Real Estate Professionals
Choosing the Right Home Inspector
Home inspectors are often unwelcome pariahs in the real estate industry. Many real estate agents see us, at worst, as deal killers, and at best, sandbaggers of the process, causing avoidable delays and potential inviters of lawsuits. We are, at times, a suspicious lot. It may be useful to review some inspection company characteristics to help in selecting the right one.
Buyer Home Inspection - Abandon hope all ye who enter here
Deal Killers
Most Realtors are acutely aware of the perils associated with a home inspection conducted during the option phase. Unlike other activities during this period, such as appraisals and deed searches that are required by various entities involved in the process, an inspection is not mandated and often not actively promoted by real estate professionals. Agents and brokers see the potential of a transaction falling apart because of "issues" that surface during an inspection, alarming their clients and killing the deal, and having the sale fall through.
Mucking Up the Process
Another concern, and rightfully so, and maybe less destructive then the "deal killer" scenario, is adding complexity to the negotiation when issues are found. There is a cost associated with this aspect too, in time invested, in anxiety and worry over resolution, and maybe even real dollars out of pocket for correcting problems found.
Liability Exposure
A third and maybe the best reason agents stand at arms length regarding home inspection, is the legal liability exposure. Agents are more than justified with this concern. Being involved at any level, i.e., recommending an inspection company, having a list of "approved vendors", or merely standing on the sidelines as an interested party, may end up with agents being named in a lawsuit should a dispute arise against an inspector. You're darned if you do and darned if you don't.
The real question is why would anyone in their right mind be a proponent of home inspections so fraught with downsides? One answer, and maybe the best answer, is because it's the right thing to do. Some might label this simply a "fiduciary responsibility". Given buyer home inspections are a necessary evil, what can agents do to make living with them a little easier? Choosing the right home inspection company may be part of the answer.
Not All Inspection Companies are Created Equal
So what are the things that should help selecting a home inspection company? I've picked some that I hold as top priorities in my company. They include professionalism, communication, and (snore) insurance.
Professionalism
Establishing a good business relationship can buy a lot of goodwill. Often, that goodwill translates to future problem avoidance. The foundation for the relationship starts with being professional and no where is this more important than the inspection business. Showing up on time, explaining what to expect, what will be examined, why particular aspects are important, etc. are all part of the professional equation. Showing up late, disheveled, unshaven and wearing bowling shirt doesn't exactly promote the best company image, and it can reflect poorly on the other involved real estate professionals associated with the listing.
Communication
How one interacts with clients can go a long way to avoid problems, not only for the inspection company, but for all parties to the transaction. Addressing your audience at their level of understanding is critical to making communication work well. Explanations to poets will be vastly different than how one speaks to a civil engineer. A clear, concise message, unfettered with techno-speak, and avoiding trying to impress someone with how much you know, helps to create an environment of mutual respect and cooperation.
Additionally, how an inspector presents an issue can be just as important as what is presented. As advancements in technology are incorporated into regulations, older homes will necessarily be subject to increased scrutiny. Texas does not grandfather regulations and codes, but that does not necessarily mean these older home are inadequate or deficient. Putting things in context and conveying a sense of the "degree" of the problem is almost always beneficial to the client.
The Insurance Angle
E&O Insurance
In the summer of 2007, the Texas Real Estate Commission (TREC) instituted a requirement that licensed home inspectors carry Errors and Omissions insurance policy. Proof of insurance must be presented to the State upon license renewal. No policy, no license . . . kind of. Inspectors are not required to carry E&O until they are up for re-licensing. Because an inspection license is renewed every two years, there are many inspectors who are deferring that cost until renewal time, or simply folding up shop and getting out of the business when they have to pony-up for insurance.
Does carrying E&O by an inspector mean agents should have less concern about inspections adversely affecting a deal? Not at all, but not carrying this insurance may say volumes about the inspector, their approach to their profession, and whether they intend to be in for the long haul. Think of it as a sort of Darwinism for home inspectors.
Referring Agent Insurance
An inspector mentioning that he has a "Referring Agent" clause in his insurance policy generally invokes a response similar to the RCA Victor dog - it sounds interesting and I understand the individual words, but I don't fully grasp the concept. Simply put, if a home inspector is sued by a client, the real estate agent associated with the transaction is often named in the suit. The inspector's insurance will pay to defend the inspector and if there is a Referring Agent clause in the policy; it will also defend the referring real estate agent. This doesn't mean agents now have a bulletproof leotard and can leap tall buildings in a single bound, but it does add another layer of protection to help insulate third parties in such situations.
These are but a few aspects that might be considered when choosing a home inspector, and as my mother often said that is appropriate for many instances, "Choose wisely".
