Seattle's Home Inspection Team (206) 295-4330
: Bribery in the Biz

Bribery in the Biz

I get calls numourous times a year from real estate offices asking me if I want to be on their preferred list of Inspectors.  Of course I always tell them I would as long as it's free, and it is never is. 

 

I think this practice is disturbing, unethical and likely illegal.  One company actually told me that the only way I would be recommend for that office was to buy "desk space".  WTH? Are you kidding me?  

I had another very big company say nearly same thing.  They have this service they offer to help home buyers, including recommending professional services like inspectors that have to pay off the Real estate firm.

By the way, in both of the above examples, I work with lots of brokers in these companies.  I bet most of them don't even know that their corporate list of preferred providers is a list based on bias and bribery.

It is against the standards of practice for any inspector to participate in such an arrangement.

 According to the ASHI Code of ethics:

"Inspectors shall not directly or indirectly compensate realty agents, or other parties having a financial interest in closing or settlement of real estate transactions, for the referral of inspections or for inclusion on a list of recommended inspectors, preferred providers, or similar arrangements."

 

Comments

JJ & Suzanne:  Bribing inspectors is such a great thing.  Why, besides the fun of doing it... bribery even comes with a custom-made orange jumpsuit for both the inspector and the one doing the bribing if they get caught.  What a concept.

Now, really.  Are there folks still out there who even try to bribe you?  If so... how totally stupid.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) about 5 years ago

I wonder if the brokerage discloses that their "preferred vendors" bought their way onto the list?

Posted by Doug Rogers, Your Alexandria Louisiana Agent (Bayou Properties) about 5 years ago

You should know there are money of us out here that do not tolerate this type of practice.  Service professionals are based on relationships and quality; never on bribes or bias.  Keep up the good work!

Posted by Vic Steele, Broker/Consultant (Vic Steele, Broker CA BRE 01349863) about 5 years ago

Wow -- I have NEVER heard of this nor would I partcipate in this type of thing.  Incredible.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) about 5 years ago

Hi JJ and Suzanne...Thank goodness that is not the practice in my area.  At least I have never heard anyone mention it.  We are compensated for selling homes and land.  That is what I signed up for and that is all I expect.  I want honesty from anyone that is hired to help in the process.

Continue to stand firm and the agents that do work with you will continue to respect you.

Kate

Posted by Kate Elim, Realtor 540-226-1964, Selling Homes & Land a (Dockside Realty) about 5 years ago

All this is common. Integrity is valuable. Keep on moving! :)

 

Love and light,

Laura

Posted by Laura Cerrano, Certified Feng Shui Expert, Speaker & Researcher (Feng Shui Manhattan Long Island) about 5 years ago

what sort of level are these requests coming from?  Even many big box names are locally owned franchises so I can't imagine such a thing.  I'm just speechless.

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) about 5 years ago

I'm not surprised to hear this.  I can't imagine anyone being stupid enough to bribe inspectors or anyone else in the business but I'm not naive enough to believe that it doesn't happen.  I remember the pressure to use our preferred vendors at my first brokerage.  The level of pressure applied felt suspicious to me and caused me to avoid them all like the plague.  

Posted by Iris Stuart (none) about 5 years ago

Over the past few years I've been offered several "opportunities" to be included on a real estate office's list of preferred vendors, for a price.  I'd never do that -- because I don't think it's necessary to get business, for one thing.  And from what I understand, brokers and agents in that brokerage still use their own "preferred" vendors and ignore the list -- sounds like an opportunity for a rip-off to me.

Posted by Maureen Bray Portland OR Home Stager ~ Room Solutions Staging, "Staging that Sells Portland Homes" (Room Solutions Staging, Portland OR) about 5 years ago
This seems to be a reoccurring theme. I saw an agents post about a contractor offering them money the other day. I don't take or give kickbacks but especially with inspectors, why would anyone think for a second tht is ok? Goods for you,do the right hong and the business will come back 10folds!
Posted by Tiffany Sniezek, Tiffany Sniezek 713-594-9639 RE/MAX Woodlands TX (RE/MAX The Woodlands & Spring, TX 713-594-9639 direct,) about 5 years ago

I have not heard of this here in my area and would never participate. Horrible !!!          

Posted by Sandy Acevedo, RE/MAX Masters, Inland Empire Homes for Sale (951-290-8588) about 5 years ago

I work for a large brokerage with multiple offices that charges contractors to be on their website. There is no agent compensation and there is no coercion on the part of the company to use those contractors. Basically, it's selling them advertising space. There is no ethical or legal issue that I see in doing  it this way.

Posted by Richard Iarossi, Crofton MD Real Estate, Annapolis MD Real Estate (Coldwell Banker Residential Brokerage) about 5 years ago

JJ,

I have a prefered list. The only way on is to be recommended by one of our clients--the way off is to fail to take care of our clients. Vendors have asked to buy their way on but we don't work that way.

I do agree with Richard in #12 that paying for advertising in not an ethical or legal issue for the vendor or the brokerage.

Tom

Posted by Tom Branch, Broker, CDPE, SFR, ACRE, Plano TX Ambassador (RE/MAX Dallas Suburbs) about 5 years ago
Wow. Makes you think those companies are really hurting for revenue. In my area it would be illegal to do this and maybe a huge fine (not the orange jumpsuit) would be in order here.
Posted by Valerie Zinger, Home Organizer (House Proud Ottawa-Ontario-Canada) about 5 years ago

Richard (#12) is absolutely right - paying for the advertising of your services in the right place where potential clients can learn about you is perfectly all right and has nothing to do with bribes!

Posted by Olga Kellen, Author of Amazon E-Series "Selling to Foreigners" (English-and-Russian.com, English-Russian Translation & Russian Internet Marketing) about 5 years ago

I prefer when real estate agents recommend us because they like us.  These are the best types of referrals - when they say good things about us to their clients.

Posted by Mark Woodward, We bring the flooring store to your door (Floor Coverings International) about 5 years ago

I'm going to jump on the Richard #12 bandwagon.  While it does sound like the companies are hard up for money and desperate, I don't think it's illegal.  

Posted by Amanda Christiansen, Christiansen Group Realty (Christiansen Group Realty (260)704-0843) about 5 years ago
That is bold of those agencies! I too have preferred Vendors but they are on my list because they do a great job for our clients.
Posted by Paula McDonald, Magnolia Realty ~ Granbury, TX 936-203-0279 (Magnolia Realty ~ Granbury) about 5 years ago

JJ and Suzanne, I don't agree with a company who asks payment to be on their preferred list of vendors. Could it be they were charging for giving you a desk space in their office rather than paying to be on the list?

Posted by Michael Setunsky, Your Commercial Real Estate Link to Northern VA about 5 years ago

In our office we have other vendors who do lease office space from us and yes, I'm sure part of the calculation on the part of the vendor is that as a supporting business to real estate, they just might pick up more business with the visibility that comes with being at our office and immediately available to help/meet/answer questions etc... So getting a call from a Real Estate office offering to lease space is one thing but calling to discuss "preferred vendor" status and then requiring financial return?  Doesn't sound right to me.

When I work with clients, I let them know that the company in our building is an option and NOT the only option. They are convenient for sure and that doesn't matter in the long run if they aren't the right vendor for the job.

As for the advertising, I can actually offer add space on my individual website as well and haven't done it yet. It would help defer costs associated with having the website/domain names & work done to improve SEO. Someday, maybe I'll use it.

I agree with Paula, Vendors should be preferred when they earn it through action, not through $$

Posted by Rebecca Reynolds, Achieve everything in Real Estate with Right Style (Right Style Realty) about 5 years ago

I've not heard of this in my area (although it could be happening) and would not appreciate a bought referral. If someone does a good job for a client, they are on my list for another future opportunity. I think it really has to be that simple.
Bruce

 

Posted by Bruce Kunz, REALTOR®, Brick & Howell NJ Homes for Sale (C21 Solid Gold Realty, Brick, NJ, 732-920-2100) about 5 years ago

It is one thing to require money for advertising space, it is quite another to require money to be on a preferred list. 

How seedy is it when a client is being referred to a provider, because of the provider paid for inclusion on a preferred list, and there is no gauge of quality.

Indeed it is a fine line, but a line indeed between the two.

Posted by Michael Hobbs, SRA, LEED GA, RAA (PahRoo Appraisal & Consultancy) about 5 years ago

As a locksmith I have turn down paid list since the customer I have keep me busy and i give them priority.  Why pay to be on a list the I have to turn down the work for a few hours before I can get to them.

 

Posted by Chuck Mixon, Cutler Bay Specialist, GRI, CDPE, BPOR (The Keyes Company) about 5 years ago

Te old pay to play. Yes this is against pretty much all Home Inspection Association Code of Ethics. I do get asked to buy ad space. I ask them if I don't by ad space can I still get on your office list? Because if I can't then call it what you will but it's still pay to play. I get about 25% of my business coming directly from buyers and it's growing. They don't trust that the "Agents Inspector" is impartial and programs like this are why.

Posted by Rob Ernst, Reno, NV-775-410-4286 Inspector & Energy Auditor (Certified Structure Inspector) about 5 years ago

Karen Anne Stones #1 summer cubicle above comment  got me laughing...To leave your home dressed the way you like and to have to be dressed the way the jails prefer it is reason to really pause....However, some people insist on that change of clothing...

Posted by Richie Alan Naggar, agent & author (people first...then business Ran Right Realty ) about 5 years ago

You should start your OWN Network (ask me how)

Posted by Chuck Ward Local Video Marketing, SMS Marketing, Google Plus Local Pages (Florida Mobile Fusion Mobile, Marketing, Local SEO) about 5 years ago

Good Morning, I'm sure this practice goes on. I totally disagree with any company that has a policy regarding having to buy ones way on to their list of preferred vendors. Thanks for the post. 

Posted by Adrian Willanger, Profit from my two decades of experience (206 909-7536 AdrianWillanger-broker.com) about 5 years ago

I was unaware of this practice, but then I have my own list that I use. Never received a dime to get on it.

Posted by Wayne B. Pruner, Tigard Oregon Homes for Sale, Realtor, GRI (Oregon First) about 5 years ago

This is news to me, but I guess I can see how that could happen. In Arizona you get a pink jumpsuit for both men and women.

Posted by Monique Keith, Ahwatukeenulls Favorite Realtor, Buyers Agent with about 5 years ago

I have never had an inspector or any other service provider imply a gift or perk as a means of enticing more business.  The best I can expect is better treatment when I have a rush order.

Posted by Bryan Robertson, Broker, Author, Speaker (Intero Real Estate) about 5 years ago

A good inspector is worth his or her weight in gold.  I have always stuck with the 2 or 3 inspectors I've been using for the past 20 years I've been in the business.  It also says something good that these inspectors have been around in the business as long as 20 years.

Posted by Debbie Cook, Silver Spring and Takoma Park Maryland Real Estate (Long & Foster Real Estate, Inc) about 5 years ago

Dang, it never ceases to amaze me what some companies are using as ways to make a dime, even if it is unethical or illegal.

 

Posted by Nan Jester, Realtor, Exit Real Estate Gallery (Exit Real Estate Gallery Jacksonville Beach, FL ) about 5 years ago

I think all brokers should ask for the source of the recommended providers comes from. If your corporate list is based on bias and payoffs, show the management this.
According to Washington Administrative Code 308-408C-020:
"A Home inspector may not provide compensation, inducement, or reward directly or indirectly, to any person or entity other than the client, for the referral of business, inclusion on a list of recommended inspectors or preferred.providers or participate in similar arrangements. The purchase and/or use of low-value advertising or marketing services or products that does not exceed ten dollars per item, is not considered inducement or reward."

Posted by JJ and Suzanne Greive - Seattle Area ASHI Inspections (Home Inspections of Puget Sound) about 5 years ago

When asked, we tell our buyers about the inspector that we normally recommend.  But, it is their call. 

And, no, we don't ask for anything in return.  (A referral sometime would be nice, but...)

Posted by Don Sabinske, Sabinske & Associates Inc. (Don Sabinske, Sabinske & Associates Inc.) about 5 years ago

I will not work with anyone that I know that takes a bribe. 

Posted by Ginger Harper, Your Southport~Oak Island Agent! (Coldwell Banker Sea Coast Advantage) about 5 years ago

I had never heard of this...I dont practice any such thing but I am sure a lot of companies do.

Posted by Chuck Carstensen, Minnesota Real Estate Expert (RE/MAX Results) about 5 years ago

It seems there are always people who try to get ahead by bending the rules. Greed can make people do strange things and beings out the bad in a lot of people.

Betty

Posted by Team Honeycutt (Allen Tate) about 5 years ago

There is one inspector in our area who almost always is the inspector chosen for a large firm. It makes me wonder, with other good ones out there, why is this guy the vendor of choice for so many of their agents? What is he bribing them with? And there are so many other good ones in our area that you rarely see agents at this firm use.

Posted by Erica Ramus, MRE, Schuylkill County PA Real Estate (Erica Ramus - Ramus Realty Group - Pottsville, PA ) about 5 years ago

JJ:

That is common practice in my area that I know of.  I certainly would not recommend someone who paid me for an endorsement.  Not a good practice.

Posted by Evelyn Kennedy, Alameda, Real Estate, Alameda, CA (Alain Pinel Realtors) about 5 years ago

It would seem to me that such a process would REQUIRE that they disclose the "business relationship" they have between the realty office and the inspector.  Of course, then the client is probably going to be less likely to choose them, as noted above by Rob (#24).

Posted by Steven Cook (No Longer Processing Mortgages.) about 5 years ago

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