Real estate agent building inspector referrals – a conflict of interest?
Mar 13 2017
If a building inspector claims to be popular with real estate agents, or a real estate agent is strongly recommending a particular building inspector to the exclusion of any other inspector, your suspicion may be warranted.
A real estate agent’s primary objective is to sell their vendor’s property at the highest possible price under the most favourable contract conditions.
A building inspector’s primary objective is to provide you, the purchaser, with an independent report detailing the condition of the property prior to the expiration of the contractual cooling off period, or prior to bidding at auction, so that you can make an informed decision about whether you want to proceed with the purchase, and how much you are prepared to pay.
The relationship between real estate agent and building inspector can easily go awry because the building inspection report may jeopardise the sale and/or purchase price of the property.
Unfortunately, cooperative relationships exist between certain “building inspectors” and real estate agents in SA where the “inspector” enjoys a good feed of referral business from the agent because they are willing to provide “favourable” building inspection reports. SBI believes this scenario is quite rare, however.
Then again, many real estate agents are generally dubious of building inspectors because they have had legitimately bad experiences with untrustworthy building inspectors.
Unfortunately, the building inspection industry is South Australia is completely unregulated and anyone can call themselves a building inspector! We’ve heard many horror stories firsthand from both agents and clients about deficient building inspections.
On the other hand, your suspicion may be justified if you find an apparently reputable building inspector through your own independent research and the agent strongly warns you against using them. Sometimes this may be reasonable as the agent may be warning you against a legitimately dodgy building inspector who has somehow slipped through the cracks, however, this may also be because the inspector you have selected is “too thorough” (if there is such a thing!). On occasion, we have been told by our clients that certain agents have advised them against using us, but this only confirms that we are doing our job properly and ethically!
An ethical and qualified building inspector will provide an objective, impartial property inspection report regardless of the personal or financial circumstances of the purchaser and vendor.
When we are engaged to conduct an inspection and we make contact with the agent to schedule the inspection, we have at times met with resistance from the agent when we advise a standard building inspection will take between 1.5 to 2 hours. When the agent responds by suggesting the inspection should take no more than half an hour, we know that they have dealt with – and may even endorse – illegitimate inspectors.
These days most astute buyers will organise a pre-purchase building inspection before committing to a property. Having dealt with hundreds of real estate agents, we can safely say that most are reasonable people who gracefully accept that there may be issues raised in a building inspection report that their client may need to rectify for the sale to proceed. However, some agents (and vendors) can be less gracious and the building inspector, as the bearer of bad news, is an easy target for their wrath and blacklisting.
In our experience, through honest reporting and respectful and effective communication, there is no reason the agent, client and building inspector cannot work together to achieve a mutually beneficial outcome: the successful sale of a property by an informed buyer at the right price.
At the end of the day, real estate agents can and do recommend building inspectors. We at SBI believe that there is not necessarily a conflict of interest when agents refer inspectors as most agents do so with noble intentions, legitimately recommending inspectors that they believe are of high quality and integrity. When agents refer dodgy inspectors with less-than noble motivations, a conflict of interest then arises.
Ultimately, you as the purchaser are responsible for investigating the credibility of a building inspector.
How do I choose a good building inspector when the industry is so unregulated and there are so many dodgy “inspectors” out there?
Easy. Use the following guide … or phone us on 0438 416 461 for a quick chat!
1. Do they hold any building qualifications and what is their building industry experience? Ideally you want to see a Building Work Contractors Licence (Building) and, even better, an unrestricted Building Works Supervisor’s Licence. Run licence numbers through the Consumer and Business Services website to ensure that they are legitimate. Some building inspectors who hold BLD licenses may be purposefully misleading you to believe that they are licensed supervisors, yet are only licensed for a specific trade like landscaping or tiling. At Summerton Building & Inspection we are proud to hold the appropriate licences.
2. Google the inspector. How many Google Reviews do they have? Read what other people have said about them. At Summerton Building & Inspection we proudly enjoy a 5-star Google customer review rating with over 50 independent reviews!
3. Are they insured? All building inspectors should hold current professional indemnity and public liability insurance policies. What credible insurance company would insure a truck driver to conduct building inspections?
4. Don’t fall into the trap of price shopping. Most, if not all, budget “inspections” will be done by someone who is unqualified.
In this scenario, you may as well do the inspection yourself.
For more information on selecting a qualified building inspector, please read our Blogs “Anyone Can Call Themselves A Building Inspector!!!” and “How Do I Select the Correct Building Inspector?”