Are Home Inspectors allowed to pay to be on a list of Inspectors your Agent provides you?

“Pay To Play” advertising lists are a common feature in any business today.  The phrase means that a service or product provider must “Pay” an advertising fee to “Play” with another service or product providers clients.  In other words one service or product provider must pay a fee to be referred by another business.  In the case of Home Inspectors in Texas that means paying to be on a list of Inspectors your Real Estate Agent/Broker, the brokerage firm, or other service provider hands you as a selection aid in picking an Inspector for your home purchase or sale.  But is this legal, and what affect does this type of arrangement have on you the consumer?

The Texas Administrative Code (The laws governing Real Estate Inspectors) covers this very subject and prohibits this act as stated in Rule 535.220, Professional Conduct and Ethnics:

(3) An inspector shall not pay or receive a fee or other valuable consideration to or from any other settlement service provider for, but not limited to, the following:
(A) the referral of inspections;
(B) inclusion on a list of inspectors, preferred providers, or similar arrangements; or
(C) inclusion on lists of inspectors contingent on other financial agreements.

Settlement Service Providers are defined in this same rule as Real Estate Agents, Real Estate Brokers, Loan Originators, Mortgage Brokers, Title Service Providers, Attorneys, Appraisers, the settlement Agent, Mortgage Insurance Providers, and even any person who prepares/records/notorizes/delivers the documents related to your purchase or sale.  What this means is that an Inspector can not pay any of those people or their firms money to be on any list of Inspectors those settlement service providers hand to you.  That does not prevent any of these settlement service providers from giving you a recommendation for an Inspector as long as the Inspector did not pay to be on that list.

Unfortunately in the State of Texas this very practice with licensed Home Inspectors is very prevalent.  What is even more disturbing and damaging to the consumer is the fees these Inspectors pay to be on these “Pay To Play” lists.  One large Real Estate Brokerage Firm office serving the Dallas/Ft. Worth area, which is a franchise of one of the largest real estate companies in the country, even charges as much as $750 a month for the Inspector to advertise on their list.  Not only are Inspectors paying this fee but there are very prominent Inspectors on that list!  Yet even more damaging to the consumer is that the Texas Real Estate Commission (TREC) is aware of these violations of the law and choose not to pursue the offenders.  TREC is the licensing agency for Real Estate Inspectors.

So why should you care as long as you are getting a good Inspection and report?  Well how do you know you are getting a good inspection and report?  The Inspectors that participate on these lists depend heavily on referrals from these Agents, Brokers, and other service providers to obtain their clients, and their paychecks.  If an Inspector is paying heavily into these “Pay To Play” lists (i.e. $750 X 12 Months = $9000 per year just for one list), and they depend heavily on these Agents/Brokers for their business then who do you think they are trying to service, you or the person that will give them future referrals if the deal closes?  If the Inspector performs their job properly, and you back out of a deal because of the inspection results, then that Inspector is not likely to be viewed favorably and will potentially lose referrals through bad mouthing by the person handing you that list of Inspectors.  If the Inspector does not obtain those referrals then that $9000+ a year is a waste of their money.

As a consumer you need to protect yourself to make sure your Inspector is acting impartially, without any outside influences, and acting in your best interest.  Ask the service provider that hands you the list of Inspectors if the Inspector had to pay to be on it?  If they are paying for the privilege would you feel comfortable with an Inspector who is either knowingly violating the laws or who does not even know what the laws are that they are required to follow?  If the Inspector is willing to violate the laws to be on a “Pay To Play” list then what other laws is the Inspector willing to violate to get your business, and how do you think they will do on your inspection and report?  If the service provider tells you no they are not paying then ask the Inspector as well when you call them.  If the Inspector admits to violating the law then run the other way from that Inspector, and be careful with the rest of your dealings with the service provider who gave you that list!

Remember only can fully protect yourself from being ripped off or harmed in a business dealing.

Knowledge is power, but sharing knowledge brings peace!

PS Inspection & Property Services LLC is a full service home inspection and light commercial inspection company servicing the entire Dallas/Fort Worth metroplex.  We strive to for the satisfaction of our customers in everything we do.  Our services offerings include:

Buyer home inspections
New Home Warranty Inspections
New Home Draw Inspections
Home Maintenance Inspections
Home Remodeling Inspections
Investor Inspections
Rental And Renter Inspections
Infrared Thermal Imaging Inspections
Energy Audit Inspections
Whole Inspections Or Inspections Customized To Your Needs

If you have an inspection need we can customize an inspection for it.  Please visit our main site at PS Inspection & Property Service LLC.

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