Copyright© 2011
By: Fred Willcox
All Rights Reserved.
Does you real estate inspector work for you? Or for your Realtor? Or for other service providers? In most cases, your real estate inspector really works for your Realtor first, for other service providers second and for you last. You, the buyer and the one who is paying the bills, are the least important person in the transaction to most real estate inspectors.
Unless you hire a buyer’s agent, your Realtor works for the seller. Although you are spending the money to buy the house and you are providing the money that actually pays the seller, both the listing Realtor and your Realtor are paid by the seller. And, if you do not buy the house, neither Realtor makes a penny. Real estate inspectors market to Realtors. It is very difficult for real estate inspectors to find and market to individual buyers. Realtors have offices. It is very easy to market to a real estate office.
When a real estate inspector finds problems with the house you want to buy, the Realtor simply does not ever call that inspector again. The real estate inspector has lost his client. He has wasted all his time and money marketing to the Realtor.
There is a real estate inspector based in Dallas who puts on seminars to teach other real estate inspectors how to make lots and lots of money through marketing. A friend of mine recently attended one of these seminars. According to this friend, there was a Realtor speaker whose presentation was:
“What have you done for me lately?’
Meaning what has the real estate inspector done to stay in the Realtor’s good graces lately. If the real estate inspector expects to get any more business, he had better have made sure that the buyer of the house he just inspected was not upset about anything that was found during the inspection. The easiest way for an inspector NOT to upset a buyer is for the inspector to NOT find any significant problems with the house.
Should something happen after the closing on the house and you complain to the inspector, the inspector will simply state that everything was fine during the inspection and that he is not responsible for future events or for maintenance of the house. That way, the real estate inspector you hired did not need to tell you that the roof on the house was at the end of its useful economic life, that the roof covering materials had been patched and that sealants had recently been applied to reduce the number of active leaks. Telling you those things might upset you. You might want to negotiate for repair to or replacement of the roof. This could lower the sales price of the house. And it could lower your Realtor’s commission. Or you could cancel the contract in which case your Realtor would have wasted his/her time for no compensation. In either case, your Realtor may decide that your real estate inspector was just too picky and was a deal killer. Your real estate inspector will never hear from your Realtor again. Your real estate inspector relies on your Realtor for referrals. You may refer 4 or 5 people to your real estate inspector over the next 10 or 12 years if your inspector did a really good job. Your Realtor may refer 12 clients a year to your real estate inspector because your inspector does nothing to upset you. Who do you think most real estate inspectors really work for?
If your inspector found those roofing conditions during your inspection, he might note that he found no active leaks during the inspection. The fact that the inspection was performed on a bright, sun shining afternoon would not be relevant.
The other group that captivates your real estate inspector’s attention is other service providers. Most, if not all, real estate inspectors get offers all the time from WDI (termite) inspectors, pool inspectors, alarm companies, foundation leveling companies, replacement window contractors, roofers, etc. There is a WDI inspector that I am aware of who offers real estate inspectors $50.00 for every WDI inspection referral. A pool company that provides pool maintenance offers $70.00 for referrals and a replacement window contractor offers $75.00. All a real estate inspector has to do is to call these providers and tell them when the inspector will be at the house. The service provider then shows up during the inspection and gives you a little commercial in the hope that you will use their company.
A real estate inspector can make an extra $335.00 per inspection that I know of by giving out your name and the date, time and address of the inspection.
You hire a “low cost” inspector because your Realtor tells you the inspector is good. And the inspector is good, for your Realtor. You pay the real estate inspector $200 to $250 to not upset you by telling you the real condition of the house you want to buy and for bringing a whole lot of salesmen along for you to enjoy.
And your real estate inspector makes more from the advertisers he brings along than he does from you, his client. And be clear on this fact, the inspector is not referring these providers to you because he is convinced that these are the best companies in their service or profession. He is referring these companies to you solely because these companies are paying him.
This seems wrong. And it is. Actually, some parts of this are illegal under federal RESSPA laws (Real Estate Settlement Services Provider Act). If you have concerns over the actions of your real estate inspector, please contact the U. S, Department of Housing and Urban Development and file a complaint against your real estate inspector with the Texas Real Estate Commission.
There are, of course, a few highly ethical Realtors who will refer you to good, competent, honest, ethical real estate inspectors who do not pimp you to other service providers. For example, there are five Realtors who routinely refer me to their clients. Five. Out of the entire Greater Houston area, there are five.
Of course I hear from lots of Realtors during the year. I hear from them when they are buying a house, a family member is buying a house or their best friend is buying a house. They always tell me: “I refer you to all my clients. I just don’t know why they don’t call you.”
I do.
I decided many, many years ago to build my business on client referrals. It takes longer to grow a real estate inspection business that way. But my clients do refer me to their family, friends and co-workers. And I sleep really well at night.