Attending the Home Inspection

This article was published by the State of Washington in their semi-annual newsletter to Real Estate Licensees. I was very pleased that my work met their standards. Next I hope to get a paying gig.... During the public comment portion of a recent board meeting for the Home Inspector Licensing Advisory Board, the inspector asked for clarification regarding the process of real estate agents attending the home inspection. While it spurred considerable discussion, the issue was outside the scope of the Board’s purview. “Why don't you go get a cup of coffee or something while my client and I concentrate on this inspection?” is what one home inspector said to a Licensee recently during an inspection. The agent balked and stated "I'll be fined!" Here is the story from the inspector. Within minutes of beginning the inspection the agent involved had begun asking the inspector leading questions. The inspector recognized that the real estate Licensee was attempting to exercise damage control. In this case, the issue really was a big deal - it needed to be attended to as soon as possible and it was important that the buyer understand it fully. The liability for everyone was substantial. Every Licensee is familiar with the process of the inspection. The Department of Licensing now has regulations on how to conduct the referrals including requirements for a written policy for each office and disclosure requirements for both the inspector and the agent. These are regulatory and legal requirements and need to be differentiated from the obligations that are placed on us by associations and clients. What we do not have are rules for the interaction at the inspection. That was the situation here where the regulatory requirements differ from the association rules. The inspector pointed out the inspection time is his time with the client to provide that client with the best available information. To protect everyone involved, the home inspector suggested the Licensee leave. The client fortunately was oblivious to the real messages being exchanged. Imagine the reaction of the client if the inspector said to the Licensee, "Why would you try to convince me to minimize a serious and expensive issue when it has the potential to bankrupt my client; and, if not fixed, make this house unsellable five years from now?" As home inspectors our primary obligation is to ensure that our client is as fully informed as possible. This means focusing on the concerns and questions that the client has; an agent asking questions at this juncture can interrupt the process and actually increase buyer anxiety. Given that strong-willed personalities populate our professions on both sides of the equation, let’s focus on how to avoid the potential for confrontation rather than assign fault. Could the inspector have been more tactful? Probably. Could the Licensee been less intrusive? Probably. But focusing on the confrontation does not move the industry forward. Instead, we should look at the facts on attendance requirements and information sharing. Then, we can look for common ground that will make the process more successful for all parties.

There is no legal requirement to attending the home inspection. That doesn’t let you off the hook though; your local MLS and Realtor Associations may have bylaws that will direct your actions on attendance. The Northwest MLS, for example in Rule 50(a) states, “no key holder shall leave any other person who is not also a key holder unattended at a listed property without the seller’s permission.” This, by definition, includes the home inspector and the mutual client. On the eastern side of Washington, the Associations are either indifferent (Lewis-Clark Association) – or actively discourage attendance (Whitman County Association.)

At the heart of the Northwest MLS position is the legal liability if property is damaged or missing after the inspection, not a matter of a lack of trust. The western side of the State is more litigious than rural Eastern Washington and the Multiple Listing Services and Associations have responded to that to protect their members. The purpose of the MLS rule is to actively protect the property of the seller by maintaining control of the property and monitoring the activities of those who are present – the buyer and the inspector. It is quite normal and reasonable for a buyer or the inspector to open and look into closets. It would be a rather different event if one or the other were trying on jackets or looking in jewelry boxes and the Northwest MLS recognizes this.

In Eastern Washington, there is a greater concern with unduly influencing the inspection. The region is less litigious than Western Washington and the incidences of broken or missing items very rare. A greater perceived risk for the real estate agent is the liability incurred by attending the home inspection. For example, an agent attending the inspection who tells the buyer that an item “isn’t a big deal” has injected themselves into the process and placed themselves in substantial jeopardy. Worse, the agent may find herself held responsible even if they say nothing; failing to point out a defect, even if the inspector missed it, may be enough for the agent to be held legally liable.

In each case, the MLS and local processes have taken into account the source of greatest liability to the members. But what of the inspectors….

The Inspector has legal and ethical rules he must follow. Under Washington regulations (WAC 308-408C-020(10), the inspector is not allowed to disclose the results of the inspection to any person other than the client. By that standard, the home inspector cannot and should not discuss the report in front of either the seller’s or buyer’s representative. Most inspectors have an automatic means built into their Inspection Agreements to gain this permission so that they can transmit the report to the agent representing the buyer. I am unaware of any inspector who routinely collects approval for transmission of information to the opposite party in the transaction.

Without the approval of the client, the inspector is required to exercise reasonable care in presenting the information without compromising the privacy of the client. Indeed, in a small percentage of cases, usually involving a dual agency by the real estate agent, the client will specifically withhold permission to share the findings of the report. In those cases, we cannot ethically discuss the findings while the buyer’s representative is present any more than we could if the home owner elects to be present.

So, clearly, while attendance is mandatory in some areas due to MLS Rules, it does not carry the force of law. The effect on the agent is unchanged as they can still be fined. What we need are an operative set of rules that both inspectors and agents can agree upon to work in a cooperative manner rather than treating each encounter as an adversarial adventure.

1. Mutual Respect. Too often, the real estate agent and inspector behave in a manner that does a disservice to their common client and to their industries. Instead, each should recognize the limits of their expertise and act within those bounds while respecting the obligations that are placed on the other person legally, ethically and morally.

Inspectors need to accept that the agent will be present. The inspector needs to communicate clearly his expectations to perform the task he was hired for without interference. The mere presence of an agent does not constitute interference. The agent is there to maintain the security of the property. Unless the inspector wishes to assume that responsibility, he should be supportive of the agent. Also, the buyer’s representative can directly get the information from the inspector at the appropriate time and with the permission of the client to best serve the needs of the client. This can serve to limit miscommunication by getting the information directly from you rather than relying on their interpretation of the report or the second-hand impressions of the buyer.

If the agent is the seller’s representative, understand that the communication with the buyer is confidential. The inspector is not being deliberately rude in avoiding you or asking you for privacy with his client but performing within his scope of responsibilities to his client.

2. Let the Inspector work. Every successful inspector has developed an individual system of performing the inspection and communicating the results. Both clients – buyer and seller - have expectations that the inspection will provide unbiased information. By systematizing his process, the inspector increases his accuracy for your clients while minimizing wasted time.

Additional people at the inspection add distractions and increase the likelihood that items important to your client will be missed or miscommunicated. Every inspector has a story of the first-time homebuyer who has both sets of parents, siblings, children, the aunts, uncles, first and second cousins show up for the inspection. This invariably makes the job of the inspector far more challenging and substantially changes both the flow and the quality of information that your client is receiving. As an attending agent, you can help by directing these flows and letting the inspector do his job.

Also, as an agent, you may have been through hundreds of inspections through the years. Resist the urge to provide your own commentary. The inspector is a licensed professional who adds to his knowledge base through annual continuing education. A comment such as “I’ve never seen an inspector say that is a problem…” places you in a position of liability and may not reflect the progress of the inspection industry. Let the inspector take that risk.

3. Attending the Inspection – or just Present? If you are required to be at the inspection, understand that this is a different requirement than attending the inspection. To quote Oliver E Frascona from an article in REALTOR® Magazine,

“Don't go through the house with the inspector. Explain to your clients that you sell real estate and the inspector inspects it.”

This is a time that you can catch up on emails, phone calls and other small tasks that do not require full office. One agent of my acquaintance reads or chats with the client. Her primary focus is to be ready to assist the client when needed and to be the buyers advocate if there is a claim of missing or damaged property. She coaches the client to let the inspector do his job and then proceeds to model that behavior.

When there are findings, she respects the client and trusts the expertise of the inspector. This licensee will ask clarifying questions to ensure that she understands the scope of the issue and the precise location. She finds that this greatly enhances her ability to communicate with all the parties involved.

4. Negotiations. It is a very different question when the buyer asks “Should I get this fixed?” versus “Should I have the seller fix this?” Inspectors need to be aware when they are crossing the line from inspector to agent. The agent is the person who has the expertise to handle the negotiations. Just as an inspector will grumble if an agent minimizes a reportable item in the report, the agent has every right to be unhappy if the inspector crosses the line from impartial observer to advocate. Inspectors need to resist the urge to leave their sandbox. Let the agents do their job representing the client.

The ultimate goal of each of us is to have clients successfully navigate the home buying/home selling process. For that to happen, real estate agents and inspectors need to act cooperatively in the best interests of our clients.