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Real Estate Upprisal


Are you at risk?

As a homebuyer, there are many ways to become a home-buying victim. What follows is a list of scenarios that can have long lasting manifestations.

There a multiple times in the home buying process that a homebuyer can be misled and become a victim of fraud. As a buyer, you can reduce your risk of becoming a victim of fraud. The term ‘fraud’ is used loosely in this section because local, state, and federal laws typically favor the real estate professionals, or are poorly enforced. It is usually the buyer and seller of real estate that are left to pick of the pieces of unscrupulous real estate professionals.We’ll start with the inspection process. This includes who can become an inspector, who provides a slick inspection marketing process versus who performs a thorough inspection, and real estate agents who ‘steer’ the home buyer to one particular inspector as opposed to another.

While many states have licensing or registration requirements for inspectors, these requirements are influenced by trade organizations including real estate agents’ related organizations, mortgage lending industry organizations, etc. Most influence comes from those that stand to profit from the sale of homes. This is generally not in the best interest of home buyers.

Your Choice of Inspector

Recommendation and Referrals When you choose an inspector, what are you really getting? Are you hiring someone who is experienced at performing an accurate and uninfluenced inspection? How do you know? How can you ensure you are hiring the ‘right’ inspector? A better question to ask would be “what are some of the mistakes I can make when hiring my inspector?” What follows is a list of scenarios and relationships that can result in you hiring an inspector that is poorly trained, lacks experience, or is influenced by wanting to ‘please’ the real estate agent.


When the inspector you have chosen has years of experience as an inspector, you increase the likelihood that he/she is capable of discovering and identifying major defects in the house you are considering buying. Ask how many years the inspector has been inspecting houses. Ask how many houses the inspector has inspected a year. If the inspector inspects 10 houses a year, you have probably located a ‘part-time’ inspector. If he/she inspects 1000+ houses a year, you have probably located a ‘churner’ or what is known as a ‘drive-by’ inspector. This is someone who spends so little time inspecting a house that he/she should not be relied upon to give an accurate account of the deficiencies in the house.

Recommendation and Referrals

Can you trust them? What baggage or conclusions come with a recommendation? If you taking the recommendation from a friend or relative, this is generally the safer route than taking a recommendation from the real estate agent or the mortgage lender. However, there are some issues to consider. How does your friend or relative actually know that the inspection they received when they bought their house was thorough and accurate? If your friend, relative or neighbor hired a particular inspector, has enough time elapsed since they bought their home to really know if the inspection was thorough and accurate? If they just bought the house last week, how do they know if the inspector discovered the deficiencies? If they have only experienced one inspection, how do they know the inspector they hired is any better than anyone else? What were some of the major discoveries made by their inspector? The point here is that you should qualify any recommendations you receive about a particular inspector with these types of questions.

The Real Estate Agent's Recommendation

Why question your agent’s recommendation of an inspector? M-O-N-E-Y. The real estate agent only makes a commission if you, the buyer, actually purchase the house. This can, and does cloud their thinking. While there are many honest and conscientious agents in the real estate world, there are too many unscrupulous agents. Pay careful attention to why and how you stand to be duped and otherwise harmed by the agent’s actions. What follows is list of ways ‘your’ agent will ‘lead’ you to a particular inspector that will ‘help’ the agent to convince you to actually purchase the home after it is inspected. The agent simply says “Call this inspector, he is really good” or “I use him all the time”. When you rely solely on this recommendation, you are putting your trust in the person who only makes a commission ($) if you buy the house.Or…the agent gives you a ‘list’ of 10-20 inspectors for you to choose from. This is fine if the city or town you are purchasing a home in only has 10-20 inspectors. If the city has 100-150 inspectors and you are being given a list of 10-20 inspectors, be very concerned. No matter whom you choose on the list, that inspector is one of a group that the agent wants you to choose from. The list of inspectors may have a disclaimer on it that says ‘This is not the complete list of inspectors available in this area’ or something similar. However, make no mistake, you are being steered to one of the inspectors on the list. Why? There are many reasons why. We’ll talk about a few of them here. It could be that the inspector, without premeditation, performs a sub-standard inspection. He/she is just not experienced or lacks the skill-set to perform an inspection that protects you, the homebuyer. It might be that the inspector is an ‘agents’ inspector. This is the inspector who performs a minimal inspection and verbally downplays their findings so that they can continue to get recommendations from real estate agents. There may be a subtle, yet substantial, financial benefit to the agent. Agents have often recommended an inspector or provided a list of inspectors that have errors & omissions insurance (E & O). This is a clever way for the agent to recommend a poorly performing inspector that won’t ‘kill their deal’ and then be able to say “Call your inspector, he’s got insurance” when the inspector does, in fact, do a lousy job at the inspection. What your agent won’t tell you is that many inspectors carry E & O insurance that protects the agent in the event of a lawsuit. How does this work? If you ‘choose’ an inspector who has an E & O insurance policy and the policy has a ‘rider’ or provision that pays for the agent’s E & O insurance or deductible, the agent can recommend an underperforming inspector and know that in the event of a lawsuit against the agent, for recommending the inspector and causing you, the buyer, to be led down the path that resulted in you buying a house with defects, there will be no costs, no financial penalties for having steered you to a particular inspector. Yet another way agents steer homebuyers to or away from a particular inspector is to make verbal comments that the inspector is “not very good”, or “doesn’t know what he/she is doing”, or “he/she is an alarmist”. If you ever have your agent tell you this, ask for them to put this in writing and to give you the name of one or more of their past clients who actually hired the inspector the agent states is “not very good”.

The inspection cost; how should the cost of the inspection enter into my choice of inspectors.

First of all, choosing an inspector based solely on finding a low price almost certainly can result in the buyer, hiring an inexperienced inspector, a part time inspector, a ‘drive-by’ inspector, or an agent pleasing inspector. Smart homebuyers do their homework and choose their inspector based on reliable referrals, research and by asking the right questions.

Selecting A Real Estate Agent

The real estate sales community is full of honest, hard working, diligent and caring people. Unfortunately, there are many, many agents that put their own needs in front of their client (you). How do you find the ‘right’ agent? How do you make the buying process a carefully organized, productive and pleasurable experience? Do your homework. If you have not yet begun to work with a real estate agent, call us. If you believe your agent is not working in your best interest, contact the Texas Real Estate Commission Consumer Complain Division.