Dear Barry: When I purchased my home, I hired a home inspector. The only electrical problem he found was a charred wire in the fuse box. After moving in, I noticed that the lights kept dimming, so I called an electrician. He said that the panel was very old, that the charred wire was actually burnt through, and that some of the fuses were connected to more than one circuit, a condition he called “double-tapping.” Now I need to install a new breaker panel for a whole lot of money. So I called the home inspector. He said that he does not take things apart and inspect the inner workings. If that’s so, then how did he see the charred wire? What do you think I should do? Ryan
Dear Ryan: The home inspector is apparently giving you double-talk. It is the standard of practice for home inspectors to remove the inside cover on every electrical panel to enable inspection of the internal components. As you pointed out, your inspector apparently did this, or he would not have disclosed the charred wire. Therefore, he was in a position to see the other electrical defects and should have disclosed them. Even if he only disclosed the charred wire, his recommendation should have been evaluation and repair by a licensed electrician, prior to close of escrow, especially since this was an outdated fuse panel, rather than a breaker panel. Had he given you that advice, the remaining defects could have been discovered by the electrician before you took possession of the property. If he did not provide full disclosure of the panel defects and did not make the proper recommendation for the charred wire, then he should take some responsibility for lack of disclosure
On the other hand, if he did disclose further evaluation by a licensed electrician, it would have been your responsibility to follow that recommendation. In that case, failure to have followed the inspector’s advice would place the liability back in your court
If by these standards the home inspector remains liable, be sure to take photos of the electrical defects before having them repaired. This will enable you to prove your cased if you file a claim against the inspector
Dear Barry: We bought our home about 6 months ago, and now we are stuck with a bundle of problems that were concealed by the sellers, dismissed by the agent, and overlooked by our home inspector. Unfortunately, our agent was also the listing agent for the sellers, who happen to be her personal friends, and she also selected the person who did our home inspection. The main problem with the house is ground water seepage into the basement. The seller disclosed that there used to be a drainage problem that was corrected, but they provided no documentary proof of the alleged repairs. When we first looked at the property, we noticed a musty smell and pointed this out to the agent. She said, “I’ve been an agent for a long time. This just smells like an old basement, not a moldy one, and I know the difference….” She also persuaded us to buy the property “as-is” so that the sellers would accept our offer. After moving in, we discovered that the basement carpet was wet. When we removed it, we found mold and rot on the baseboards. We have also learned that the sellers hired a contractor to dry out the carpet and repaint the basement before we bought it. The costs to correct the drainage, repair the water damage, and eliminate the mold are very high. What can we do? Patrick
Dear Patrick: If you had written to me during the course of the transaction and said, “Dear Barry, We are buying a home that has musty odors, the dual agent (who is a friend of the sellers) says this is not a problem, the agent has chosen our home inspector, and the agent is persuading us to buy the home as-is,” I would have told you the following: “The agent is representing the interests of the sellers only. You need someone to represent you, which means find an agent of your own to help you negotiate.” I would also have advised you to hire your own home inspector, not an inspector who was chosen by an agent with an apparent bias.
Agents know which home inspectors are the most qualified and thorough. An agent who is more interested in the commission check than doing what is right will recommend inspectors who disclose fewer defects. To those agents, the best inspectors are known as “deal killers.”
My advice is two-fold. First, have your home re-inspected by a qualified professional who has many years of experience and a reputation for thoroughness as an inspector. Whether the agent’s home inspector is liable depends on whether there were visible defects that were within the scope of a home inspection, as defined by industry standards. Call several real estate offices and ask who are the most nit-picky inspectors in the area.
Second, get some advice from a real estate attorney regarding your available options for redress against the sellers and the agent for nondisclosure, and against the home inspector for professional negligence. Certified letters on legal stationary should alert all parties that you are very serious about this matter.
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.
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.
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.