As the Texas Real Estate Commission (TREC) attempts to secure greater control of Home Inspectors, is Federal intervention and oversight inevitable?
Homebuyers and sellers are reminded that the goal of Home Inspectors is something completely different than the goal of the real estate sales community.
Home Inspectors are charged with, and expected to, provide enough information about the condition of the house and its systems to their client so that their client can make informed decisions about the purchase of the prospective house. This decision can include accepting the house in its current condition, accepting the house with specific repairs or a price-reduction, or choosing to select another house altogether.
The Home Inspector should not have any outside influences that dictate or shape what information the Inspector provides to their client. One dynamic that bears mentioning is that the Home Inspector is paid for his/her services regardless of whether their client purchases the inspected property. It is the real estate agent referral that gets Inspectors into trouble and can allow the Inspector to fall into the trap of pleasing the real estate agent.
The real estate agent does not earn a commission unless their client actually purchases the home or, in the case of the listing agent, actually sells the home. For many real estate agents, this clouds their thinking and influences their comments and decision making.
Unfortunately, some of these same real estate agents (Texas Real Estate Commission Commissioners) have been put in a position of rulemaking that dictates the actions and supports the inaction of Home Inspectors.
Past and recent events at the state legislative level (influenced by special interests and the TREC Administrator and Commissioners) have resulted in ‘laws’ that allowed TREC to become an autonomous, self-funded state agency. Readers are reminded that TREC agreed to pay the state of Texas one million dollars ($1,000,000.00) a year for the ‘privilege’ of creating their own little fiefdom. This means that any operating revenue is on the backs of their licensees. This means that TREC has to conjure ways to ‘find’ the funds. This latest legislative session produced one of those means.
If an Inspector is found in non-compliance with any of the Inspection Standards known as the ‘Standards of Practice’ (SOP), TREC simply fines the Inspector for his/her ‘negligence’ and ‘incompetence’. Readers are reminded that with entirety of the fines earmarked for TREC operating and debt funds, not a single dollar is allowed to be paid to the Inspector’s client or others involved in the transaction.
This is where Federal oversight, including Justice Department review of special interest manipulation of the Home Inspection industry in Texas and other states, is needed.
Most houses sold in the United States involve federally insured lending institutions and federally insured loans. Strict appraisal guidelines are in place as a result of manipulation of the appraisal/appraiser profession at local and state levels.
Most houses sold in Texas involve institutions with some type of federal loan insurance and/or federal banking insurance.
Most houses sold in Texas are inspected by Home Inspectors.
Documents produced at the federal level (HUD) encourage consumers/homebuyers to have their prospective home inspected. Documents even go so far as to clearly state that an Appraisal is NOT a Home Inspection.
Why is this so important? …Because the fox is guarding the henhouse.
Because TREC is now telling Inspectors that even though a Code violation exists, even though a condition exists that can result in foundation failure, even though a condition exists that results in higher utility costs, the Inspector doesn’t even have to mention the condition to their client if the Inspector can opine that he/she doesn’t see any immediate visible, clear and present danger from the condition.
There is nothing like wanting to sell houses at the expense of consumers.
Honest, hard working real estate agents, who want to do everything they can to protect their clients, should be outraged that TREC is allowed to operate in this fashion.
Homebuyers/consumers should be outraged that TREC can fine an Inspector, keep 100% of the fine, and not reimburse the Inspector’s client for their losses resulting from a poorly informed client.
HUD and other federal agencies that have seen loan after loan go into default, should be focused on TREC’s manipulation of the Inspection Industry.
Simply put, TREC has no business having any oversight of the Home Inspection industry.
One potential solution is to relocate Licensed Home Inspectors/Real Estate Inspectors to the Texas Dept. of Licensing and Regulation (TDLR).
Another solution is to create a Texas Home Inspector Commission, comprised of Professional Inspectors that have no affiliation with real estate brokers or agents.
It shouldn’t cost the taxpayer. The state can simply use some of the one million dollar ($1,000,000.00) TREC bounty to fund the Inspector Commission.
The state of Kansas saw the conflict of interests between the real estate agents and Home Inspectors and terminated Inspector Licensing. This appears to be a more viable solution than allowing TREC to control the Home Inspection Industry.
