October, 2018
Feature
Inspection News and Views from the American Society of Home Inspectors



Can an Inspector Do Inspections That Are Paid for by Real Estate Agents?

JAMISON BROWN

QUESTIONS:

Is a program set up by a real estate company that offers free home inspections (paid for by the real estate company) in conflict with the ASHI Code of Ethics, Section 1.E?

To add more context, let’s say that the application to participate in the program directs the inspector to give discounted fees based on the number of referrals the inspector receives.

Also, is it a conflict if the real estate company or another entity pays for the inspection only if the deal goes through (meaning that, if the deal doesn’t go through, the buyer pays)?


INTERPRETATIONS BY THE ASHI CODE OF ETHICS COMMITTEE:

A program such as this does not necessarily conflict with the ASHI Code of Ethics, Section 1.E (www.homeinspector.org/Code-of-Ethics), as long as the real estate company reimburses the client after the client pays the inspector or if the inspector’s client is the real estate company.

Under the latter arrangement, the inspector would typically be responsible to the real estate company as the client (as opposed to another party, such as the buyer) and the inspector should be mindful of the second paragraph of the Code of Ethics (which cites integrity, honesty and objectivity as fundamental principles of the Code), as well as Section 1.A, to avoid slanted reporting.

However, if the real estate company is not the client and the real estate company is dealing with the inspector’s client, then accepting payment from the real estate company would conflict with Section 1.E.

In addition, discounting fees paid by a real estate company based on referrals would conflict with Section 1.B because such discounts would be de facto payments for referrals to clients (other than the real estate company).

Such de facto payments are a deception of consumers, who would expect referrals to be based on competence, not on a hidden benefit to the real estate company. However, if the real estate company is always the client and pays the fees, then such discounts would not conflict with Section 1.B.

It is not a conflict if the buyer is the client and the buyer pays the inspector, regardless of whether or not the real estate company reimburses the buyer. Similarly, it is not a conflict if the real estate company is the client and pays the inspector, regardless of whether or not the buyer reimburses the real estate company.

However, it is a conflict with Section 1.E if the buyer is the client and the real estate company pays the inspector, or if the real estate company is the client and the buyer pays the inspector.

Finally, having any inspector compensation that is directly or indirectly contingent on the inspection results, such as whether or not “the deal goes through,” is contrary to the second paragraph of the Code of Ethics to avoid conflicts of interest and contrary to Section 1.A against slanted reporting.


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 jamison.brown@gmail.com.