Featuring America's Home Inspector: Nationally Syndicated Columnist, Barry Stone

New Home Inspector Feels His Oats

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: In one of your articles, you said, “The essential purpose of home inspection is to disclose property defects.” If that is true, why don’t home inspectors use the top tools of the trade, such as thermal cameras, borescopes, and moisture meters? In my opinion, most home inspectors are retired general contractors with a lock on Realtor referrals. I am a new home inspector, but I provide a far more thorough inspection than my competitors who don’t use specialized testing equipment. The problem, however, it getting real estate agents to refer me to their clients They all seem to use the same few home inspectors who have been here forever. Can you offer any help on this?  Mark

Dear Mark: When I said that the essential purpose of a home inspection is “to disclose property defects,” I did not mean that the purpose is to disclose every possible property defect. If home inspectors intended to disclose every possible defect, thermal cameras, borescopes, and moisture meters would definitely be needed, as you suggest. But even then, the inspections would not be complete. To provide disclosure of all possible defects, inspectors would need to take air samples for mold, to place test canisters for radon gas, and to sample various materials for possible asbestos fiber and lead content. But that’s not all. Home inspections would not be complete without a structural analysis of the foundations, which would require that the inspectors be licensed structural engineers or that they subcontract with a structural engineer on every inspection. Inspectors would also need to take core samples of property sites to ensure geological stability and to evaluate subsurface water drainage characteristics based upon soil composition. This, of course, would require credentials as a licensed geotechnical engineer. Homes would also need to be tested for electromagnetic fields, for soil contamination, and for off-gassing of synthetic compounds such as urea formaldehyde.

This list could be expanded almost indefinitely if the essential purpose of a home inspection was to disclose all possible property defects.  In truth, home inspections are preliminary visual inspections, not techically exhaustive evaluations. A home inspection is analogous to the routine annual phyical that you receive from your doctor. Family physicians don’t do EKGs or CATSCANs as part of an annual exam. Instead, they look for indications that such tests might be necessary.  If critical symptoms are observed, they refer you to specialists. In the same way, a competent home inspector is looking for conditions that might warrant further evaluation by specialists such as plumbers, electricians, geotechnical engineers, or registered environmental assessors.

It might surprise you to know how very thorough many home inspectors are in their forensic duties; how able competent home inspectors are to find significant defects without the use of sophisticated testing devices.

As for referrals by real estate agents, there are many reasons why agents recommend particular home inspectors. Some refer the inspectors they believe will provide the most thorough disclosure, while others refer inspectors who are not so thorough and are perceived as less likely to scare away their buyers. Either way, it takes persistent marketing to develop a base of agents who will routinely recommend you to their clients.

Teaching Disclosure Ethics to Realtors

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: As a real estate instructor, I teach many programs on ethics and disclosure to agents and people preparing to become agents. These same subjects are often addressed in your column. From your perspective, what can we Realtors do to enhance our ethical approach to real estate disclosure?  Janice

Dear Janice: Realtors are often advised, in seminars and trade journals, to disclose defects and recommend home inspections to clients. The reason given for this advice is to reduce liability and avoid lawsuits. That recommendation has merit, but it offers a narrow view of the issue. Reduced liability is a fringe benefit of disclosure. It is not the primary motive to disclose.

The best reason to disclose property defects is simple: It is the right thing to do. It is the way each of us wants to be treated in business. The focus, instead of liability, should be promoting the best interests of clients. Agents who pursue that approach, rather than a legalistic one, enjoy three primary rewards: They build a lifetime reputation for honest, ethical business practice; they receive the repeat business and referrals engendered by a solid gold reputation; and they reduce the likelihood of claims and lawsuits for undisclosed defects. From that perspective, here are some simple ways to put this into practice.

Agents should determine which home inspectors are the most experienced and most thorough, and they should provide a list of those inspectors to all of their clients. Articles and seminars often advise agents to provide inspector lists as a way to avoid liability, but the competence of the inspectors who appear on such lists is rarely mentioned. The problem here is obvious. If the list contains mediocre inspectors, then it fails on the ethics scale, while increasing the agent’s liability. If the client chooses an inexperienced home inspector from the agent’s list, disclosure will be incomplete, and disputes may occur after the sale.

Real estate brokers should be proactive about disclosure, even when they are not directly involved in transactions. Many brokers are laissez faire in their approach, uninvolved in the home inspector choices made by agents. This lack of oversight increases a broker’s liability. When a lawsuit for a faulty home inspection is filed against an agent, the broker is usually named in the suit. To avoid this liability, brokers should influence the inspector referrals made by their agents. The message should be, “This brokerage cannot afford disclosure related lawsuits. If you work for this company, you must recommend only the most thorough home inspectors available. Here is the list of inspectors we have found to be the most qualified.”

Brokers who wish to maximize this approach can test local inspectors to see who qualifies for the referral list. Inspectors can be hired to inspect a representative home, and the findings can be compared to see which inspectors provide the most complete disclosure.

Real estate professionals are in a service business. Success in any service business comes from treating customers the way you want to be treated. Homebuyers want to know what they are buying before they buy it, not after the sale is closed. Agents and brokers who approach their profession from this perspective will build reservoirs of repeat business for years to come and will simultaneously reduce their liability.

For Sale By Owner vs. Loyalty to Agent

The House Detective:  by Barry Stone, Certified Home Inspector

Dear Barry: Our Realtor has been showing us listings for several weeks. But last week, we found a for-sale-by-owner property and made an offer to the owner without calling our agent. Since our Realtor spent so much time trying to find a house for us, are we obligated to involve him in this purchase?  Rob

Dear Rob: This type of situation is a sore spot with many real estate professionals. Your Realtor devoted many hours to your search for a home and now will receive nothing for those efforts. Unless you have a contract with him, you are under no obligation. However, most agents feel that the time and effort they spend showing property to a prospective client warrants some loyalty.

The seller in this case is clearly under no obligation to pay a real estate commission, nor is it likely that he would be willing to pay one. So there’s probably no way to involve your Realtor in the current transaction.

The most fair and respectful way to have handled this situation would have been to inform your Realtor of your interest in the property, rather than contacting the seller directly. The Realtor could then have called the seller and said, “I have clients who are interested in your home. Would you be willing to pay a reduced commission if I bring you an offer?” At that point, the seller could have accepted or declined. If he had declined, you would have been free to make your own offer, without misgivings between you and your agent.

At this point, you can choose whether or not to inform your Realtor of the decision you have made. Expressing your concern and extending your apologies would probably be more respectful than to say nothing at all.

Agents Complain to Editor

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: As editor of a paper that publishes your column, I’ve received complaints from real estate advertisers who find the tone of your articles to be anti-Realtor. After reviewing some recent columns, I tend to agree with them. When recurrent articles deal with unscrupulous real estate agents, a negative theme and negative perceptions can form. The tone of such articles creates an “us vs. them” mentality that isn’t good for anyone involved. I realize there are bad agents out there, just as there are bad inspectors, and you have written about both. But I think you should touch on other topics for variety. Readers would be better served if, for example, you would address the item-by-item details of a home inspection.  Mark

Dear Mark: Let me begin by praising the numerous first class real estate agents with whom I am personally acquainted. There are many outstanding Realtors who bring credit and good repute to the real estate profession — hard working agents who truly represent the best interests of their clients; who conduct their work with the highest ethical standards; who truly deserve every dollar of the commissions they earn.

The intent of this column has never been “us-versus-them”; nor has it been to paint real estate professionals with a broad brush, either positive or negative. As you say, there are good and bad agents out there, just as there are good and bad home inspectors; just as there are good and bad members of every profession.

The content of this column is largely dictated by questions and comments from readers, and many of these involve grievances against Realtors and home inspectors. If human nature tended toward praise rather than complaint, I would probably hear from more people who were satisfied with the top-notch agents and inspectors who have served them. Instead, I receive consumer complaints involving very real problems. The purpose of this column is to address those issues from an honest and unbiased perspective; to educate buyers, sellers, agents, and others about the pitfalls of real estate disclosure and best ways to deal with property defects.

In the years from 1996 through 2005, the real estate market thrived throughout most of the United States, and this booming activity caused many people to enter the real estate and home inspection professions. As a result, there were many inexperienced home inspectors, with little ability to provide homebuyers with adequate disclosure. Unfortunately, these novice inspectors obtained referrals from misguided real estate agents, and unsuspecting homebuyers made bad purchase decisions on the basis of faulty inspection reports.

Some of the agents who referred those inspectors were novices themselves, unaware of the vast quality differences among home inspectors. At the same time, there were experienced agents who should have known better, but who failed to exercise ethical discretion when referring home inspectors to their clients.

So what is the solution?

Leaders in the real estate profession, including brokers and Realtor associations, need to provide agents with better clarity regarding disclosure. This emphasis should be two-fold. First is the matter of ethics: Buyers should be fully informed of property defects because total disclosure is the only honest way to do business. It is the way that everyone wants to be treated. Second is the matter of legal liability: Faulty disclosure exposes agents and sellers to potential lawsuits. If the altruism of ethical disclosure is not sufficient cause, then the need to avoid litigation should be. For either reason or for both reasons, disclosure of property defects is good for everyone.

Agents should become familiar with the best home inspectors in their areas of business and should only recommend those inspectors. Many good agents have made this a practice throughout their careers. When other agents follow that good example, consumer complaints will cease to fill my inbox, and articles that offend agents will no longer be necessary.

Buyer Alleges Faulty Home Inspection

The House Detective by Barry Stone, Certified Home Inspector

Dear Barry: We purchased our home 1 1/2 years ago, and our home inspector missed a number of problems. These include rotten eave boards, a bad roof, a rusted water heater, garage door openers not equipped with safety eyes, rotted window frames, an unvented kitchen stovetop, a broken vent on the furnace, and the list goes on. We trusted him because he was recommended by our Realtor. Do we have any recourse? Sandra

Dear Sandra: The first step in the process of recourse is to notify the home inspector and the agent that these problems were not disclosed. You should invite them to your home for a review of these issues. And be sure to do this before making any repairs because corrected problems are not as negotiable as existing ones. Be aware also that not all of the issues you listed are within the scope of a home inspection and some may not involve actual defects. Here are some examples:

  • Rotting wood at the eaves and windows may or may not be included in the scope of the inspection. You should check the inspection contract in that regard. Termite inspectors are the ones who typically inspect for rotted wood.
  • Older garage door openers were not required to have safety eyes.
  • In most states, venting is not required at a kitchen range.

On the other hand, the rusted water heater, the broken furnace vent, and the faulty roof should have been disclosed by the inspector if the problems were visible at the time of the inspection.

It is an unfortunate reality of the real estate business that some agents cannot be trusted to recommend the best home inspectors. This does not apply to all agents, but it does apply to some. Therefore, your agent should be asked, “Was this the most thorough and experienced home inspector you know?” In most cases, agents know which inspectors are the best. If you can get the name of a “top gun” home inspector in your area, a second inspection would be advisable. This may alert you to additional problems that may have been missed by the agent’s inspector.