Some Good Reasons For Federal Regulations
In my opinion, there is an urgent need for Federal legislation. The legislation should prevent anyone who will benefit by the sale of a property from recommending a home inspector or an appraiser to a client. The reason I say this is that, it is a total conflict of interest if they recommend an inspector or appraiser!!! I can't believe that laws have not been passed which prevent this conflict of interest. If someone will gain a profit or a commission on the sale of a property, then don't you think that there's an obvious problem if they recommend a home inspector or an appraiser? The problem is due to the temptation of the Realtor or third party to make sure the deal goes through, at any cost, so they can get paid. Furthermore, most of the time, Realtors and third parties who get a commission on the sale work for the seller!! This means that their fiduciary and legal responsibility is to get the best deal possible for the seller, not the buyer. Therefore, how can these third party people say that they're looking out for the buyer's best interest, by recommending a thorough and unbiased home inspector or appraiser? Again, it's a total conflict of interest if they recommend a home inspector or an appraiser!
Legislation should prevent anyone who benefits by the sale of a property from recommending a home inspector or appraiser. I say this because, it's a total conflict of interest if they recommend an inspector or appraiser!!!
Believe me, I'm no rocket scientist and I can see as clear as day that there's a problem here that needs to be fixed. I also think that there is an urgent need for another type of Federal legislation. This legislation should require all Realtors and third parties involved in a real estate transaction, who receive a commission on the sale, to make certain recommendations to the seller and the buyer. However, the recommendations should not be a conflict of interest.
- The recommendation they should be required to make to the seller is: "The seller should hire an independent real estate appraiser that they select on their own, without any involvement or encouragement of the Realtors or any other third parties. An appraisal is recommended to give the seller an unbiased estimate of market value for the subject property. This appraisal should be done before the seller lists the property for sale."
- The recommendation they should be required to make to the buyer is: "The buyer should hire an independent real estate home inspector that they select on their own, without any involvement or encouragement of the Realtors or any other third parties. An inspection is recommended to give the buyer a thorough and professional home inspection of the subject property. This home inspection should be done before the buyer signs any contracts to purchase the subject property."
If these ideas were enforced by Federal legislation, then it would greatly help everyone in the country with the biggest investment of their lives. This type of legislation would also improve the integrity of the real estate business tremendously. Now don't get me wrong here. If an attorney wants to recommend a home inspector or an appraiser to a client they're representing, then that's fine. In a case like this, the attorney is only looking out for their client's interests. The attorney will get paid a fee, regardless of whether the deal goes through or not. Therefore, they don't have a conflict of interest and a financial commission incentive to move the deal along by recommending an incompetent home inspector or appraiser - like a dishonest, greedy Realtor or other third party does. I hope you see the difference between these two situations.
In the front of the book I list the benefits of having an appraisal done by an independent, honest and thorough real estate appraiser. (See section Benefits Of Knowledge Of Appraisals). I think they're all valid reasons that are based on a foundation of solid facts. These facts reinforce my opinions about the need for Federal legislation. I've seen many examples of sellers who have been deceived by dishonest Realtors and other third parties. This deception could have been prevented, if the seller had been educated about the benefits of getting an unbiased appraiser to estimate the market value of their property. The way dishonest Realtors and third parties cheat sellers is by deceiving them as to the true market value of their property.
I had a client that hired me to do an appraisal of their house before they listed it for sale. The woman who owned the house was a very nice, easy-going person. She told me that she and her husband purchased the house just three years earlier for about $500,000. There was a Realtor who was involved in the transaction. At the time they purchased the property, this Realtor told the couple: "You're getting a rock bottom price, and you're stealing his house for $100,000 below market value. " The woman who was my client told me, that she and her husband asked this same Realtor to list their house for sale, three years later. Well, this Realtor told them: "The market has gone way down because of the recession. You're going to have to sell the house for $100,000 less than what you paid for it, three years earlier."
Luckily, my client and her husband didn't believe that the real estate market had dropped that drastically in only three years. The reason a greedy, dishonest Realtor may want to list a house for sale at a very low price is that the house will sell very quickly and that listing Realtor can make a fast commission on the sale. Also, if the listing Realtor has home buyers looking for houses in that area, then he/she may even be able to also be the selling Realtor on the deal by calling one of her home buyer clients and telling them about this "great low-priced house that's just come on the market and hasn't even been listed yet in the MLS!!" If the listing Realtor is also the selling Realtor, then he/she will get twice the commission percentage on the sale! That's a greedy, dishonest Realtor's incentive to low-ball a seller with their listing price. I did an extremely thorough appraisal, using six sales comparables that had sold within the past six months. These sales comps were all located within two blocks of the subject property. My appraisal market value estimate was just about the same price the client had paid for the house. There was a recession that caused prices to drop in the area. However, at the time my clients were going to sell the property, the market had rebounded so they wouldn't have to take a loss. This is a perfect example of how the public gets cheated by dishonest and/or incompetent Realtors who call themselves "real estate professionals."
This appraisal client made a statement to me about Realtors that I have found to be very true. She said that "Realtors talk out of both sides of their mouth." During all of my experience in this business I've found that some Realtors will say anything to sell a house. It's similar to a prostitute - they "screw" people for money!!
I've seen ENDLESS examples of buyers who have been deceived by dishonest Realtors and third parties. I'd be one of the richest people around if I had a nickel for each time I've seen this happen. All of this deception could have been prevented, if the buyer had been educated about the benefits of getting an unbiased home inspector to evaluate the condition of the subject property. The way dishonest Realtors and other third parties cheat buyers is by deceiving them as to the true condition of the house they're purchasing. For example, let's say a buyer wants to have an inspection done on a house they're thinking about buying. They will ask a Realtor or other third party that's involved in the deal to recommend a home inspector to them. A dishonest Realtor or other third party will give the buyer three names of home inspectors that won't say anything bad about the subject property. This way the deal won't be delayed or renegotiated due to problem conditions found during the inspection. After the buyer closes on the house and moves-in, they find out about all the repairs that are needed and all of the problems with the house. The buyer then realizes that these are the things that the home inspector should have told them about. But by that time, it's too late. It's already a done deal.
I've seen ENDLESS examples of buyers who have been deceived by dishonest Realtors and other third parties to the transaction.
The reason a dishonest Realtor or other third party gives the buyer a list of three names is another con game. All three of the home inspectors on that list are incompetent crooks with no integrity or morals that are "in bed" with the Realtor and they "screw" the clients for money - like prostitutes! The dishonest Realtor or other third party has those inspectors in their back pocket. They're partners in crime. They're cheating the public by "moving deals along " and people don't realize they've been scammed until it's too late. The buyer can call the Realtor or third party to complain about the incompetent home inspector they recommended. However, the Realtor or third party gets off the hook by saying, "Well, Mr. Buyer, I'm very sorry you found problems with the house that didn't come out during the inspection. However, I gave you three names to call. You should have hired inspector #2 on the list instead of inspector #3." If you don't believe all of this, then just ask other home inspectors that are very thorough and knowledgeable. See what they tell you.
The reason a dishonest Realtor or other third party gives the buyer a list of three names is another con game. All three of the inspectors on that list are incompetent crooks with no integrity or morals!
One way you will certainly be able to know if you are a very honest, thorough and knowledgeable appraiser is based upon what greedy, dishonest Realtors think of you. For example, when potential clients call me for price quotes, I tell them that they want to hire the appraiser that's HATED BY THE REALTORS!!!! I explain that the last thing the client should do is use an appraiser (or home inspector) recommended by the Realtor due to the conflict of interest concerns. You know that you're an excellent appraiser or inspector when the dishonest and greedy Realtors HATE YOUR GUTS!!! They hate my guts but that's OK with me because I don't want nor need business from criminals anyway! It's fine when the honest Realtors that I know recommend me to their clients. But I still make it very clear to the client on the phone when they are booking the job, that I represent the client and will tell them all known problems I find at the house and site, regardless f whether or not it kills the deal and costs the Realtor who recommended me to lose their commission. It's always a pleasure to meet and work with an honest Realtor that can accept terms like that - terms that are for my client's best interests only!