Beware of Agents' Pet Building Inspectors!

Published 09 September 08 08:54 AM | Peter Mericka 

OPINION
by Tim O'Dwyer M.A., LL.B
Solicitor
Consumer Advocate
watchdog@argonautlegal.com.au

When will governments put in place stronger legislative measures to protect real estate consumers not only from self-serving real estate agents, but also from their own trusting natures?

The story below from a school teacher client of mine, whilst ending happily, gives ample reason for a long-overdue legal prohibition on agents’ referring buyers to building inspectors, mortgage brokers, solicitors and the like.

"A recent experience with building inspectors and a real estate salesman may serve as a warning to others looking to purchase a home.  My experience was enough to turn a normally reasonable person into someone with noticeable traits of paranoia.

It all started when my partner and I visited a real estate agency as part of our search for a new home.  The salesman we dealt with soon showed us a tenanted property – which he happened to own himself.  The house, although thirty years old, was a log cabin with beautiful timber cathedral ceilings, it had a touch of class.

The seller/salesman negotiated a sale price with us and, while we were signing the contract, helpfully gave us a card (from many others in his office) for a building (and pest) inspector.  He suggested that this fellow was thorough, but cheaper than the rest.  My partner and I were thankful for this advice, and happily engaged the recommended inspector...

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Filed under: Conveyancing, Estate agent, Contract, real estate, pest inspection, building inspection, termites, major structural defect, inspector

Comments

# White Anti-Agent said on September 10, 2008 5:37 PM:

Hey shouldn't that pic of the six legged estate agent be in your photo gallery!?

# Chris said on September 12, 2008 10:29 PM:

I'd say to choose your building inspector, have a look at the sample report first. It needs to have clear structure and lots of pictures (the larger images are - the better) and they should have arrows or other signs showing clearly where the problem is. Also, choose pest inspectors who use a trained dog - that gives the most accurate (94%! result), whereas humans are only 50% accurate.

# John Carle said on September 13, 2008 4:07 AM:

As a Canadian, I find it interesting how similar our 2 real estate industries are.

I am a Realtor in Edmonton, Alberta, Canada. I do recommend certain inspectors. But not because they give me any kick-backs (not legal here) but because they do a good job. Part of my responsibility as a Realtor in Alberta is to ensure that my clients get proper representation from the professionals that help in the transaction.

Maybe they're my "pet inspectors". But really, I use them because I know they won't mislead my clients.

John

# Peter Mericka said on September 13, 2008 3:26 PM:

Hi John,

I hear what you say, and I wish it was as simple as that, but it's not.

If you have a vested interest in the outcome of the inspection, and you have a say in the selection of the inspector, then there is the potential for trouble.

It's no different from an estate agent who chooses his clients' lawyer.

Before you know it there are "tokens of appreciation" being offered, then "incentives" and then full-blown bribes.  And at all times the estate agent maintains that he was acting in the clients' best interests.

I am sure that Richard Wood (see http://reic.com.au/search/SearchResults.aspx?q=richard+wood) and the estate agents to whom he offers his movie passes all believe that they are acting in the best interests of their clients.

And John, when you say "I use them because I know they won't mislead my clients" are you referring to the seller of the property, the buyer of the property, or both?

# Tim O'Dwyer said on September 13, 2008 3:39 PM:

Our view, as we've expressed here before, is that "agents should not be allowed to give buyers or sellers so much as a bus timetable".

Moreover, a Court of Appeal in Queensland recently remarked that the “lesson of experience” is that unsatisfactory outcomes are likely for sellers if, unbeknown to them, agents take a personal interest in the “other side” of transactions. This court had just confirmed the cancellation of the licence of a rogue agent.

# Kim, Brisbane Real Estate Agent said on September 13, 2008 4:51 PM:

Thanks for writing this blog.Other buyers now know for sure what to check before buying a house.They will see to it that they are not tempted by such offers.

# Kim, Brisbane Real Estate Agent said on September 13, 2008 5:41 PM:

I just wanted to know,what if somebody successfully cheats you in this way,are there any legal ways to handle such a situation?

# Peter Mericka said on September 13, 2008 6:09 PM:

Hi Kim,

Yes, cheating in real estate transactions invariably involves the commission of serious criminal offences.  However, as the perpretrators of such crimes know, a lack of resolve on the part of regulators and the rules of evidence in criminal proceedings mean that it is rare that real estate cheats face prosecution.

# Tim O'Dwyer said on September 22, 2008 10:51 AM:

Agents never cease to amaze.

Have just come across a local agency's disclosure form on referrals to buyers where the full page list of "service providers" includes three building/pest inspectors, three law firms, two financial services, two carpet cleaners, two insurance brokers, a medical practice, a pharmacy, a florist, an animal hospital and a hair salon.  But no bus service!

Would you believe that this helpful little real estate agency unashamedly disclosed its "commercial relationship" with each "based upon many past referrals" and "favourable reports we have received from buyers and/or sellers as to the service they have received"?

# CW said on October 23, 2008 11:49 PM:

It's a shame that such warnings are needed, but it's great t have blog posts such as these to guide consumers. Great blog. I'll be stopping by regularly.