Leads from home inspector?

Question

My question is pretty simple. I would like to ask a friend of mine who is a very reputable home inspector in my area to let me know about "problem" homes he has come across through his work. I'm thinking that he would know about what properties just aren't selling due to inspection issues and that information seems valuable in terms of negotiating a deal that no one else wants.

My question is about ethics and his profession, I don't want to put him in any kind of position that could hurt him or his reputation. I'm pretty confident that there isn't any issue, if anything he may be helping the seller. I guess I could just ask him but I thought maybe some of you have any experience with this. Also, I wonder if he would even have any information that I can't already get. Of course I'd be willing to pay him a finders fee on any properties he brought that I closed on.

I'm a licensed GC in Massachusetts and am not afraid of foundations or other structural problems that scare others (as long as the numbers work)

Any thoughts and experience?

Mike Cumbie · Answer

Going along with @Melissa Kirchhoff on it, I have had agents call asking to purchase the previous home inspection from the buyer that fell through (they have a client that put an offer in). Often times they are happy to let it go for half price since it means zero to anyone else but the seller and any prospective buyer. There is nothing wrong with offering to buy someones report. The difficulty comes in determining how you know about that report and if you are giving something to the inspector, the appearance of "He made stuff up so his buddy could get a better deal" is not where anyone wants to be.

Good luck and nice working outside the box, but I think I would avoid it.

Tom Gimer · Answer

I agree with @Melissa Kirchhoff

"Our inspection and report are for your use only. You give us permission to discuss our observations with real estate agents, owners, repair persons, or other interested parties. You will be the sole owner of the report and all rights to it."

That is language from a contract used widely in the industry.

Your inspector friend would arguably be violating the agreement with his client the BUYER in sharing any information with you... as you are not an interested party.

Michael Volek · Answer

@Alfred Edmonds, I don't have any experience doing this, but that sounds like a pretty good idea. I've heard of some using their mailman to point out distressed homes on his route. Others fish online using listsource, and filter potential leads by age, equity, foreclosure, etc. Heck, I even heard a guy on the podcast talk about filtering by criminal records, haha.

If there's any kind of inspector-client confidentiality rule or law, perhaps you could just ask him about that before moving forward. I don't find any ethical issues with asking. It shows you're a creative thinker.

Hope this helps. Good luck.

-Michael Volek

Chris Purcell · Answer

@Alfred Edmonds

Could work.   Probably have to get approval from the buyer AND seller

Tell the inspector to “mention” to seller he has another buyer if this falls through and could pass the info along if they wished....

Good luck

Melissa Kirchhoff · Answer

@Mike Cumbie - That's a very good point and idea! And it would be very positive for the buyer to get some money back and helps everything be very transparent. Buyer would be happy, seller would be happy someone is seeing what's wrong and still wants to buy (esp if the deal fell through) and there's no shady business going on then. Excellent point, Mike!

Brian Pulaski · Answer

@Alfred Edmonds I imagine if you ask him, he will probably agree with others here. I can't see him giving you any information on houses he has inspected.

With that said, I get leads from others in my "network". My attorney got me a lead into a family house that I ended up getting and making a ton of money on. My roofer gave me leads on houses he knows of/sees. A friend of mine, his father does clean outs on property. He will give me heads up on stuff when it may interest me. It is on me to do my due diligence, but a lead on a possible house never hurts!

Melissa Kirchhoff · Answer

@Alfred Edmonds - But again, doesn't hurt to ask in a way that doesn't put him in an uncomfortable position. Or maybe he can give you more general steering (i.e. keep an eye out on 123 Main St, that's a nice house but I think some of the issues that came up on the inspection that seemed scare those first time buyers...) and it wouldn't be a breech? Ultimately, it's still what he's comfortable with. And probably stay away from exchanging money for it. Maybe do something nice if he helps you find a good deal or try to send some work his way, but nothing so direct...

Melissa Kirchhoff · Answer

@Alfred Edmonds - I don't know, honestly, I think it sounds unethical to me. It may be different because I'm a realtor, but here's my logic:

So when I have a buyer who gets an inspection (this is my state but I assume it's similar other places?) the *buyer* pays for the inspection. I tell the buyer if ANYONE asks for it, they do NOT need to show them the inspection, unless they so choose, since they paid for it. (IE they are independently contractors in effect for the home inspector) and they don't even need to allow me to see it unless they so choose.

So to me, the same concept would apply. And would the sellers be comfortable with your friend kinda blabbing all the problems with their house to someone random in effect and letting you decide if it sounds good or not? If they get an offer over it if a sale fell through, maybe. But otherwise, that seems very...invasive?

Also, I think it could put him in a pickle if someone else sees this. Who to say he isn't finding things wrong and trying to break a deal to get his friend (and himself a cut) of a really good deal? (The cut part would make it even more sketchy because then, in theory, he could be double dipping -- getting money for the inspection and then getting a finders fee from you on the same property). I think it'd be rare anyone would look into this, but what if they did? (Also probably depends on the area, around me, that would be a VERY hot topic VERY quick and it would probably be a major problem REAL quick but in a larger area/market, someone may never know)

However, I do think you could start out by asking your friend without giving him the whole sell. Something like, so you know I'm an investor, would you be able to share any information about properties you inspect or would that be unethical to you?

Also, keep in mind, this might really limit you. There's going to be a list of properties out there he's not inspecting and it might give you sorta tunnel vision and miss out on something else that could be better. Also, not to be rude to your friend, I'm sure he's great, but there's all different levels of inspectors lol. We've had many that have missed very huge things (that are super reputable!) and honestly, stuff like that can happen.

Lastly, he probably won't know if the deal falls through since all that negotiating happens after the inspection between the real estate agents and buyers/sellers and if it went back on the market, it could be for any array of reasons. So some logistics in that may not really work either...

Leads from home inspector?

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