This should make for a very interesting conversation!
A blog reader sent me an article from the CBC.ca, which talked about the “lack of regulations” on the home inspection industry, and asked if I thought it was better or worse than the lack of regulations I complain about in real estate on a regular basis.
Better or worse? I can’t really say. But I do agree that the parallels in the industry are striking, and that it’s ultimately up to the customer to satisfy him or herself of the inspector (or Realtor…), as there are always going to be a few bad apples in the bunch.
A Realtor from another brokerage told me last week that I “hammer on real estate agents,” and asked why I did so. She said it “makes us all look bad,” and she can’t see any benefit.
Really?
Doesn’t it make the bad agents look bad?
Maybe giving my opinion on industry practices – in the industry in which I work, helps me rationalize all the crap that goes on. Maybe I feel it’s helpful to the consumers. And maybe I just take pride in my work, and my business, and I wish others would follow suit. So yes, I look to expose poor practices where I can.
But real estate isn’t unique.
Real estate isn’t the only industry that has bad apples. EVERY industry on the planet has bad apples. I just happen to write for a real estate blog…
Trust me, if I were an auto mechanic, I’d have a blog on shady auto mechanic practices, and resources for drivers. It’s the same thing in my mind.
But one of the fundamental problems in my industry, which I write about on a regular basis, is lack of barriers to entry to the business, that results in anybody who is interested becoming a Realtor.
The same, it would seem, is true for our neighbouring industry: home inspectors.
The CBC ran an article on last week called, “Shopping For A House? Inspect Your Home Inspector.” Click the link to read the article.
The article reads:
–
“Anybody can print a business card and call themselves a home inspector,” says author and home inspector Bruce McClure.
“There’s no rules or regulations as to what a home inspector does.”
The problem, McClure says, is education. Plumbers, electricians and gas fitters get extensive training that includes thousands of hours as an apprentice
“But the home inspector is supposed to come in and do everything and has no training in any of that,” he said.
–
If you take the above quotes at face value, it would seem there is little to stop Joe Public from putting on some Mike Holmes-brand overalls and calling himself a home inspector.
And it would also seem that there is no definition of what a home inspector actually does.
It’s like some things in real estate, like how I lament that there is no one, set, identifiable procedure for reviewing multiple offers. It all depends on the listing agent, and how he or she wants to handle it.
Is there a checklist for the home inspector?
Is there a “pass” and “fail” like there is on TV shows?
At the end of the day, the consumer is hiring the inspector, just like the consumer is hiring the Realtor. Or the accountant, or the personal trainer, or anybody providing any service out there.
Lack of licensing and regulations is only the first problem.
But isn’t this true of many industries?
Perhaps many certifications, licenses, degrees, and designations are watered down?
A friend of mine recently completed his M.B.A. at a very prominent Ontario university, and he told me, “More than half of the people in that class were complete rejects, who probably need help getting dressed in the morning.” He said many of them got into the program because their parents are “somebodys,” and that maybe 10-15 people in the class were capable of offering intelligent thought.
But isn’t an M.B.A. worth something these days?
Perhaps value is in the eye of the beholder.
So when it comes to picking a home inspector, what should the consumer look for? And how should the consumer go about finding the inspector to begin with?
Well if you trust your real estate agent, and that agent is experienced, with good contacts, then that person is as good a place as any to start.
I have one home inspector that I know and trust, and refer to all my clients. He’s probably done 50-60 inspections for me over the last few years since I first started working with him. Just as I have one mortgage broker I prefer, and one real estate lawyer, I find that when you’ve got somebody that satisfies your clients – stick with them!
Interestingly enough, public sentiment might not agree. One comment on the CBC article online read as follows:
Okay, so somebody that says, “they are usually in cahoots with each other” might be exaggerating, and might have an axe to grind.
But it can happen though.
I told this story once before on this blog, so forgive me if you’ve already heard it.
A few years ago, a buyer came to me, having fired his previous agent – a very well-known Toronto Realtor! He told me a story that I had a hard time believing, but it turned out to be true in the end.
First, the Realtor told the buyer that the home inspection was $3,000, and he needed to pay in cash, which he did. When his suspicious led him to investigate later on, he found that the inspection company usually only charges $500-$600, although the inspector refused to speak to the buyer on the phone, or answer any questions, and just kept telling him to speak to the agent.
Second, the Realtor really, truly tried to push through the inspection, for a house that was sold conditional on inspection once previously, and two times afterwards; and all three times, the deals fell through.
I know this house very well. A friend of mine’s parents owned this house 15-years ago, and my friend told me one day, “Yeah, my folks had major issues there and they got out, thank God!”
Small world, indeed. And after talking to my friend (the coincidence was astounding!), and after seeing this house sold two more times, with the deal falling through both times, I realized that my new buyer-client wasn’t crazy – like the guy posting on the CBC story above, but rather he really did find a Toronto Realtor in “cahoots” with an inspector.
So that’s one case. And it’s the only time I’ve ever experienced, or heard anything like it.
But even if an inspector is honest and true like 99% of them, then how do you know if they’re any good?
I think as with Realtors, or many other professions, it’s word of mouth. And maybe as with other professions, you’re only as good as your last referral.
As the CBC article explained, there’s really no “process” for an inspection, and no checklist, although many home inspectors have adopted the Carson Dunlop formula as their own. Even when the inspection is not Carson Dunlop, the pages in the folder look the same.
How much stake do you put into the name of the company that the inspector works for? Do you need a “brand name?” The inspector I use works for Carson Dunlop, but I’m sure there’s one, two, or ten crappy inspectors that work for the company. And by the same token, I’m sure there’s some fantastic home inspectors that work for a “no-name” company, or are self-employed at “Bob Smith Home Inspections.”
Do you put any stake into online resources, reviews, and rankings?
I think we all know that there are companies out there that specialize in faking online reviews! Whether it’s a hotel chain, consumer electronics, automobiles – they all have fake reviews.
In all my time in the business, I’ve had only two, what I would call, “problem houses,” that ended up costing my buyer-clients money. One of these houses, unfortunately, was one I sold to a friend.
I knew something was off about the house from the very beginning. Houses “settle” over time, but this goddam house was slanted! Leaning, like that tower in Pisa!
I told my friend to use my home inspector, and he decided to pick a stranger off the Internet. He told me, “He’s got a really great rating on HomeStars!”
I didn’t like the guy at all. Call me judgmental, but I just had a “feeling” as soon as I met him. It felt like he came into the house looking to check boxes on a sheet, hand it to the client, say, “good luck,” and move on.
That’s exactly what happened, and when I pressed him on the crazy slants in the house, the lean, and the risks involved, he couldn’t really offer more than “it’s fine, it’s fine.”
My friend bought the house, against my advice, but that’s another story.
In the end, low and behold, the house had issues, and it cost a lot of money to fix. Don’t worry – my friend, like anybody else that bought real estate in Toronto in the last 20 years, has made a lot of money on the property. But that inspector should never have been in the business to begin with.
So there you have it: two stories about inspectors, one that was referred by a prominent Realtor, and one that was “ranked highly” on the Internet. Neither panned out.
But home inspectors, as I said at the onset, are like Realtors: there’s a lot of them, some good, some bad.
As with renovators and contractors, if you had a couple of friends use a person’s services, and those friends were happy, then there’s a good place to start your search.
I really do think “word of mouth” is the best way to find a reputable, reliable, experienced home inspector, so long as that word comes from the mouth of somebody you know and trust.
Noel
at 8:50 am
Any time you have a business relationship with someone and they can refer someone else to you that you have to pay money to there is an the potential for a conflict of interest even if money is not being changed hands. You might be referring them because they are your brother-in-law, because you owe them a favour or because you are indeed getting a kickback. I don’t know any industry that is immune from the latter. However, I would sooner use a professional, be it home inspector, stager, landscape to fairy dust my front yard for sale, etc. that a realtor recommended and risk some conflict of interest from them than I would some anonymous posters on a website like Homestars (which is notorious for being full of shills). As with every industry there are the unscrupulous but I am surprised about the story you told about the well-known agent how was. Perhaps he was having a slow month!
As for the low barriers to entry into the real estate business. Why is that? I think it’s obvious. Ever organism wants to perpetuate and grow and business is no different. The greater the revenues of RECO/OREA/CREA, etc. the better the executive can justify their huge salaries and perks. Do you think they are all of a sudden going to severely lower their revenues and thus have to contract their organization, fire some employees and also lower their own salaries by making it much harder to become a real estate salesperson? Of course not! Their self-serving strategy is the main reason the bar is not being raised. “Let the agents fight it out amongst themselves but I am not going to do anything that affects my remuneration or my success at growing this organization”. Charities work the same way. Most are over-bloated organizations feeding off the desire of people to help others but just look at the overhead and ridiculous salaries paid to many of the top brass at most charities and you’ll be amazed at what they get paid.
If that is not the reason the bar on becoming licensed is not raised, then what is?
Kyle
at 10:55 am
I’ve had a few home inspections done and i have found most inspectors to be pretty knowledgeable and diligent, but i would recommend that you be present when the inspection is going on and ask lots of questions. Your Realtor will be there (i believe RECO rules force them to be), but don’t rely on him/her to ensure the Inspector is carrying out a thorough inspection. The one bad inspection (i.e. there was something that showed up fine in the report, but actually required lots of money to fix) i had, was the one inspection that i wasn’t present at.
Noel
at 11:47 am
REBBA 2002 does not require a real estate salesperson to be in attendance but a local board might. For exampe, TREB requires the buyer’s rep to be “in continuous attendance during any showing of the property, buyer visits or inspections necessary to fulfill conditions”.
However, that’s not necessarily going to prevent the agent and inspector from being in cahoots or ensure a good job is done.
Appraiser
at 5:06 pm
Don’t look now, but the TSX is down 14% year to date. Ouch!
Note to real estate bears: ‘Shoulda bought a condo eh?
GeorgyBoy
at 9:01 pm
You are an idiot. LOL
Appraiser
at 6:41 am
@ GeorgyBoy. Here’s an article from TEN years ago, just for you (depending on your level of comprehension, that is).
Bubble to burst?
http://www.canada.com/national/nationalpost/financialpost/story.html?id=33dddb8e-b351-4a48-a31e-2d61e515e7fa
Anything sound familiar?
condodweller
at 1:28 am
@GeorgyBoy. Don’t feed the trolls. It’s hilarious that he is using my words I used on him a few posts ago to put you down!
Appraiser
at 7:43 pm
Why Very Low Interest Rates May Stick Around.
http://www.nytimes.com/2015/12/15/upshot/why-very-low-interest-rates-may-stick-around.html?partner=rss&emc=rss&_r=0
Interesting quote from above article re expert predictions:
” In 2014, all 67 economists surveyed by Bloomberg predicted higher rates six months hence; they instead fell sharply.”
Izzy_Bedibida
at 11:10 pm
Ex wife bought a house before we separated. Had a home inspection done. Our home inspector was thorough and diligent. Sellers had a home inspection done and had it on display. Sellers report was very wishy-washy. Everything was fine compared with our home inspection report. Their report labeled asbestos insulation in the attic as “other” and roof as needing “only a few shingles”. I see it as an example of their home inspector being a shill.
The story continues with sellers real estate agent trying to do everything possible to get ex wife to sign off on waivers and not give any extensions while she waited for lab report and quotes for asbestos removal and roof repair. Ex wife signed waivers a few days before lab report became available.
Sellers agent suddenly became ” unavailable ” after lab report was presented to her. She switched brokerage and “couldn’t represent sellers anymore”. Ex wouldn’t close deal until conditions were met and sellers lawyer comented on the agents behavior. He recommend sellers meet conditions or house becomes even harder to sell when it’s relisted and word gets out why deal fell through.
I’m sure sellers agent still got a very nice commission.
Joel
at 9:40 am
I think if you can trust a real estate agent with selling or buying your very expensive home, you should trust their judgment on the ancillary services. When we bought our home our real estate agent had all of his trades lined up and offering us quotes. They were way higher than we thought reasonable so I hired some people I found on kijiji. Needless to say we ended up getting his trades in to fix the work that the other guys messed up.
If you can’t trust them to recommend an inspector you shouldn’t trust them with your 700K purchase or sale.
daniel
at 1:03 pm
I bought a house where the sellers had commissioned a home inspection report which indicated knob and tube wiring. I walked the house and ID’ed a few unrelated issues, brought in an engineer and a contractor to inspect some specific points of concern unrelated to the wiring and bought the house. My insurer had agreed to insure it with K+T but wanted a report from a licensed electrician documenting the extent of the K+T. After doing a thorough inspection of the house he wrote a letter explaining that although there was K+T it had all been disconnected already and had merely been left hanging from some joists in the basement and attic, and therefore only had K+T in a nominal sense.
Given how freaked out people are by K+T i always wonder how many buyers that incorrect report scared away. Also worth noting, it was a very reputable firm, whose name rhymes with Shmarson Shmunlop.
Lastly, i would guess a lot of agents have a preference for home inspectors who don’t scare buyers off of deals the agents are trying to close. Without getting into kickbacks or anything shady, it’s just a general bias towards the inspectors downplaying problems so the deals get closed and the commissions get paid. I suspect, as well, that many agents even do this subconsciously.
Mara
at 8:27 am
Hi, I am looking at a property with knob and tube and can’t afford to convert it right away. Can you make any recommendations regarding insurers that will insure a house wired with k&t?
Thnx,
Mara
Kyle
at 4:24 pm
http://www.justshelter.com/realestate/issues/oldinsurance.htm
“Carson Dunlop has an exclusive relationship with David Slack of Liberty Mutual to provide insurance coverage for knob and tube wiring and galvanized plumbing, if Carson Dunlop inspects the home. Carson Dunlop can be contacted at (800) 268-7070. Mr. Slack can be contacted at (800) 971-1363.”
Mara
at 9:08 am
Hi Kyle, thnx that’s great!
Kyle
at 9:15 am
No problem. Despite the misleading wording, you don’t actually need to get a Carson Dunlop inspection in order for David Slack to insure your property either. Good Luck
Appraiser
at 3:04 pm
Sorry Mr. Rabidoux, but it seems that Canada actually has a three-pronged real estate market, not two.
https://twitter.com/bankofcanada/status/676798985949048832/photo/1
Michelle Stevens
at 5:55 am
This is why 87% of real estate agents fail in their first few years. People think it is easy. You put a for sale sign on someone’s lawn and make a bunch of money in commission, right? Well! It isn’t like that at all. I know, because I am a real estate agent and I had to bust my butt to get to where I am. I treat people with respect. I work as hard as humanly possible to educate myself, learn the trade, shadow seasoned agents, etc. If you don’t do that, you are not going to succeed. The public is smart. People talk and anyone who runs their own business will succeed if they are great. And anyone who isn’t will fail. It’s a free and open market which is the way it should be. It is unfortunate for those people who hire these “professionals” during their short stint in business, however. Thanks for the good read. I also write a blog on my website. If anyone is interested to check it out. Relating to the subject, I’ve written a whole series for homebuyers:
https://jewelhouserealestate.com/category/buying-a-home/