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Natasha Gromicko Jan 14, 2024 2 min read
The Real Estate Agent’s Duty
Just for a moment, let’s assume that you’re a real estate agent. The seller has accepted your clients’ offer and now, with your help, your clients must choose a home inspector. Should you steer them toward the inspector who writes the softest reports? Should you steer them toward the inspector who pays to be on your office’s preferred vendor list? Should you help them find the cheapest inspector? The answers to these questions are of course, No, No, and Heck, no.
Real estate agents have a fiduciary duty to their clients and, therefore, must recommend the very best inspectors. If a real estate agent recommends a patty-cake inspector, an inspector who indirectly pays for an agent’s recommendation, or a cheap inspector, the agent potentially violates their fiduciary duty to their client.
The National Association of REALTORs defines an agent’s duties in their Code of Ethics. Article 1 requires an agent to protect and promote their clients’ interests. Article 6 requires an agent to disclose any financial benefit they may receive from recommending related real estate services (this also includes any benefit to an agent’s broker).
The inspection image shows water marks in the corner of the ceiling. The water marks indicate that the water leak has been taking place for some time. One could assume that the homeowner would likely know of this water leak problem since it has been an issue for some time.
Because most real estate agents get paid only if the real estate transaction successfully takes place, the personal interests and the fiduciary duties may already conflict. Agents should not make the situation any worse. The best way to avoid negligent referral claims, to operate ethically, and to fulfill the fiduciary duty is to help the client find an inspector based solely on merit. And although no real estate agent can guarantee the thoroughness of any particular inspector, there is a strong correlation between a home inspector’s fees and the inspector’s competence (in other words, you get what you pay for). An agent that helps their client find a cheap inspector for the purchase of their life seems to be a violation of the agent’s fiduciary duty. When in doubt, the agent and client should shop price, and seek out the most expensive inspectors for the agent’s clients.
And for you inspectors, compete with each other on value, not price.