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



Working With Real Estate Companies

JAMISON BROWN

In this and future issues of the Reporter, ASHI’s Ethics Committee will address dilemmas faced by home inspectors.

Questions

  1. Is it inappropriate or unethical for an inspector to pay a fee back to a realty company for work referred by that company?

  2. Is it inappropriate or unethical for an inspector to pay a real estate company to advertise as a marketing partner or a preferred vendor?



Interpretations by the ASHI Code of Ethics Committee

1. Is it inappropriate or unethical for an inspector to pay a fee back to a realty company for work referred by that company?

Yes.

Paying a real estate company for referrals generally deceives or misleads clients who would assume that a referral is based on competence, not on hidden payment. Participating in such deception is inconsistent with acting in good faith toward each client, as required by the ASHI Code of Ethics
(http://www.homeinspector.org/Code-of-Ethics). 

The client is best served when the inspector’s relationship with the real estate company handling the transaction is at arm’s length. Any agreement or understanding between an inspector and a real estate company that restricts open disclosure to consumers about hidden referral fees or other pertinent financial arrangements is unethical because it compromises the consumer’s legitimate interest to know the circumstances behind the referral that could impact the integrity of the inspection.


2. Is it inappropriate or unethical for an inspector to pay a real estate company to advertise as a marketing partner or a preferred vendor?

Yes.

Paying for endorsements or paying to be on an “approved” or “preferred” list (even if it is being called “advertising” or “marketing”) is generally similar to paying for referrals and is inconsistent with the ASHI Code of Ethics for the reasons described in the answer to Question 1. Furthermore, giving an “up-front” payment to a real estate company for an endorsement or a listing is inconsistent with the Code of Ethics, which calls for impartiality. Inspectors’ fidelity to their clients and the interests of their clients is paramount; inspectors should avoid actual or potential conflicts of interest created by such arrangements.

Paying to advertise as a partner or as having a special relationship with a real estate company, or paying to use the logo, trademark or other property of a real estate company is (a) inconsistent with the Code of Ethics because it shifts the inspector’s allegiance away from serving only the client and (b) inconsistent with acting in good faith toward each client, as required by the Code of Ethics.

 

The impartiality of the inspector and his or her absolute duty of loyalty to the client would have the appearance of (if not an actual) conflict of interest from such an arrangement. Such an arrangement also could mislead and confuse the client about the distinction between the inspector and the realty company handling a transaction. 

Finally, any undisclosed understanding that is hidden or disguised from consumers—involving referrals, endorsements or other agreements from real estate companies that are quid pro quo for any action or appearance that would compromise full and honest inspection and reporting—is inconsistent with the Code of Ethics. The separation and independence of the home inspector from the real estate company handling the transaction is a cornerstone principle intended to protect consumers.


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 over 18,000 residential and commercial properties. Contact him at jamison.brown@gmail.com.