Realtor and inspector relationship

Has anyone known or heard of inspectors, Inspect their spouses listings for his or her buyer? Even if its disclosed up front? Just curious.

This has been discussed many times and the common conclusion is that inspecting a house with a financial interest in it is unethical. If your wife is the realtor and she receives compensation then you, too, would be seen as receiving payment.
Others may chime in and add some wisdom.

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I agree with David. IMO, it is unethical.

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As the old saying goes… “No man can serve two masters: for either he will hate the one, and love the other; or else he will hold to the one, and despise the other. Ye cannot serve God and mammon.”

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Well, I will be the first “judge” on this panel to dissent with the other “judges”.

JMHO, I think the InterNACHI COE touching base on this is somewhat vague and confusing.

The InterNACHI® member shall not:

  1. have any disclosed or undisclosed conflict of interest with the client;
  2. accept or offer any disclosed or undisclosed commissions, rebates, profits, or other benefit from or to real estate agents, brokers, or any third parties having financial interest in the sale of the property; or
  3. offer or provide any disclosed or undisclosed financial compensation directly or indirectly to any real estate agent, real estate broker, or real estate company for referrals or for inclusion on lists of preferred and/or affiliated inspectors or inspection companies.

Regarding (1.) What are disclosed or undisclosed “conflicts of interest with the client”? What are the examples and why does it present a conflict of interest. Very vague!

Regarding (2.) Clearly trying to state “kickbacks” that could possibly be deemed taken for “favorable” inspections are not allowed. Interpreted that realtors, brokers or 3rd party “sellers” should not “donate to the cause” in their favor. Not sure I’ve ever seen any buyer say I’ll give an additional $1k if you make this deal work for me with your inspection.

Regarding (3.) You probably have a very weird marriage if you pay your spouse for referrals.

Bottom line, if InterNACHI feels that doing inspections for a spouse’s BUYER clients is not appropriate, it would or should be included in their COE, " Inspectors are NOT allowed to perform ANY inspections if the Spouse of the inspector is a real estate agent and is involved in the transaction."

When that wording is adopted, I’ll change my opinion.

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To each their own. There a quite a few well respected, long time members that do inspections for their spouse’s clients. It is inconceivable that a client would not know that their agent suggested their spouse as an inspector. The ultimate decision is for the client to make as to who conducts their inspection.
Nothing wrong with it IMHO
Cheers

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100% Doug, and as long as the agent recommends at least 3 other inspectors to their client for them to choose from, I see no problem.

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Anybody want to explain what’s unethical about this scenario?

Client hires inspector to do a home inspection. Client is aware that inspector is the spouse of the RE (buyer’s) agent representing them in the purchase of the home. The client, prior to the inspection, was given 3 other inspectors information and was instructed to make decision based on research. The client chose the inspector they felt most comfortable with although the spouse of their RE agent.

Prior to the inspection, the spouse RE agent came across some information that indicated that the subject property could possibly be related to a mobile home structure. The client did not want their home to be related to any kind of a mobile structure.

Spouse inspector started the agreed upon inspection and looked first at the foundation and determined it was originally a mobile with a build around. Spouse RE agent contacted the client who was also the inspector’s client to inform them. Contract was terminated.

Any conflict of interest here?

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I agree with what you said

There may b a conflict if the listing agent’s spouse conducted the inspection. If that info was not disclosed.

Cheers

IMHO it is not a conflict if properly disclosed prior to accepting to do the inspection, so client has a chance to find another inspector if they don’t feel comfortable with the situation. You can’t agree to do the inspection without making the disclosure; you can’t wait and not disclose the relationship until you get on site and start the inspection. That is too late to make the disclosure. Now the client has little choice but to continue, as there’s been too much lost time at that point for the client to say no I don’t like this, but now it’s too late to find another inspector. Especially when the purchase contract only allows a few days to get inspection done and request remedies. They are trapped into using that inspector even if they don’t like it. But just being a relative isn’t necessarily a conflict in my opinion.

In a different scenario from relatives, I know of several inspectors who have developed very deep relationships with realtors which I feel equally borders on a conflict like a relative. These inspectors ONLY do work for like 1-3 agents, and rarely take any other jobs. Often the agent contacts them directly and sets up the inspection for the buyer, who is still the client but the agent just feels it’s easier and they can control things better if they set it up. Having the agent set it all up avoids the situation when you have a client who is a procrastinator and not reliable to make the call to set something up in a timely manner, or who might go rogue and hire another inspector that the agent doesn’t like or can’t “control”. Also, this seems to happen a lot with the high end expensive homes, where the big wig buyer doesn’t want (or has time) to get their hands dirty with those details and the RE agent offers all that as part of their “VIP buying service”. I personally feel those relationships are as suspect as a relative, if not more suspect. The inspector maintains his livelihood of inspecting only by keeping that agent happy. If there is a conflict of which way to go with an issue, you better believe the inspector might err on the side of keeping the agent happy and not on the side of their client. They can’t upset that agent or they risk not getting future referrals. What’s your opinion on those relationships, aren’t they just as much a conflict of interest?

And Tom, no conflict in your scenario with mobile home, that can happen regardless of whether agent and inspector are related, both were acting in the interest of their client and disclosed what they found to the client. Now if husband/inspector suspected the issue, told wife/agent, who then talked him out of reporting it cause he wasn’t 100% positive…then it’s all wrong.

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It is a slippery slope you are walking. I don’t see an issue if you are getting referred from your spouses co-workers. But you are gaining financially on any transaction that your spouse earns money from. I would also caution you to at least consider this when entering into any business relationship whether it’s with a spouse, relatives, or friends. The scenarios I read besides George’s listed above strongly rely on each person, (client, realtor, and inspector) acting on their best behavior and trusting that everyone acted in the best interests of the client. Even if you are doing everything correct and above board that doesn’t necessarily mean a client won’t believe they got taken advantage of because of your relationship.

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I agree with Tony. And things can really get hairy if attorneys and judges get involved.

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Boy… based on all the posts… it sure sounds like a lot of explaining would have to be done in court. No thank you :slight_smile: I like it simple.

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Simple is good. And, I think the perception of wrong-doing is not something I want to be forced to deal with either.

For each of you who have replied… I ask this question: Would your answer change if the word “spouse” was changed to “boyfriend”? or “friend”? or “acquaintance”? Aren’t we all friends with some agents? IMHO, This is a relationship business. Social marketing, strategy marketing to build referrals from realtor agents is key. If “Spouse” is wrong, why is “friend” right?

It’s not a matter of being friends per se. The question is whether or not there is any direct financial benefit from the transaction (sale of the house). A typical “friend” will not pay for your rent, buy you food, clothing, a car, and share a retirement plan, etc… In other words, if the house sells and your “friend” will then pay (via commission or the profits from the sale) for “your” rent, then there is a direct financial benefit and it’s best not to perform inspections for that “friend”. In other words, when you are inspecting for your spouse or boy/girlfriend, you’re guaranteed an indirect kickback.

Some state laws have specific language about this, best to ask your attorney in your state to be sure.

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I agree with Simon’s points and also have you ever filed taxes with your spouse, probably. But have you ever filed taxes with your friend, probably not.

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IMO that would depend on if you were living with them and sharing expenses.

Even if All Parties are Impeccably Honest it could come back to bite you, even if you fully disclose the relationship to the Client. Say there is a problem and you wind up in court it is not going to look good to the judge or jury when the Client’s Attorney starts showing all the potential problems that were set up when You and Your spouse ‘conspired to defraud’ the (now Their) Client.

Best to avoid any semblance of impropriety. Like for instance, you don’t go meet your neighbors wife for lunch to discuss her husband’s upcoming birthday party. Makes no difference if both of you are faithful and honest…

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