It’s my goal to sleep well each night and wake up the next morning looking at myself in the mirror knowing that I’ve always been truthful and completely transparent in both my personal and business life. As I’ve always tried to teach my kids, once you lose your integrity, it’s very difficult to get it back. It is thus not a surprise that few things bother me more in my business life than seeing vendors try to take advantage of my clients in real estate transactions.
One of the areas where this happens on an all-too-frequent basis is during the “inspection” process. Termite companies have an inherent conflict of interest in the inspections that they perform. I don’t care how honest a company is, when you give them the power of inspection, bidding the job, and the weight of contract law requiring that the work be done… inherent bias will find its way into the process. Earlier this year, I had a buyer’s agent insist that “her” termite company inspect a home we had listed that had been previously inspected by another company. The company that she brought in found about $5000 worth of supposedly “missed wood fungus”. The first company insisted that they had not missed the fungus, and the second company insisted it was present. Ultimately, our clients were extorted for the incremental $5000, rather than have the home fall out of escrow.
Just a few short months ago, we had a listing inspected by a termite company that we have used a lot over the years. Wood fungus was found in a beam under the house, and due to supposedly difficult access, the bid to make the repairs was around $1500. Our client authorized the repairs, and when the repair person showed up, I asked him why he wasn’t going to simply wire brush the area, treat it with an anti-fungal chemical, and possibly “scissor” a new piece of wood in for reinforcement. He said he’d look into it. Two hours later, I watched the two person crew leave the home having completed the work. I called the owner of the termite company and complained that my clients were being taken advantage of, and that $1500 for two hours of work and minimal materials was ridiculous. He reduced the bill to around $800 — still outrageous. Had I not called, it would have been charged as quoted.
With the resurgence of real estate in 2012, I believe we are seeing various vendors try to recoup their losses from the heart of the recession. The problem isn’t just with termite companies, I’ve seen it extend to those purporting to do all sorts of inspections, including chimney, pool, and roof inspections. There is a contractor in the area who is frequently used by the real estate community for “chimney inspections”, yet among the licensed home inspection community, his level of integrity is at the lowest of levels. Most of his “inspection” reports have the same or similar findings, regardless of whether the chimney system really needs the indicated work. In fact, one licensed home inspector was talking to me about him and he asked me if I had ever looked up a chimney. I responded that I had not. He said that if I had, I’d likely see the bricks completely coated in black creasote, making the interior materials impossible to inspect without prior cleaning. He pointed out that this particular company never cleans the chimney prior to inspection, yet somehow is able to find all sorts of problems that often add up to many hundreds of dollars or more per inspection. Another home inspector told me that he observed this same chimney company owner put his shoulder into a roof top chimney and crack it at roof level, then write a report stating that it needed to be rebuilt for several thousand dollars.
Buyers and sellers are often victims of vendors during the escrow process since the vendor knows that most of what they bid will either get negotiated into the real estate contract, or be required to be completed by an anxious buyer. It’s important to know the reputation of the “inspectors” that are being used, and to the extent you are able, to let them know that you are going to get alternative bids for any work they recommend. Often, that helps to keep them honest.