Alleged collusion among agents and home inspectors

 
 
Posted2/7/2021 6:00 AM

Q: As an expert witness in construction-defect lawsuits, I see cases involving home inspectors who fail to disclose defects or who minimize the findings in their reports. One inspector confided that too many problems in his report might "kill" a sale, and the agents would no longer recommend him to buyers. Another inspector said he was expected to "work with the agents" and not to be too "nit-picky." This is a disturbing problem, because home inspector referrals come mainly from agents. What are your thoughts on this?

A: Your position as an expert witness exposes you to some of the worst examples among 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 situations that wind up in court. Fortunately, there are brighter sides to the real estate and home inspection professions. So let's examine the darker and lighter aspects of disclosure practices, beginning with the 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-maligned profession. Advocates are the agents and brokers who truly represent the best interests of their clients; who actively promote the full disclosure of property defects; who recommend only the most qualified home inspectors. Advocates would rather have a deal fall out of escrow and find a better property for their clients than have their clients be unhappy after the sale. Advocates treat clients as they themselves would want to be treated, knowing that doing the right thing attracts future business.

Unfortunately, there are also the hucksters, the snake oil salesmen, as it were, who jeopardize the interests of homebuyers; 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 principles for increased business. A huckster would rather close the sale than jeopardize the flow of commission checks. To a huckster, top-notch home inspectors are known as "deal killers."

Among home inspectors there are 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 an inclination to service the needs of hucksters. Adversely affecting this critical choice is the fact that home inspectors rely on agent referrals for most of their business. Agents understand this, and some have learned to exert subtle pressures. 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, choosing instead to represent the buyers' interests, needn't expect future referrals from such agents. The choice then is well defined: either become a "street walker" for unscrupulous hucksters, or rely strictly upon the honorable referrals of advocates.

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.

• To write to Barry Stone, visit him on the web at www.housedetective.com, or write AMG, 1776 Jami Lee Court, Suite 218, San Luis Obispo, CA 94301.

© 2021, Action Coast Publishing

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