Question: What happens when a home inspection company and home warranty company offer a $50 rebate? My attorney says this is a kickback.
Interpretation by the ASHI Code of Ethics Committee: ASHI’s Code of Ethics Section 1.C. states: “Inspectors shall not directly or indirectly compensate realty agents, or other parties having a financial interest in closing or settlement of real estate transactions, for the referral of inspections or for inclusion on a list of recommended inspectors, preferred providers, or similar arrangements.”
The rebate in this arrangement is not a direct or indirect compensation to the home inspection company, warranty company or anyone else having a financial interest in the closing or settlement of the real estate transaction for the referral of inspections or for inclusion on a list of recommended inspectors, preferred providers or similar arrangements.
Instead, the $50 rebate goes to the client, who chooses to use the two companies that have bundled their services. The client may choose whomever they wish to conduct their home inspection and from whom they would like to obtain a home warranty.
The marketing plan made between the home inspection company and warranty company is obvious from the wording of their brochure—it stated that these two companies have bundled their services to attract the client by saving them money.
Choosing a home inspector based on price could just as easily have led the client to choose a $200 inspection from “ABC Inspection Company (a fictitious company),” without credentials or affiliations, over a $400 inspection from an ASHI Certified Inspector.
In this case, the client benefits with a savings of $50; neither the inspection company nor the warranty company involved in the transaction receiving a $50 kickback, so this is not a violation of the ASHI Code of Ethics.
Question: Can a home inspector offer a $20 gift card to every real estate agent who books a home inspection with him or her?
Interpretation by the ASHI Code of Ethics Committee: Offering a gift card to real estate agents would be considered a form of compensation for the business and, as such, violates ASHI’s Code of Ethics Section 1.C.: “Inspectors shall not directly or indirectly compensate realty agents, or other parties having a financial interest in closing or settlement of real estate transactions, for the referral of inspections or for inclusion on a list of recommended inspectors, preferred providers, or similar arrangements.”
Home inspection clients should be able to have confidence that the referral of a home inspector by their real estate broker is based on an assessment of the inspector’s competence and professionalism, rather than on the potential receipt of a financial incentive by the referring party.
Question: A home security company is sending out emails to home inspectors advertising a program they designed exclusively for home inspectors. Through this program, the home security company will pay $165 for each closed sale or activation that the home inspector completes. Does this program violate the ASHI Code of Ethics?
Interpretation by the ASHI Code of Ethics Committee: This program is clearly a violation of the ASHI Code of Ethics. Section 1.E. of the Code states: “Inspectors shall not accept compensation, directly or indirectly, for recommending contractors, services, or products to inspection clients or other parties having an interest in inspected properties.”
Jamison Brown is the owner of Home Inspections by Jamison & Company, Poquoson, VA. Before becoming an ASHI member in 1988, Jamison was a project manager, and supervised the construction and remodeling of more than 10,000 housing units for the U.S. Department of Defense (DoD) and the U.S. Department of Housing and Urban Development (HUD). Jamison is a former member of the Carpenters and Joiners of America and a former licensed plumber in the state of Virginia. He is a member of the International Code Council, International Association of Electrical Inspectors (IAEI) and a certified member of the American Society of Home Inspectors (ASHI). He has been a member of ASHI’s Technical and Membership Committees, and was chair of the CEPP Committee. Currently, he chairs the ASHI Code of Ethics Committee. Jamison has personally inspected more than 18,000 residential and commercial properties. Contact him at email@example.com.