Truth About Real Estate Agent Referred Home Inspectors

Buyer Protection or Buyer Deception

This report discloses the inherent problems associated with agent referred home inspections.

With close to 70% of home inspections being referred by agents, There is significant cause for concern.

Also see "Tricks of the trade video"

The views and opinions expressed here do not apply to all real estate agents and home inspectors.  There are many good honorable agents out there that want their clients to be protected and will refer good inspectors who feel the same way.  This report is provided as cautionary advice and insight and is based on personal experience, feedback from clients, conversations with home inspectors, attorneys and real estate agents.

What's Wrong With A Real Estate Agent Recommending A Particular Home Inspector To A Prospective Home Buyer? Most real estate agencies work on an average commission of 6% paid by the seller of the property. On a house selling for $350,000 there is a potential commission of $21,000. Sometimes a selling agent will recommend particular home inspectors to a prospective buyer, sometimes a list of three is given out. Who are these recommended inspectors? How did they "qualify" to get on the "approved" list of the agent? Is the agent recommending a thorough non-bias inspector or is the agent recommending someone who will help protect the potential $21,000 commission? Unfortunately, some real estate agents view a thorough and non-bias home inspection as a threat to their sales commission.

Shouldn't a prospective homebuyer have the right to use an inspector of their own choosing? If a real estate agent tells you that you cannot use an inspector of your choosing, or insists that you use one of their "recommended" or "approved" inspectors, you should contact your attorney. (You should also wonder why they don't want you using an independent inspector of your choosing.) A real estate broker or sales agent who tries to get you to use an inspector of the agent's choice is trying to control the home inspector selection process. Prospective home buyers must keep in mind that real estate agents who receive a commission from the property seller, are working in the best interest of their client, (the seller.) As the prospective home buyer, shouldn't the home inspector you're paying for, be working in your best interest?

What Is A "Deal Killer"? The derogatory phrase "deal killer" is often used by real estate agents to describe independent home inspectors who give buyers objective information in an inspection report, which may lead the buyer to renegotiate or to look at other properties. Many real estate agents view independent home inspectors as a challenge to their ability to generate income. They view these "deal killers" as foes and will use a number of tactics to control the inspector selection process to make sure that the prospective buyers do not retain independent home inspectors.

How Does A Real Estate Agent Control The Inspector Selection Process? There are many tactics used, some subtle and some not so subtle. The agent may discourage the potential buyer from using a certain inspector by making comments like: "That inspector is a deal killer", or "that inspector takes too long" or "we've had trouble with that inspector" or "we don't allow that inspector to inspect any of our listed properties" or "that inspector is too expensive." A twist on the fee tactic is to advise the prospective buyer that they should expect a home inspector to charge around $150 or $200. By advising homebuyers to expect these low (unrealistic) fees, agents are trying to steer homebuyers to certain inspectors, because the prospective homebuyers might limit their search to the arbitrary price range set by the real estate agent.

The tactics used to encourage a prospective buyer to use a particular inspector include: "We've had good luck with this inspector" or "this inspector has the lowest fee" or "we use this inspector all the time" or "this inspector can schedule an inspection on a day's notice" or "this inspector only takes an hour and he gives you a report right on the spot." For instance, in the first stage of discussion about having the home inspected, the real estate agent may recommend to the buyer a "good" home inspector with whom they have worked with for several years. Some agents may have a list of three inspectors who have been carefully screened not to be 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 gives the agent the perfect combination of: A) No liability for the referral; B) The buyer "chooses" an inspector the agent prefers; and C) The buyer's choice is limited to home inspectors who will not hurt the sale.

Set up your own home inspection. If you already know an inspector from prior use or a family friend referral, call them personally to set the appointment.  Several times a year we hear from past clients that say they where sorry we couldn't do their home inspection which is never the case. What happens is that their agent volunteers to call their inspector to set up the appointment. They'll either go back to their client and say the home inspector could not schedule it in time or wasn't available.  Sometimes the agent even calls the office and ask leading questions with "no" answers, like My clients wants to use you for their inspection, can you do an inspection Sunday night for $150.00? Of course the answer is no. But when we ask them their name or the clients name, they never say. Then they go back to their client and give them the bad news, but not without the good news. Which is, I was able to set an appointment with "my inspector" who is available.

 

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