Featuring America's Home Inspector: Nationally Syndicated Columnist, Barry Stone
Alleged Collusion Among Agents and Home Inspectors

Alleged Collusion Among Agents and Home Inspectors

The House Detective: by Barry Stone, Certified Home Inspector

Dear Barry:  As an expert witness in construction defect lawsuits, I see many cases involving home inspectors who fail to disclose defects or who minimize the findings in their reports. In most cases, these inspectors are members of the American Society of Home Inspectors (ASHI) or similar associations. One inspector confided that too many problems in his report might “kill” a sale and the agent would no longer recommend him to buyers. Another inspector said he was expected to “work with the agents;” not to raise red flags or be too “nit-picky.” This is disturbing because home inspector referrals come mainly from agents. It also indicates that inspector organizations are not policing the industry very well. Perhaps ASHI or their insurance carriers could maintain a database of court rulings against inspectors and agents. The industry needs to do its job before the government steps in.  Ray

Dear Ben:  Your position as an expert witness exposes you to the worst examples of home inspectors and real estate agents. Without doubt, there are ethical disparities and conflicts of interest among some agents and home inspectors, and it is these unprincipled relationships that engender so many of the courtroom dramas in which you testify. But fortunately, there is a brighter side to the world of real estate and home inspection; one whose characters rarely stand in the shadow of a judge’s bench. So let’s examine the darker and lighter sides of disclosure practices, beginning with those professionals who recommend home inspectors to their clients.

Basically, there are two kinds of real estate agents: Advocates and Hucksters. Advocates are the honorable standard bearers of an often unfairly maligned profession. Advocates are those who truly represent the very best interests of their clients; who actively promote the defect disclosure process, and who recommend only the most qualified home inspectors. Advocates would rather kill a sale and find a better property for their client than to have the client be unhappy after the sale. Advocates know that doing the right thing attracts future business.

Unfortunately, there are also the huckster agents, those who keep attorneys busily employed, who denigrate the hard-earned reputations of the honorable advocates, and who boycott the most qualified home inspectors. Hucksters represent their own financial avarice at the expense of their clients. They compromise the disclosure process by seeking those inspectors who are less likely to provide full defect disclosure. They recommend inspectors who are less experienced, less capable, or who are willing to exchange principal for increased business. A huckster would rather close the sale than jeopardize the immediate flow of commission checks. To a huckster, top-notch home inspectors are known as “Deal Killers.”

Among home inspectors there are also two basic varieties: experienced practitioners and developing practitioners. But even within these divisions, we find the same ethical contrasts that define agents: either a total commitment to the client’s interests or a general disregard for same. Adversely affecting this situation is the reliance of most home inspectors upon agent referrals for the majority of their business. Agents understand this, and some have learned to exert subtle pressure. Nothing overt; just a simple hint such as, “We just want to know that everything is structurally sound, so please don’t be nit-picky.” Another favorite is, “This deal is important; so we need a really good report.” Inspectors who do not accede to these coded messages, who are fully committed to the buyers’ interests, needn’t expect future referrals from those agents. The choice then is well defined: either become a “street walker” for unscrupulous agents, or rely strictly upon the referrals of advocates.

As to the consumer advocacy of ASHI and similar organizations, professional integrity among member inspectors can be influenced and encouraged, but it cannot be forced. Honesty can only derive from a willingness to be honest. A database of inspectors and agents who have been successfully sued could be published, but would this truly be a reliable determinant? We live in the age of frivolous lawsuits, a surreal business world in which McDonalds must serve tepid coffee, lest we victims burn our litigious laps. If the seller of a home fails to disclose a defect that was unknown to the agent and concealed from the home inspector, the attorneys still name the agent and the inspector as defendants in the suit.  And sometimes the juries rule against them, regardless of innocence of guilt.

In an imperfect world, “buyer beware” remains the essential caveat for those who purchase a home. The best way a buyer can beware is to find an “Advocate” for an agent and a home inspector with a reputation for thorough, accurate, unbiased inspections.

Buyers Afraid To Cancel Bad Deal

The House Detective: by Barry Stone, Certified Home Inspector

Dear Barry:   While on leave from the military, we bought a home that was totally misrepresented. According to the listing, it was a 2300 square foot, four-bedroom, lake view house. During the escrow, we read the tax documents and discovered that the home is actually 2000 square feet with only three bedrooms. We also learned that the fourth bedroom is an unpermitted addition and the “lake” is a retention pond. When we tried to cancel the sale, the seller threatened to keep our deposit and take us to court. We consulted an attorney, but he said he couldn’t do anything in this case.  So we closed escrow and now owe more than the current appraisal value of the property. What can we do?  Doug

Dear Doug:    It is very disappointing to know that you closed on the property. Once you learned that the listing details were false, you had every right to cancel the sale. The sellers could not have gotten your deposit without taking legal action, and they had no basis for their claim because they were guilty of fraudulent misrepresentation and violation of seller disclosure laws. The same culpability applies to the listing agent, who should definitely have known better. Furthermore, anyone who would abuse members of our military in this way can add “scum-hood” to their other reprehensible attributes.

The fact that your attorney did not advise you not to buy the property is actually astonishing. It’s hard to image someone with a law degree being so bereft of common sense. At this point, you need some better advice from a more reliable real estate attorney. 

Agent Gives Bad Inspection Advice to Buyers

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:We are currently buying a home and are troubled about our recent home inspection. Our agent recommended this inspector as the one she always uses, and she advised us not to attend the inspection, saying that most buyers do not attend home inspections. We have since learned that most agents give buyers a list of three home inspectors, advising them to choose one. We would actually like to hire another home inspector for a second opinion, but we don’t want to offend our agent. We can’t afford to buy a fixer-upper and are wondering what we should do. What do you recommend?  Jenn

Dear Jenn:  Choosing a home inspector can be a problem when you rely on someone else’s choice rather than your own. When referrals come from Realtors, the results can be good or bad, depending on the agent. Some Realtors recommend qualified home inspectors and some do not. Some give a list of three qualified home inspectors, and some give lists of mediocre inspectors. Therefore, whether you were given a list or a single referral is not a determining factor.

The red flag in your situation was your agent’s advice not to attend the inspection. No knowledgeable, experienced agent who is honest and ethical would give such misleading advice to a client. Your presence at the inspection was not only a good idea; it was essential. You are on the verge of making an extremely expensive investment. Your home inspector is there to educate you about the condition of the property so that you can make a wise purchase decision. What your agent did was to limit your exposure to the information you need from your inspector. Again, this is not something that an honest and ethical agent would do.

A second home inspection is definitely a good idea, and you should not worry about whether this is objectionable to your agent. It is her job to protect your financial interests. If she doesn’t perform that duty, you need to do it for yourself. If a second inspection reveals defects not found by the first inspector, your agent should reimburse you for the first inspection.

Home Inspector Pans Remodeled Home

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  We’re selling our house after spending $150K on a complete remodel. The place is in excellent shape, but the buyers’ home inspection report was hideous! The inspector said the toilets are loose and need new seals, but they were installed less than a year ago, and we can’t budge them. He also said the framing is rotted under the house, but we’ve had all of that repaired. When we asked why there were no foundation photos in the report, he said he “didn’t want to get his camera dirty.” We think the inspector wrote a bad report to help the buyers negotiate a lower price. Another related problem is that we wanted to be home during this inspection, but the buyers’ agent said it was illegal for us to be in the house when the inspection was being done. This is such a mess, but we don’t know what to do. What do you recommend?  Randi

Dear Randi:  If the home inspector’s findings are questionable, you should state your concerns in writing to the buyers, and the inspector should verify his findings with photos. If he doesn’t want to get his camera dirty, he should cover it with a plastic bag while he is under the house, or perhaps he can borrow your camera. Either way, he should show exactly what he saw regarding the alleged wood rot.

It is also wise to hire your own home inspector to provide a second opinion of the property’s condition. If the reports agree, you can have the defects repaired. It they differ, the one whose finding agree with the photos wins. If the buyers back out of the deal, the second inspection report will help to provide disclosure to future buyers.

As for the Realtor: The idea that it is illegal for you to be in your own home during a home inspection is preposterous. It is your home. You own it. You have the right to be there any time you want, regardless of home inspections or other circumstances. The agent can request that you not be home during the inspection, but no one can legally compel you to leave your home.

Agent Advises Buyers Not to Attend Home Inspection

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry:  We are in escrow to buy a home, and we hired the home inspector who was chosen by our real estate agent. When my husband asked if he could attend the inspection, our agent told him there was no need to attend and that most home buyers don’t. Not knowing any better, we agreed to hire her inspector and simply wait for the report. Since then, we’ve read articles that say an agent should give buyers a list of home inspectors from which to make their own choice. Now we want to hire an inspector of our own to do a second inspection, but we don’t want to offend our agent. At the same time, we don’t want to buy a money pit because we didn’t get a good inspection. What do you advise?  Jenn

Dear Jenn:  Choosing the inspector for you, rather than allowing you to choose for yourselves, may or may not have been a bad thing. Some agents choose inspectors who are competent and highly qualified, while other agents choose inspectors whose work is not very thorough. Likewise, there are agents who give their clients a list of competent home inspectors, while other agents provide lists of the less qualified.

Your agent’s big mistake was advising you and your husband not to attend the inspection. Agents who are honest and ethical do not give that kind of misleading advice to clients. Your presence at the home inspection was more than just a good idea: It was essential. You are on the verge of making an extremely high-cost investment. The home inspector was there for one purpose — to educate you about the condition of the property so that you could make a prudent purchase decision.

In advising you not to attend the inspection, your agent has limited your exposure to the information you need from your inspector. Again, that is not something that an ethical agent would do.

A second inspection by a home inspector of your choice is not a bad idea, and you shouldn’t worry about whether this is objectionable to your agent. It was her job to protect your financial interests. If she is not performing that duty, then you should do it for yourselves.