For me the real estate behemoth Zillow has just hit another all-time low. After announcing late last year they would stop buying homes due to poor management, now they begin to question the ethics of the very people they have relied upon to build a billion-dollar business. in other words, their own Zestimate algorythm demonstrates they do not understand local real estate markets.
You see, millions of dollars are spent annually by Realtors who pay for leads and advertising from Zillow. Check out the online discussions and you’ll learn quickly how this has grown into a love-hate relationship, with many Realtors’ feeling like the Zillow Group, who owns Trulia, is trying in many ways to replace them. Realtors find themselves with little support from their national, state, and local organizations meant to protect them.
Now let me be clear – are their bad apples in this profession? Yes – Realtors and Home Inspectors – of which I am both. Full disclosure though, I’m only a licensed Realtor to gain entry to the homes via the Supra lockbox system utilized by our local real estate boards. I do not practice real estate – meaning I do not buy and sell homes or work with clients to do so.
So, let’s look at Trulia’s opinion of real estate agents and home inspectors in their article “4 Reasons Not to Hire your Realtor’s Home Inspector”.
“1. Conflict of interest
A home inspector recommended by your agent may pose a conflict of interest. You have a vested interest in a detailed report on the condition of your potential new home, while the inspector may feel a vested interest in helping your agent close the sale. While it’s unlikely they would do anything less than aboveboard and risk losing their certification, the waters can get a bit muddied when the agent is involved in the inspector/buyer relationship.”
There is absolutely no reason for me to care whether you buy the home or not. I’m working for you, not the Realtor and all the agents that use us know that. We’re clear about it all the time, to the point that some Realtors refuse to use us because we don’t care whether you buy the home or not. Yet, they call us for their family’s homes because of our thoroughness. Yep, those are the bad apples of the group, and that behavior will in time have unintended consequences that I can assure you we will not be a part of – an in fact, I’ve had that conversation with a few.
And if it’s unlikely “they would do anything less than aboveboard” as Trulia suggests, then how is this a concern? It seems even Trulia is contradicting themselves while raising unnecessary concerns for the consumer. I also wonder if this could be an Ethics Violation for Realtor’s as they are seemingly questioning the ethics and speaking poorly of some Realtors which is not allowed. How about we trust professionals to be just that. We trust doctors to care for our medical needs even though they are inundated by manufacturers to use their products or medicines. Yes, we can look at the Oxycontin debacle, and again learn there are bad apples in every bunch.
And who the hell is “they”? Frankly “they” cause a lot of problems in our lives and seem to be this anonymous uneducated source who brings problems to our doorstep and drops them off with no real purpose or value.
- Who’s the client?
The inspector is paid by and works solely for you, the buyer — in theory. However, if the inspector and agent have a strong work history, their relationship may feel more like a partnership, leaving you as the secondmost important party in this venture. The inspection is your big opportunity to understand the good, the bad, and the ugly about your new home. It’s critical the inspection not be rushed or come back with less detail than you need to make a decision moving forward. Watch out for red flags, such as if the home inspector references their professional relationship with your real estate agent when refusing to expand upon details on their report.
Ask any Realtor in town, most are going to tell you that local Home Inspectors are going to tell you things you do not want to hear. It’s what we do – we educate.
However, I might suggest that the close working relationship between and Realtor and I is based upon the transparency and honesty demonstrated by both parties over a lengthy period of time which has led to respect. You see, in some cases we have helped a Realtor save a deal by going over and beyond in the form of working extensively with Clients, revisiting the home, or doing other services for Free to better support our Client (let’s be clear – the Buyer or the person paying us for our professional services) and bring clarity to a sometimes-murky discussion with lay persons not well versed in residential construction. In 99.9% cases, we simply allow the deal to take it’s natural course based on the Buyer’s decision. FYI – that’s what Realtors do as well, recognizing that different Buyer’s have different tolerances and comfort levels for various problems, I promise anyone reading this the last thing that I or any Realtor wants is a Client who constantly calls with problems, complaints, or problems. We want you in the house you’re happy with and that fits your needs.
Read our reviews – we’re detailed, we’re thorough and the best Realtors in the Upstate use us for that reason. They are meeting the single most important responsibility they are entrusted with and held accountable to – Acting in the Best Interest of the Client!
Are we partners with Realtors? NO! They don’t run my business nor make my decisions. We sponsor things for them based upon our relationship, and we work closely with them to grow their business because it grows ours. But there is no single home, inspection fee, or Realtor commission that will compromise my reputation. You cannot put a price tag on my reputation or the Realtors we work with regularly – because that’s the type of people we align ourselves with. Over the last 6 years, I’ve fired 3 Realtors. I specifically told them never to call us again because we aren’t changing reports, we aren’t changing language, and we aren’t watering down the report and dismissing things that are safety issues or costly expenses.
The Buyer is our Client and always will be! Realtors you are not, and if you’re good at what you do and care about your Client – that’s exactly why you refer us.
- List of three
In many markets across the U.S., it’s typical for real estate agents to provide a list of three inspectors to their buyer clients. Undoubtedly, the chosen home inspectors are professionals who come with many references, but they may also be aware that finding large amounts of inspection issues may threaten their future inclusion on that agent’s list of recommended inspectors.
The infamous list of three! One of the biggest myths in real estate.
Never has a judge heard the attorney say, “But your honor, I provided a list of three” and the judge immediately said, “oh well in that case the case is dismissed”. Recently, in an expert witness engagement in Georgia where Home Inspectors are unlicensed, I served as an expert witness against a home inspector who did a crappy job. The shrewd plaintiff’s attorney used this against the Realtor by saying that they are tasked with acting in the best interest of their client. By providing a list of three, clearly, they felt one was superior to the other two, and by providing three they failed to act in the best interest of their client. The Realtor made the situation worse though, because during testimony she clearly identified which if the three she felt was the best, and it wasn’t the one the Client chose, and she provided no input as to who she felt was the best or give clarifying remarks and evidence as to why. She allowed the Client to use whom they selected from her list with no further question. She offered no vetting as to why they were on the list, how many times she had used them, didn’t refer the Client to online reviews, etc. Had the Realtor don’t their homework – she would have found that inspector had a google rating of 2.7 stars over 77 reviews. She further testified that he was on her list at the Broker’s recommendation to have three listed. Now we have the Realtor tying the Brokerage into it, a broker who had also failed to properly vet vendors.
The plaintiff won big from the Inspector, the Realtor, and the Brokerage because they clearly demonstrated a failure to act in the best interest of the client or to be prudent in selecting and recommending vendors.
Most of work comes from word of mouth. Ask your friends, ask your Realtor, vet the Inspectors yourself. I have also asked specific brokerages to remove me from their list. Why? I had a friend buying with a local brokerage who selected us. The brokerage spent two days trying to talk them into using someone else, even after they identified I was a close friend. Yet, we were on their list of three….
The list really means nothing. I called the broker and said hey, take me off your list. It does more harm to be spoken poorly of than it does to be on the list to begin with. The comments provided from my friend was how thorough we are, we were too detailed, too picky.
- That nagging feeling
Even if your agent’s referral delivers a thorough inspection, you may not be able to shake the feeling that they missed something. If a foundation issue crops up two years down the road, you may wonder if the problem was present at the time of inspection. Even if it wasn’t a factor, it’s likely you’ll never know for sure.
I doubt you got that nagging feeling after the inspection. There were likely red flags long before you got under contract, right? So why did you write a contract with that Realtor anyway? You shouldn’t have.
Did you discuss your needs with the Inspector prior? Was the Inspector willing to spend time chatting with you to understand your concerns, questions, and needs? If not, why did you hire them? If you didn’t call them, why? This is likely the largest investment you’ll ever make, and you were too busy to investigate and search for an Inspector and/or Realtor who fit your personality, needs, style, approach, etc.?
In closing, Trulia and Zillow you’ve again attempted to harm the reputation of the many small businesses that make our community who we are. You’ve questioned our ethics, tried to devalue the local Realtor and Home Inspector. All the while never mentioning your vested interest in this article. The conflict of interest you have is you use some of those same home inspectors that you question, you have relied upon the very Realtors you now question while paying you billions of dollars while you refer and promote them across your various platforms.
Trulia has investors to hold them accountable to some degree. Investors expect returns, and “they” do this by collecting huge fees and recurring revenue from the very people they now question. Meanwhile, I’m on the hook for a $600 inspection to one person, who now lives in my community with a voice that can carry further and louder with a significant impact upon my business.
So, the real conflict of interest, in my opinion, is Trulia collecting fees from the local Realtor and Inspectors, while alluding to the fact that we are colluding, yet – while promoting and using the same parties they now ethically question…
Beware of “they”…
They sit in a big corner office in a far off land. Your local Realtor and Home Inspector live, work, and play in your community and will be there to serve you – in YOUR best interest – not the corporation or investor.