Collusion between agents and home inspectors isn’t the norm

Q. I am a court-certified expert witness in construction defect lawsuits. Many of the cases I see involve home inspectors who fail to disclose defects. One inspector confided that an inspection report with “too many problems” might “kill” the sale, and then the agent would stop recommending him to buyers. Another inspector said he was expected to “work with the agents,” not to raise red flags or to be too “nit-picky.” This is disturbing, since home inspection referrals come mainly from agents. Perhaps organizations such as the American Society of Home Inspectors (ASHI) and the National Association of Realtors (NAR) could do more to promote professional ethics. What do you think about these issues?

A. Your position as an expert witness exposes you to 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, some of which lead to the courtroom dramas where you testify. Fortunately, there is a brighter side to the world of real estate and home inspection, where the players rarely stand in the shadow of a judge’s bench. So let’s examine the dark and lighter sides of disclosure practices, beginning with those 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 a profession that is often unfairly maligned. Advocates are those who represent the best interests of their clients; who actively promote defect disclosure; who recommend only the most qualified home inspectors. Advocates would rather kill a sale and find a better property for their clients than have the clients be unhappy after the sale. Advocates treat clients as they themselves would want to be treated, with honest concern for the clients’ financial well-being. Advocates know that fair treatment of others 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 home 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 two variables that affect the thoroughness of disclosure. The first is professional competence. Inspectors with higher levels of knowledge, skill and experience are simply more thorough than others. But regardless of ability, we find the same ethical contrasts that define agents: either a total commitment to the client’s interests or a greater concern for immediate cash-flow. Hucksters recognize this difference, 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 ignore these coded messages needn’t expect future referrals from those agents. The choice then is clear: become a “street walker” for unscrupulous agents or rely strictly upon the referrals of advocates.

Finally, there is the question of ethics enforcement by associations such as ASHI and CAR. Professional integrity among home inspectors agents can be influenced and encouraged, but it cannot be forced. Honesty can only derive from a desire and willingness to be honest. The only other inducement to be good is the fear of litigation. We live in the age of frivolous lawsuits, a surreal business world in which McDonald’s must serve tepid coffee, lest we victims burn our litigious laps.

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 “Deal Killer” reputation for thorough, accurate, unbiased inspections.

• Email questions to Barry Stone through his website, housedetective.com, or write AMG, 1776 Jami Lee Court, Suite 218, San Luis Obispo, CA 94301.

Gary,

My wife and I are considering selling our current home and building a new home.  Note that “considering” is the key word and we are very early into the conversation.  However, I was wondering what is the value of getting a HERS evaluation on my current home to use as 1) an assessment to identify weak points in the current efficiency/energy use systems and 2) use as a selling tool for prospective buyers?

Also, what is the timeframe for conducting such a HERS assessment and the costs?

Brent

Good question and one that I wish more sellers would ask.

Time Frame: Two Visits Required

1. One to three hours for interview and diagnosis.
2. Recommendations made.
3. An hour of so to return and measure the results of the repairs made per recommendations.

Cost: Full energy audit with report of duck leakage, whole house air infiltration evaluation and recommendations to improve if applicable = $450.00. Often times the cost to repair/improve is less than $350.00 (handyman with average skills). Total cost…approximately $800.00 (+ -). The savings and cost to repair will vary based on the quality of construction and the age and condition of your HVAC equipment, water heater, insulation, windows and appliances.

Why consider: Statistics show that lowering home energy usage directly improves value. This notion is supported by Fannie Mae, Freddie Mac, ENERGY STAR, FHA and VA financing instruments. When you increase the value through energy savings the increase is recognized in the new loan. A potential buyer will consider cost to operate the home, but only if informed. Information and education is the key to using the homes energy consumption as a sales marketing tool.

As evidence of the savings a prudent seller should consider creating solid data prior to beginning the sales/marketing efforts. I suggest that you learn where your greatest opportunity for savings is located by diagnosing your usage. You might be surprised at how little time and effort it takes to improve your home’s efficiency and value.

Selling Points: Improved marketability, improved comfort and indoor air quality, lower energy cost lead to lower cost of ownership and less maintenance.

Supporting Links
Home Energy Ratings What’s the HERS Scale?
ENERGY STAR Watch this video
Efficiency First Membership as Energy Rated Homes of Mississippi

Let me know if I can answer any other questions or help you in any way…

The south side of my yard is considerably lower than the north. Therefore my flower beds on the south side are more “raised”. We want to lower the beds by removing dirt but it will make the actual foundation of the house visible under the brick, 6-10 inches.

Would this be something that you as an inspector would call out on an inspection for any reason?

We bought this house as a foreclosure and the repairs made prior were shoddy at best. We are trying to make sure all improvements we make will be  within the scope of a good inspection.

Thanks in advance.

Adam

Concrete is porous and allows for heat exchange, both infiltration and ex-filtration. From an energy loss stand point it would expose the building envelope (the protective shell of the home that shelters you from the elements) to temperature changes, both hot and cold. The floor surface nearest the exposed slab will transfer heat. Since a south facing wall is exposed to a rather large amount sun in the summer, you’re risk will be that the slab will begin to act as a radiant heater near the area of the slab that’s heated by the sun. This will begin to effect your electric bill as your A/C will most likely make an attempt to cool it down.

From a pure visual home inspector standpoint, I doubt most inspectors will notice anything unusual about it unless you have fairly obvious cracks in the slab. Generally speaking, that’s not an area of the home most visual home inspectors will ever see. If you have siding as exterior cladding the added space will help prevent moisture intrusion. If you have brick the space will certainly expose the bottom of the brick ledge and the weep holes that either have been properly installed or (in most cases) have completely been left out. So the space may increase the opportunity for the inspector to notice “other” specific details of the bottom of the wall covering.

Three things to look into if your bulbs keep blowing. Your bulb supplier (cheap bulbs use thin filament), check the wire connections inside your bulb holder (loose wire in the fixture), and check to see if the spring loaded connectors  inside the fixture are working properly inside the bulb holder.

As a last resort you can also check the tightness of the connections in your wall switch. Unscrew your bulb and look for “pitted” marks on the end of the bulb you’re replacing.

Maybe…but here are a few important aspects to keep in mind.

As a professional home inspector I’m uniquely suited to perform objective and comprehensive visual examinations of a house. When hiring me as a home inspector you will benefit from the experience, training, and depth of knowledge I have, as well as the unbiased and thorough report of the property’s condition. I’m also very familiar and experienced with the many elements of home construction, as well as their proper installation and maintenance. In addition, I also understand how a home’s systems and components should function together, and can interpret my findings to offer you helpful recommendations.

Do you have any other questions? Leave them below! or contact me…