Phone book referrals bad for business
How do agents avoid trouble when recommending inspectors?
By Barry Stone, Tuesday, July 8, 2008.Dear Barry,
In one of your columns, a buyer was annoyed that her agent would not recommend a home inspector by name. I'm a Realtor, and our company has a policy against recommending any service providers, and that includes termite inspectors and home inspectors. We simply hand our clients the Yellow Pages and point out the section where inspectors are listed. Past experience has shown us that this is the safest way to do business.
If a home inspector that we recommend makes a mistake, we could be sued for making that referral. We'd like to provide the kind of personal service that includes a list of reliable contractors and inspectors, but our hands are tied by fears of litigation, much to our dismay and disappointment. How do you view this position? --Jennifer
Dear Jennifer,
Your fear of litigation is understandable and shared by many -- not just in the real estate profession, but by nearly everyone in business, including grocers, doctors, plumbers, engineers, teachers and musicians. Trial attorneys, for whatever reasons, good or bad, have removed from our society the trust that was once communicated by a promise and a handshake. Instead, we have pages of fine-print legalese that no ordinary person can understand. Yet none of these documents eliminates the likelihood of lawsuits: They merely provide talking points for that dreaded day in court. But there are still ways of operating in this defensive business environment, without abandoning the kind of personal service that we prefer to offer in good faith to our customers.
The phone book approach to home inspector selection may not provide the liability protection that Realtors seek. In fact, it may pose a higher level of exposure to tort liability. The problem with a Yellow Pages selection is that a buyer may randomly hire a home inspector who has very limited experience or someone who is not very thorough or qualified and who may fail to disclose significant property defects. If a buyer chooses a mediocre home inspector from the phone book and the agent fails to give warning to point out that there are better home inspectors, that agent could be vulnerable to a lawsuit, without having made a referral.
Fortunately, there is a safer middle ground between recommending a home inspector or supplying a phone book. Instead, you can provide a list of the most qualified home inspectors in the area and let your buyers choose an inspector from that list. In fact, you could ask a number of local home inspectors to each submit a one-page flier outlining their professional credentials and their levels of experience in the inspection business. A packet of these fliers could then be given to every home buyer. Buyers could select their own inspector, but their choice would be an educated one, based on information that would facilitate a more thorough inspection and, therefore, less liability. Run that idea up the flagpole at your next staff meeting and see if anyone salutes it.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.
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Submitted by Sharon Arnett on July 8, 2008 - 5:36am.
We find in our marketplace that the best home inspectors are ASHI certified or working on their ASHI certification. We give buyers a list of these inspectors along with ASHI's website explaining that this is a home inspector's trade association and they must adhere to certain standards. The ASHI website gives buyers a basis for them to evaluate inspectors and ask their own questions before hiring them.
Submitted by Richard Greenwood on July 8, 2008 - 6:07am.
In California, we only use California Real Estate Inspection Association (CREIA - http://www.creia.org) certified inspectors.
http://HiddenMarketRealty.com
Submitted by Nick Ostrowski on July 8, 2008 - 10:09am.
Barry's assertion that it is risky to pick a home inspector out of the phone book is confusing. Not only do newer or lesser experienced home inspectors advertise in phone books. The long-time most experienced inspectors advertise there as well. It is the preferred and most effective method of advertising in some areas.
For better or worse, many real estate professionals will not recommend anybody by name or give a specified list for many reasons listed above. And while the realtor has an obligation to their client on the home buying end, the client has an oligation and the right to make choices on their own too. The state of Massachussettes has the ideal model in place when it comes to the issue of realtors referring home inspectors...........it is not allowed. This helps minimize potential conflicts of interest between realtors and HIs.
Like many other things in life where consumers need to make decisions, it is up to the buyer to ask the appropriate questions and interview inspectors so they can find a company that meets their needs.
One of the best and most overlooked resources for finding a home inspector is word-of-mouth. Talk to relatives, friends, and coworkers and find out who they used and recommend. Also, consumer protection sites like Angie's list and the Better Business Bureau are other avenues to pursue.
One cannot overlook the potential for conflicts of interest when considering a home inspector from a realtor's recommended list. Realtors and home inspectors have conflicting objectives when it comes to the sale of a house. Realtors want the house to sell. Home inspectors want to provide as much information as possible about the condition of the house so the buyer can make an informed decision on the purchase. This isn't to say all realtors are unethical and all home inspectors are ethical. It goes both ways and there are plenty of realtors who do care about the buyers' best interests. However, it makes sense for the buyers to hire the home inspector of their own choosing if they do not feel comfortable with their realtor's recommendation. With this in mind, another good resource for finding these inspectors who work independent from realtors and do not solicit their offices for referrals is the Independent Home Inspectors of North America (IHINA). These inspectors have signed a pledge to not market themselves to realtors or solicit them for business.
While ASHI inspectors may appear to be the best inspectors in some areas, keep in mind that an organization does not in and of itself make a home inspector a good one. It is up to the individual inspector to make themself the best. Good home inspectors can be found through the National Association of Home Inspectors (NAHI) too.