Do You Pay Bribes to RE Salesmen?

[James H. Bushart]

I recently had the privilege of sharing some time and information with a television news reporter who was doing a story on real estate brokers and agencies that refer only those home inspectors to their clients who pay a fee. Both of us were of the understanding that a real estate salesman had a fiduciary responsibility to act in their client's best interest in regard to the activities leading to the purchase/sale of a house and both of us were shocked to find this to be untrue.

One agency was collecting a fee of over $9000 per year from a home inspection company for referrals. The reporter laughed as he put himself in the place of an inspector with that much money invested in getting leads from one source and asked himself, aloud, if he would ever write a report that put the house he inspected in a bad light. "I'd have to be crazy to write anything that might kill this deal," he said.


Then, as we screened a list of names of "preferred" inspectors that one agency had published after collecting money from the inspectors on the list - we found an inspector who was graded "F" by the Better Business Bureau, yet appearing as a "preferred" inspector based upon nothing more than his willingness to pay for the referral.


Some states have passed laws prohibiting this practice but, in one state with such a law, these lists were still found by the reporter. "They would go as far as to violate the law in order to collect these fees?" the reporter asked. "Why?" I had no answer for that, or for why so many home inspectors belonging to the International Association of Certified Home Inspectors and the American Society of Home Inspectors would violate their own code of ethics to pay these bribes?


While times are certainly hard, they are never that hard where we put the best interest of our clients second to something like this.


Does your agency solicit bribes from home inspectors? Film at eleven.

[Jae Williams]

I have never solicited, nor paid, any bribes to used-house salespeople. I started my business years ago out of my working in construction trades, slowly evolving from part-time into a full-time business based on client referrals.

Even though I'm "retired" I still get a great deal of calls, many of which I turn down for whatever reason.

[Wayne B. Wilson]

So buying a BMW for all the agents, would that be consider a bribe?

[James H. Bushart]

If I found a "preferred vendor" list in my market I would mail it to the nearest television news station to the agent with a brief reference to their accepting bribes from home inspectors to refer them...in spite of the requirements of their licenses to provide a fiduciary relationship with each of their clients.

Let the inspectors on the list and agent collecting their money all be blasted.

If we all did this, we could end this practice.

[Gary Farnsworth]

I was once offered to advertise in this agent's magazine, in which she published herself, to promote her own group, with the blessing of her RE office. The fee was $4,000 for the year. She guaranteed me her business and that of the other agents in her group, as long as they were all "happy" with my services.

I declined. All you have to do is pick up these magazines, and find out who are the ones that pay up. I know of at least two large home inspection companies that "work" for large RE offices.

Just to put a small plastic tray with some brochures in one office, I have to pay $120 per year. Several inspectors are there. I have yet to decide. I have the brochure for that fee. Sad that the KBI, NAR or the KAR does not care about what agents and offices do and say. The RE's only complain about the inspectors, so the attention is taken off of themselves and their lenders and appraisers, all who are in it together, for the sales of homes and the filling of their pockets. If there is a problem, we are the ones who get the call.

[mnahrgang]

Originally Posted by gfarnsworth

I was once offered to advertise in this agent's magazine, in which see published herself, to promote her own group, with the blessing of her RE office. The fee was $4,000 for the year. She guaranteed me her business and that of the other agents in her group, as long as they were all "happy" with my services.

I declined. All you have to do is pick up these magazines, and find out who are the ones that pay up. I know of at least two large home inspection companies that "work" for large RE offices.

Just to put a small plastic tray with some brochures in one office, I have to pay $120 per year. Several inspectors are there. I have yet to decide. I have the brochure for that fee. Sad that the KBI, NAR or the KAR does not care about what agents and offices do and say. The RE's only complain about the inspectors, so the attention is taken off of themselves and their lenders and appraisers, all who are in it together, for the sales of homes and the filling of their pockets. If there is a problem, we are the ones who get the call.

I pay $50.00 a year at one office in my area to keep brochures in their office. However I do not pay that $50.00 to that office, but to that office's favorite charity "sunshine kids". It's one way the office raises money for the charity. I don't get a lot of business from them, but I do get a few calls every year. So from a business standpoint it's good. Also helps out a local charity.

[Gary Farnsworth]

Great idea, Mark. I wish more offices would do that.

[Joseph Tribuzio]

No way Jose

Ive never even considered it. Since i started, its been person to person friends and family and business to business referrals, but i would never solicit a Realtor.
Actually once i gave a presentation at a local Realtor office - he was in my chamber of commerce and had invited me. My wife made 3 nice loafs of home made sweet bread. They loved it, and i got zero referrals. ( they already had a "preferred" multi-inspector firm) i felt used and abused.

I hate that preferred inspector crap, its such a scam.

[Dan Bowers, CMI]

Where FILM at 11:00??

[Claude Lawrenson]

James, et al - is it any different it involved a kickback for being a preferred vendor for anything related to home inspection and/or a real estate transaction?

- let see education, training, products, top shelf advertising, some forms of real estate office advertising, free TV's, trips, etc. Did I miss any?

It does not take much to figure that out; any associations or real estate business that conduct business in that manner needs to be classified as ethically challenged.

[James H. Bushart]

Originally Posted by dbowers

Where FILM at 11:00??

Can't tell you, yet.

[Dan Bowers, CMI]

The problem I see with kickbacks and preferred vendor arrangements, is that unlike the normal graft, bribes, etc we've always seen in awarding of manufacturing contracts, city or government contracts, construction projects, large relocation transfers involving realtors, etc - As small 1-2 man home inspection companies / We've never had a valid way of gauging the final payoff for the kickbacks. Makes it a very iffy and undesirable thing (a huge gamble).

Way too many of our guys have paid a Broker $4,000 - $10,000 to be the ONLY preferred home inspection VENDOR, and then later discover the agents preferred AND kept referring the cheaper OR softer inspector.

[James H. Bushart]

Originally Posted by dbowers

The problem I see with kickbacks and preferred vendor arrangements, is that unlike the normal graft, bribes, etc we've always seen in awarding of manufacturing contracts, city or government contracts, construction projects, large relocation transfers involving realtors, etc - As small 1-2 man home inspection companies / We've never had a valid way of gauging the final payoff for the kickbacks. Makes it a very iffy and undesirable thing (a huge gamble).

Way too many of our guys have paid a Broker $4,000 - $10,000 to be the ONLY preferred home inspection VENDOR, and then later discover the agents preferred AND kept referring the cheaper OR softer inspector.

This activity is a violation of the salesman's license, for he is NOT recommending vendors based upon their skill but upon their willingness to pay a fee to be referred.

This activity violates the code of ethics of NACHI and ASHI and will result in the immediate expulsion of any member caught on such a list. Got a competitor you want to get out of NACHI? Email the list with the offending member's name to Nick or any COE member and he will be toast.

This activity violates some state laws.

It's a new market and the "American dream" that many of these used house salesmen sold to families hoping to acquire equity turned out to result in bankruptcy and foreclosure. While the families are homeless, the used house salesman gets a shot at a second commission on the same house within a few months.

Being associated with a real estate salesman in this market...where consumer's are more savvy and prudent....is not a wise thing to do. I had two people in two consecutive days call me because I was NOT on the list of inspectors their salesman provided them.

In certain areas of the country, news organizations are preparing special consumer reports on this particular shady practice where salesmen solicit and take bribes and I don't think the guys paying the bribes are going to look very good, either.

[Gary Farnsworth]

If a democrat in the senate gets a ride on air force one, and changes his vote/ideals the next day, is that a bribe? Is paying $600 to join a BNI group to get referals a violation of ethics?

I got a call today from an agent I have never done business with that wanted me to do an inspection tomorrow for an out of town buyer. She said that she was looking for an inspector to find some major defect in the home so the buyer could get out of their contract by tomorrow.

Who is violating their ethics? This goes on all the time, in every industry.

I did decline to do the inspection.

[James H. Bushart]

I sat with eight other inspectors listening to an outgoing State Representative tell us, when he was asked why he was changing his vote to favor a licensing law he had previously opposed, "It's not about what is right or wrong. It's about who has the money."

Thankfully, the consumer does not have to rely upon crooked politicians to get their homes inspected. Instead, they rely upon professional home inspectors.

Yet...there are some home inspectors who share the same lowlife tendencies as some used house salesmen and the State Representatives that they buy...who will participate in "pay to play". Soon they will be televised along side of the dishonest agents who solicited the bribes.

I don't know how hard ASHI enforces their ethics code, but I can assure you that NACHI does. All we need is a copy of the list with a member's name that he paid to have on it. That will be one less name to compete with on www.inspectorseek.com in your market.