New unethical trend in the home inspection business?

[Bruce A. King]

I hope I am not seeing a trend here.......

Two times in the past week I have become aware of this:

1. An agent steered a homebuyer to a certain inspector where the fee was $125 higher than the typical fee in this area.

2. A buyer called me today and said their lender had an inspector lined up but she wanted to check around. The lenders inspector was $125 higher than the typical fee.

Don't ask me the square footage/ foundation type or what the fees were, I am keeping this to myself while I get someone looking into this.

I can see this becoming a trend, the lenders don't want good inspectors either since it might cut out their fee or cause more work. Maybe its so hard for some that they are resorting to unethical practices.

If any of you guys out there are overcharging in order to payoff your favorite agent or lender in my area, you better be careful, you will be caught.

[Keith Runquist, CMI]

What makes you think someone is paying off anyone? Maybe they are offering more services like thermal. Maybe they include a warranty or energy assessment. Maybe they are very good and charge for it. I'd be sure of what your are accusing before you really know what's going on.

[Bruce A. King]

Agents around here do not typically recommend the very good inspectors.

It causes them extra work and lost commissions. Human nature thing.

I have some other info too.

[Scott Gilligan, CMI]

I have several agent that only will use me for their clients and I charge more than the average home inspector in my area. I also offer a lot more services and take more time with the client and report than most. I don't spend a lot of time marketing realtors either. I don't pay them squat for a single referral, but there are plenty that will only use me. Quality workmanship gets quality referrals without having to pay for them. I am about to raise prices across the board as soon as I get time to sit down and update the website. I will probably be one of the highest priced in my area and there is a damned good reason for it.

[Joe Funderburk, CMI]

Bruce, you are destroying my business and slandering my reputation! Pleases keep your big mouth shut! I have a good system going.

[Bruce A. King]

ok, I'll let you slide for now

[Bruce A. King]

Originally Posted by sgilligan1

I have several agent that only will use me for their clients and I charge more than the average home inspector in my area. I also offer a lot more services and take more time with the client and report than most. I don't spend a lot of time marketing realtors either. I don't pay them squat for a single referral, but there are plenty that will only use me. Quality workmanship gets quality referrals without having to pay for them. I am about to raise prices across the board as soon as I get time to sit down and update the website. I will probably be one of the highest priced in my area and there is a damned good reason for it.

There are some good agents out there, its just near imposible to find them, you have to let them find you sometimes. I have a few that I got without marketing to them at all. I think that I get their select clients sometimes though, their friends and new homes that they know will be fixed by the builder.

[dbelmont]

You can't mean that ethical real estate agents are skimming a few dollars for their pockets. Not the we only act in the interest of our client crowd and don't think it's a conflict of interest if we make sure the inspector is in our pocket folks.. I'm shocked mind you. Shocked.

[jrabanus]

I have heard of this practice, but I have never seen it around here. Agents around here don't want to have anything to do with the home inspection process. (Keeps them out of court) The only thing they will do is have a list of home inspectors. NOW, whether who makes the top of the list or not that is the question.

[Jeffrey R. Pope]

I recently had an agent tell me he would refer me to all of his clients. He says he's closing 10 per month. All he wanted was a 10% referral fee. I explained that I average 50+ inspections per month, and I couldn't handle the additional business . I'm sure he'll find someone who will accommodate him.

They're out there. Just don't get caught up in it.

[Bruce A. King]

Originally Posted by jpope

I recently had an agent tell me he would refer me to all of his clients. He says he's closing 10 per month. All he wanted was a 10% referral fee. I explained that I average 50+ inspections per month, and I couldn't handle the additional business . I'm sure he'll find someone who will accommodate him.

They're out there. Just don't get caught up in it.

We can't do anywhere near 50 a month here due to the state SOPS, it takes many hours onsite and on the report to do a true legal inspection. (If you wanted to work 18 hour days 6 or 7 days a week you could)

We do have several guys that ignore the SOPS and crank out 3 or 4 a day with reports that make you want to cry for their clients.

[Dan Bowers, CMI]

Bruce -

Thanks for the Tip. I like that idea.

The only problem is in my area there are a ton of inspectors offering deals under $225 to $250 for the home and termite inspections on house up to 3,500 sf.

Which means I'm aleady $150 - $175 higher than they are.

How much would I have to offer the lender or agent do you think to get their business? How much higher would I have to raise my prices to compensate for the kickbacks. Heck I grew up Union - This sounds great.

Should I approach them OR wait for them to come to me?

Golly I can't wait to get rolling ...... Again Thanks for the idea.

[Gary Farnsworth]

FTC is strict on rebate/referal rules. You can rebate a person/company who pays you, but you cannot rebate a company/third party. That is why car companies make you sign an agreement to rebate the dealer, instead of you. You can rebate a client who pays you, but you cannot rebate an agent or his/her company. You can, however, pay for advertising and marketing fees. I have done this, but have not had any more business from paying fees for folders, ads, etc. It is just a way for offices to make money. They want the funds, but that is it. They get the check, and not give you any business. I am sure "payola" goes on, but you run the risk of the feds moving in on you. They did it with the mofia.

You collect money from your clients, and pay a "party" to help protect your interests. You cannot rebate a third party. Not legal in any state. If inspectors are doing this, you run the risk of jail time.

If the fees are cheap, I bet they do not have insurance and/or experience. To this day I still cannot understand why buyers will not argue about agent commissions, but cry about a home inspector fee a few bucks higher than someone elses. The agents have a duty to service their clients at the best possible level. Most, sadly, are not.

[tchristopher]

Originally Posted by bking

We can't do anywhere near 50 a month here due to the state SOPS, it takes many hours onsite and on the report to do a true legal inspection. (If you wanted to work 18 hour days 6 or 7 days a week you could)

We do have several guys that ignore the SOPS and crank out 3 or 4 a day with reports that make you want to cry for their clients.

These 3 or 4 a day guys are what most agents prefer, if they can't get out of providing the buyers with names of inspectors anyway, they aren't deal killers & that's what most realtors want. I sure would like to see home inspections mandatory like appraisals, but I bet it will never happen...

[Greg Veal]

Bruce

These types of business practices have been going on for years.

In the good times of the past 10 +/- years or so, this has been standard operating procedure for many (certainly not all) R/E Agents to align with H/I's, Apprs's., Lenders/Brokers, etc., to try to totally control the buying/selling process of the Client(s). In essense, R/E Agents were trying to be God to their Clients.

In my opinion, these actions are close to what R/E went through back in the 70's and 80's, when they were accussed and in trouble for price fixing the commission structures.
What about the Mortgage Lenders/Brokers of recent past, setting up offices in the R/E offices and paying rents, utilities, maintenance, etc. Don't tell me that the R/E Offices weren't getting paid to direct clients to the other side of the office.

It comes down to ETHICS... or the lack there of...Just MHO