraged to work off the list to support their preferred vendors who paid a fee. Many tow the company line and will not venture off the list. Otherwise, they are pressured to try "X" company or refer three of them.

At their discretion, they will limit the number of inspectors on the list. One office has 4-5. In my area, they use no criteria to qualifity anyone. There are several non-ASHI or NACHI members without code certifications, E & O, etc. on their list. Just as long as they are vouched for by one or more Realtors and they are in under the cut off on numbers, they're good.

.

Don't be surprised, there are many things that I do not agree with in ASHI. Even though I do not agree with somthing it does not mean I do not abide by it.

My experience has shown me that a good percentage of my clients find me on their own and without the help of their agent. I have noticed a large increase in prospective clients not using the "agent recommended" inspector and they are finding their own inspector. Now this does not mean I do not have agents who refer me, I do. I have gained those agents respect through past work with their buyers. I have several agents who exclusively refer me, many of the homes they deal in are high end homes and their clients want them to handle all aspects of the sale.

I just do not put much salt on "preferred vendor" list, maybe at one time they were used more than now by uninformed buyers but that has changed with the use of Google and the Internet. I just can not see home inspectors surviving by depending on referrals from real estate agents. You have to build that referral base from other sources than list and literature in real estate offices. I would estimate that around 25% of my business is from a direct referrals from real estate agents.

[Ted Menelly]

.

Don't be surprised, there are many things that I do not agree with in ASHI. Even though I do not agree with something it does not mean I do not abide by it.

My experience has shown me that a good percentage of my clients find me on their own and without the help of their agent. I have noticed a large increase in prospective clients not using the "agent recommended" inspector and they are finding their own inspector. Now this does not mean I do not have agents who refer me, I do. I have gained those agents respect through past work with their buyers. I have several agents who exclusively refer me, many of the homes they deal in are high end homes and their clients want them to handle all aspects of the sale.

I just do not put much salt on "preferred vendor" list, maybe at one time they were used more than now by uninformed buyers but that has changed with the use of Google and the Internet. I just can not see home inspectors surviving by depending on referrals from real estate agents. You have to build that referral base from other sources than list and literature in real estate offices. I would estimate that around 25% of my business is from a direct referrals from real estate agents.

Scott

I do not know if you will take this as a compliment or a bash but you are sounding like me more and more everyday.

You do know that the last statement in particular will either get you called a liar or at the least a statement like "that is absolutely impossible.


I should have highlighted your entire post. I agree with it all.

[Hank Spinnler]

Thanks for the reply Scott. Yes, from prior posts, I have a good idea of what your referral sources are and that you do so without participating in paid vendor programs. I know first-hand that a number of producing agents choose who they refer business to. I think on the flip side, it's a challenge to obtain a high volume of inspections without Realtor referrals. Despite the internet, there's a new lineup of uninformed buyers stepping up to the table every day. "What exactly do you do?" Or more commonly, "How much do you charge?" is all they can think to ask.

Realtors hold relationships with buyers over a period of time and many trust their recommendation. This has been the source of many lively discussions.

[Scott Patterson]

Hi all, and Thank you (Ted too) for the complements and understanding how I operate my business.

I have been at this gig full-time since 1995 and during that period of time I have tired and seen just about everything when it comes to marketing. When I relocated in 2006 I had to start from scratch reestablishing my business in an economy that was faltering and then floundering. While others were failing and closing their doors I was building my business.

What works for me might not work for others, it is all about ones personality and people skills. I feel that I can read a person pretty well and adapt my personality to theirs. In my market I deal with folks who look like they are on their last dime. They might drive up in an old truck that afternoon and the next day they could be performing on stage in another state after flying in their own jet or driving in their tour bus to the event. You just never know who you are dealing with. I say all of this to bring out the point that we need to be aware of our clients and adapt (even though you might not like it) as the situation presents itself.

Breakaway from the pack and the others and do what works best for you. Don't worry what others are doing or how they are getting business. Keep your business and personal ethics to the highest standard you can and you will be rewarded down the road.