Real estate agencies requiring inspectors to carry insurance.

Simply amazing…NAHI should simply be ashamed at what they do.

The Inspector (vendor) has sold his soul to the Realtor.

He must pay money to be included, must submit his business
practices and insurance proof to the Realtor, and even
write his advertising, brochures and cards according to the
approved text of the Realtor… wow…:shock:

All for the sacred permission to be part of the Realtors scam…

In the vendor agreement that the Real Estate company wants
signed it states:

“WHEREAS, the parties desire to be bound by a mutually beneficial
contractual relationship.”

a. Weekly Sales Meetings. Vendor may elect to distribute some or all
of its promotional materials to Company’s sales offices. Depending upon scheduling constraints of the various sales office managers, Vendor may
meet informally with Company’s agents at the weekly sales meeting.

In the event that Company deems any of Vendor’s promotional material
unacceptable, Vendor and Company’s Marketing Department shall work
together to develop marketing material acceptable to Company. All costs incurred in order to jointly create mutually acceptable marketing materials
are to be borne by Vendor. All of Vendor’s promotional material shall
clearly state that Vendor is solely responsible for Vendor’s products and
services and that Company does not warrant or guarantee…

John, you are so right. This:

“WHEREAS, the parties desire to be bound by a mutually beneficial
contractual relationship.”

is proof of collusion (secret agreement) where none is supposed to exist outside of the agent/principal (agent/home buying client) relationship.

The Inspector (vendor) has sold his soul to the Realtor.

He must pay money to be included, must submit his business
practices and insurance proof to the Realtor, and even
write his advertising, brochures and cards according to the
approved text of the Realtor… wow…:shock:

Hey John,

That’s been going on for many years here in California. I’ve had Allen Insurance send direct copies of my coverage declaration pages to First Team Real Estate, RE/MAX, Prudential and Cendant Corp. over the years. It’s needed to help protect the real estate company from neglagent referral lawsuits when using your service. I don’t see a problem with it. We should all carry insurance to protect ourselves, clients and business relationships with folks who refer us.

Could someone cut and paste directly where it states this is between the realtor and a home inspector? I saw plumbing/maid services/etc but I didn’t see home inspector anywhere and I don’t particularly want to read the whole thing.

Thanks in advance.

The real estate company is already protected by their insurance. The problem is they have significant liability when they encourage a direct reference. Your insurance simply takes the edge off that. I bet the endemnification is “rarely used” in the real world.

The real problem however (and you may not be part of the real problem) is realtors know there are a zillion people looking for work. What they do is pick an easy disposable inspector who has insurance and refer the heck out of them. If and when the lawsuit happens they just let the inspector burn. Its called “disposable inspectors”.

I know some who do expert work and the first thing they investigate is the preferred provider relationships. When they find preferred provider coupled with E&O its easy money. You were in colusion with the Realtor. You may say no but I say let the jury decide. Done deal; your dead.

As far as protecting the client goes. How much insurance do you carry? What do you limit and disclaim in your contract? Most inspectors carry 1,000,000 policy then disclaim to a xxxx amount of report fee. In a thread earlier it was an insurance company’s opinion that said you should find ALL the defects in the Standards or make restitution for what you miss. I have been inspecting for 20 years and I guarantee you (or I) missed something on that 25 year old home.

Thats the nuts and bolts of E&O and preferred providers. I can guarantee you one thing. Take two preferred providers in the same office. One is tough; one is easy. The easy guy will get the majority of referrals. They are the disposable inspector. The tough guy gets tough clients: the jerk engineer, the threatening lawyer etc. The reasonable, easy clients ALL go to the easy guy. I guarantee it! :wink:

None of the money limits hold water here in California. The ethics and profession code strike down any and all references to limited damages, specifically the cost of the inspection. That’s why our contracts normally state that all other portions of the contract will remain in full force and effect, even if certain line items are uninforceable. Bottom line is, the contract in and of itself won’t protect you. It is another layer of defense however. It must provide some legal defense though, otherwise the insurance companies wouldn’t make our coverage subject to having a signed inspection agreement. My insurance carrier overs extended coverage to the agents relating to problems from referring me or my inspection. I think it’s a good marketing tool. I provide my insurance declarations page to any agent, real estate company or client who wants to see it. No problemo!

This is the real truth of E&O and realtors.


I’m starting to think you don’t like insurance companies to much and realtors even less. I feel your pain. This is a tough business to be in, unforturnately realtors are a necessary evil in the game. As far as insurance go’s, you know what Confucious say, “Don’t leave home without it!”

First they try to make us pay them to get their referrals. Now they want us to insure them too because they know dang well that they aren’t recommending the best inspectors based on merit as is their contractual and fiduciary duty to… but rather the inept NAHI members who pay the agents to decieve their clients about the real meaning of “preferred.”

Here is their scumbag definition of “preferred”: More desireable than other inspectors because these ones pay us to recommend them and pay to insure us for doing it.

Coldwell Banker is doing the same thing in florida,the good agents are having a hard time being told who to use,and the bad ones are like children covered in mud, they dont know any better.

Because you have accepted the lie that “realtors are a necessary evil
in the game”, then you show your fear that you cannot make it
without them. This fear will affect your judgement.

I want you to know that it is one of the most wonderful feelings in
the world to be free from all dependence and fear of Realtors.

When a Realtor starts talking to me about “going easy on the inspection”,
they sometimes stop in their tracks because they see that glare in
my eyes… It does not take long for them to realize… that I throw
realtors away, before I let them throw me away.

I am not the “throw away inspector.”

Thanks John Cahill, for such a profound post, that states the obvious.

I have been told by some realtor’s that there brokers have told them not be present at the inspection to limit there liberty.

Interesting slip of the tongue there. :wink: Probably to limit the HI’s liberty as well. :smiley:

McKenna, Thanks for the backup. Handley, Thanks for the interaction. :slight_smile:

Yes we share the pain. Actually I have many good Realtor friends. I get lots of Realtor referrals. There are 33,000 Realtors in Dallas area. I am pleased to get along with enough to keep the ball rolling. They negotiate on behalf of their clients and do not compromise my report. The ones that don’t like me go somewhere else. That leaves 29,999 to fill the opening. Disposable realtors, HA.

After 20 years in business I have many realtors who use me for two years then go somewhere else because I am too tough. They ALWAYS come back a year to two later. :wink:

What I do not like about insurance stems from a different philosophy. When I do an inspection for $300 or so I am not willing to guarantee I found it all or pay restitution if I do. In recent posts on this forum an insurance company expressed the idea an inspector should pay for what they miss. A NACHI attorney interpreted law in a similar manner. Many inspectors post “being responsible” for their work. What a martyr syndrome. What I do not like is this industry rolling over and saying I’ll pay for anything I miss for $300. Thats where it is going; look at Kansas legislation.

Sure I would be liable to Kansas standards for 5% of the home sale. Thats less than the Realtor. Its a compensation thing. I would probably eat a rabbit turd for $10,000 cash (heck a survivalist will do it for a beer :D)

As for insurance companies. Hey they are in business for themselves not you. Your company is an actuarial. We promote the concept of responsibility to the consumer by calling it E&O. It should be called professional liability insurnace not E&O. That what doctors and lawyers call it. The very name E&O imparts a warranty implication. We sell “miss it and pay for it” with the product name.

What irks me is inspectors who advertise “Do not use an inspector who do not have E&O” then they limit their liability in their contract. In some sense Kansas insanity makes sense. You gotta have E&O and you cannot limit liability. Wow now that is scary. Can you see the dishonesty in advertising “we protect the public with E&O then limiting it in a contract?”

The preferred provider scheme will prevail in spite of rule changes. In Texas they simply renamed “compensation” to “advertising”. Its just not “preferred”. I see that always being the case. Its just a business decision and I do not have a problem with that. It would be interesting to get a Realtor in deposition and ask “so you referred this inspector because they were the best for the client or because you got advertising money from them?”.

Every business has its problems however. Thanks for your comments. I am not offended at all.


Here’s a button to wear.


Or this!


Those are pretty cool! I like. :slight_smile:

Guess what Nick, in the Maryland and Virginia area there are also ASHI members paying Long and Foster. I believe one of them is on the licensing board for Maryland.