As an ethical home inspection company, we have seen a lot of things in this industry that are just not right. Atop the list are real estate companies that charge home inspectors to be on their “preferred list of home inspectors” or “preferred vendors” list. What’s that? You were not aware of this unethical practice? Don’t feel like the lone ranger. Most people are completely unaware of this very real problem.
So who are these unethical real estate companies?
You might be surprised to learn that the real estate companies who practice this “pay to play” charade just happen to be some of the largest real estate companies in the country. There is plenty of big money involved in this practice and whistle blowers in the past have not been dealt with very favorably. While we will not name names, we can tell you that the companies who actively practice this are among the top 10 real estate companies in the country. Enough said.
So how are they getting away with this?
Home inspectors are specifically banned from offering compensation to Realtors for inspection referrals by all licensing authorities as well as all home inspector organizations throughout the country. So how is this particular practice being allowed to continue? The people involved call it “advertising”. They are walking a VERY thin line, but somehow to date are getting away with it, and making plenty of money in the meantime, often times at your expense. Many of these pay to play real estate companies are charging home inspectors anywhere from $600.00 to $1,500.00 per year to be on these lists. The real estate companies argue that it is no different than placing an ad in the Yellow Pages or the newspaper. We beg to differ. When a potential home buyer places his or her trust in their Realtor, they are also placing their trust in their Realtors home inspector recommendation. If a Realtor is recommending a home inspector simply because they paid to be on a list, then that is wrong and it is a serious conflict of interest. To many in this industry, “you scratch my back and I’ll scratch yours” is not just a quirky antidote, it is a way of life. If you still are not convinced that this is a serious issue, think of it this way. When using one of these pay to play home inspectors, where do you think their allegiance lies?
What can you do to protect yourself from this unethical practice?
There are several things you as a potential home buyer can do to protect yourself as well as your investment.
First, try enlisting the services of an independent Realtor that is not affiliated with a large corporate office. Many independent Realtors used to work for these large companies and have decided to go out on their own due to the unethical practices employed by these large corporate entities. Most, if not all independent Realtors are sincerely looking out for their clients best interests and are more apt to give you the personal service you expect.
Second, find your own home inspector. Yes, you do have a choice when it comes to hiring a home inspector. You are not bound to your Realtors recommendations. You are free to choose whoever you want to inspect your new investment. Ask friends, family members and co-workers for home inspector recommendations. Anyone who has had a positive home inspection experience will be quick to tell you about it.
Third, get online. The internet continues to be one of the best sources available for finding true real estate professionals. Remember to check their reviews. Online reviews have grown in popularity in recent years and home inspectors cannot run from bad publicity.
Last but certainly not least, check with the Better Business Bureau and Angie’s List for reputable home inspectors in your area.
What can be done to stop the unethical practice of pay to play?
Currently there is absolutely nothing in place to stop this practice. There is plenty of big money involved and as you might expect, anytime it is questioned, it quickly gets swept under the carpet using the “it’s simply advertising” explanation. The only way this will stop is if legislation is put in place to stop it, and the only way that will ever happen is if people get involved. Why is it important to get involved? Think of it this way. The next time you need a home inspection, how important will it be to you to receive a thorough and unbiased home inspection with no hidden agenda?
If you are an ethical real estate professional, a potential home buyer or just an everyday average Joe who believes that this type of practice is wrong and unethical, we urge you to get involved in any way you can. Send a letter or an email to your State Representatives or your Senator and let them know that you think this practice is wrong and should be illegal. Spread the word to your friends, family and coworkers that this practice does indeed exist and that something needs to be done about it. If enough people raise their voice, we can and will make a difference and right something that is very wrong.