Home Inspection Roll Call


 Tracy Rucka  |    June 05, 2014
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Once an offer is accepted, the buyer needs to put into motion the necessary steps to conduct the inspection. Before the buyer wrestles with decisions about whether to give a Notice of Defects, try to amend or simply move forward with the transaction, preliminary questions must be answered related to who can and cannot attend the inspections. Let’s call roll. 

The buyer?

When asked if the buyer can attend the inspection, the simple answer is yes. Lines 401-402 of the WB-11 Residential Offer to Purchase specifically state; ‚ÄúBuyer and licensees may be present at all inspections and testing.‚ÄĚ This language was added into the offer in 2010 to ensure that the seller allows the buyer and the licensee to accompany an individual conducting an inspection or test. Sometimes the buyer arrives for the inspection with an entourage, but any individuals not named as buyers in the offer should not be granted access to the property unless the offer has been modified to allow this.¬†

The contract language that gives buyers the opportunity to enter the home does not specify whether or not the buyer must be accompanied by a licensee. Each company may set its own policy regarding whether consumers may go into a property without a licensee escort. This determination may have liability consequences for the agents in the transaction, their companies and the seller. In addition, inspectors, testers and appraisers who do not wish to be solely responsible and potentially liable for consumers may alternately prefer a licensee escort and/or chaperone.

It is possible to argue that Article 3 of the REALTOR¬ģ Code of Ethics is violated if the seller or listing broker is not notified that a buyer is going into the home with an inspector, tester or appraiser without a licensee present. Standard of Practice 3-9 states, ‚ÄúREALTORS¬ģ shall not provide access to listed property on terms other than those established by the owner or the listing broker.‚ÄĚ Plan ahead. Ask sellers about their expectations, document their instructions and implement them.¬†

Licensees?

The offer to purchase is once again the beginning point for the conversation: ‚ÄúBuyer and licensees may be present at all inspections and testing.‚ÄĚ The term ‚Äúlicensee‚ÄĚ in this context refers to both the listing agent and the agent working with the buyer. If a seller would like his listing agent to be at the property during all showings, testing and inspections, it would be prudent for the listing agent to document the seller‚Äôs directive in the listing contract or an amendment to the listing contract to have a paper trail. Because the listing is an agreement between the seller and the listing broker, the listing cannot compel a cooperating broker to attend the inspection. Likewise if the buyer wants to assure the buyer‚Äôs agent attends inspections or testing of the property, the buyer agency agreement may be modified to document that expectation.¬†

Unless the agents have committed to attend an inspection by agreement with the client or customer, the agents are not required to do so. The WRA does not have a definitive recommendation or statement on whether a licensee should attend the home inspection.

This is a practice issue; each broker should consider the pros and cons and proceed accordingly. There have been several articles regarding the home inspection contingency that discuss the advantages and disadvantages of brokers/agents attending home inspections. There is no one right or wrong analysis on this issue because there are reasons to justify both the licensee’s presence at and absence from the inspection. The Department of Safety and Professional Services has not taken a position on the issue, other than Wis. Admin. Code § REEB 24.07(1), which requires real estate licensees to make a reasonable inspection of the property. Listing brokers are required to inspect prior to listing, and cooperating brokers are required to inspect prior to or during a showing unless denied access. 

Potential risks or dangers

When agents do accompany home inspectors, dangers of potential liability can come from different directions. If the agent attempts to assist and/or supervise the inspector, the agent could face possible liability for negligence for a defect that is missed, as was the case the 2002 REALTOR¬ģ Magazine article ‚ÄúPass the Baton: Do Your Job and Let Inspectors Do Theirs.‚ÄĚ The article explained that an agent accompanying an inspector could also face problems if the inspector oversteps his or her authorization and, for example, engages in sampling for radon or mold. The agent has responsibility to stop any unauthorized procedures. On the other hand, if the agent is not present, no one else may be available to monitor the inspector; the fact that the inspector must be registered does not eliminate the possibility that an inspector might someday overstep authority. One way to control the scope of the inspector's activity is to have the buyer who hired the inspector enter into a contract that specifies parameters of the inspection and the inspector‚Äôs activities.

Liability may also arise in the context of negligent hiring or supervision of an inspector or other professionals. Some brokers' policies indicate that buyers choose and hire the inspector directly ‚ÄĒ the broker may provide a list of inspectors, but the buyer makes the decision. If a broker, per the buyer‚Äôs instructions, engages a home inspector, the broker may use the Model Service Request form to assure the home inspector understands that the broker is not the party and is only making the request on the buyer‚Äôs behalf. See a sample of the Model Service Request form here.

If the listing agent plans to attend the home inspection, it is a time for the agent to listen and not interject personal opinion or convey the opinion of the seller. The listing agent should keep in mind that the information indicated in the inspection report carries more weight than comments the home inspector makes. The results provided in the inspection report guide the inspection contingency discussion ‚ÄĒ not a verbal comment by the inspector.¬†

Potential benefits

A licensee who attends the inspection can confirm the inspector is properly credentialed and authorized. The broker can limit access to the property by any unauthorized individuals the buyer attempts to bring along, thereby allowing the buyer and the inspector to keep the distractions and multiple opinions to a minimum. The home inspector is not required to supervise the conduct of the buyer during the inspection. The licensee may assure the security of the seller‚Äôs property and make sure that neither the buyer nor the inspector damages the property. In the event the inspector makes spontaneous recommendations, for example, tells the buyer ‚Äúyou should have a radon test,‚ÄĚ the broker can refer to the offer and request that the inspector stop any unauthorized testing. The broker may offer to draft an amendment for the buyer to ask the seller for radon testing.¬†

Once the report is completed the licensee in attendance and the buyer may compare the written report with the verbal statements made by the inspector. In the event there are items missing, the broker may suggest the buyer contact the inspector to amend the report to reflect the inspector‚Äôs verbal statements about the property condition. Familiarity with the physical condition of the property can help the broker explain to the buyer the difference between defects contained in the report, possible maintenance items and ‚Äúdefects‚ÄĚ as defined in the offer in the event the buyer elects to give a Notice of Defects. Observing the inspection also makes the cooperating agent a more effective drafter.¬†

The inspectors? 

The final question for the role call relates to inspectors. The inspection contingency limits the inspections to certain authorized or qualified inspectors. Before granting access for an inspection, it is imperative to know what portion of the inspection contingency is authorizing access. 

The standard inspection contingency allows for three types of authorized inspections: the home inspection, a component inspection and a follow-up inspection authorized as a result of the home or component inspection. The home inspection is contained in the contingency by default. Unless the offer has been modified, the home inspection must be conducted by a Wisconsin-registered home inspector. 

Upon review of the seller‚Äôs RECR and the buyer‚Äôs viewing of the property, the buyer may request an inspection of some particular component of the property. For example, if the RECR states there is water in the basement, the buyer may include a foundation inspection. Likewise if the buyer observes stain marks on the ceiling, the buyer may request a roof inspection. The offer states that a component inspection should be conducted by a qualified independent inspector or independent qualified third party. To avoid a conflict of interest, the operative words here are ‚Äúqualified‚ÄĚ and ‚Äúindependent.‚ÄĚ A parent, sibling or spouse would not be considered "independent" for purposes of the inspection. Whether or not an individual is "qualified" will be determined on a case-by-case basis depending on the component being inspected.

The third type of inspection is not known at the time of the offer but results from the registered home inspector or component inspector recommending, in his or her written report, a follow-up inspection ‚ÄĒ not follow-up testing. For the follow-up inspection, the same standards apply with the additional requirement: the follow-up inspection must be based upon the written report of either the home inspector or the component inspector. The follow-up inspection is not authorized if the inspector says something to the buyer in passing, such as, ‚Äúyou should have someone look at the roof.‚ÄĚ The follow-up inspection of the roof would be authorized only if the inspector includes that recommendation in the written inspection report.¬†

For further home inspection resources, click here.

Tracy Rucka is Director of Professional Standards and Practices for the WRA.

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