Back on Jan 31, 2009 I submitted a post that let everyone know that WA State would be requiring real estate agents to disclose if they had a familial or business relationship with a home inspector.  In the other post I noted that it’s not uncommon for this kind of requirement to also impact title, escrow or other types of ancillary businesses to our industry.  What’s different here is that the definition of “business relationship” is meant to include whether or not an agent and an inspector worked together – even if it didn’t include property inspection.

“308-124C-050 Home inspector referrals. Each licensed designated broker will establish a written office policy that includes a procedure for referring home inspectors to buyers or sellers. The policy will address the consumer’s right to freely pick a home inspector of the buyer’s or seller’s choice and prevent any collusion between the home inspector and a real estate licensee.

If a licensee refers a home inspector to a buyer or seller with whom they have or have had a relationship including, but not limited to, a business or familial relationship, then full disclosure of the relations must be provided in writing prior to the buyer or seller using the services of the home inspector.”

Let me give you an example of what this means and how it compares and contrasts with other disclosures of business arrangements.  I have several inspectors that I have referred over the years and they can be found on my Team Reba website.  Two of these inspectors are people I’ve done business with over the years.  One of them, Norm Gosslee of Seattle Eastside Building Inspection, was the inspector I used for 3 home purchases of my own prior to me becoming a real estate agent.  I liked his work enough based on those experiences that I decided to use him as a referral resource for my own clients when I started in the business 6 years ago.  Another fellow, John Lasswell of Lasswell Home Inspection, is someone that I met as I worked with an investor client since he was her inspector of choice.  We ended up hitting it off and I really liked his reporting tools and methods so we started recommending him as well. Several years later, since he liked how I worked, he hired me to help him buy an investment property and I’ve done 2 transactions with him as a result.  Even though those occurred a few years ago I will now have to disclose my “business relationship” with him.

The thing that gets me from all of this is that in other affiliated arrangements there is a specific financial interest involved such as an ownership interest or perhaps a referral fee (aka kickback) paid for new clients (not the agent or inspector themselves) which is why RESPA requires that these relationships be disclosed.  But, if someone is using your services (or vice versa) for your own personal property transactions, I’m not sure why that is being considered the same.  In those instances there is no requirement of me using one or the other inspector for my own personal transactions and the same is true of the other side. 

What was also a bit perplexing to me was that the news of this requirement was announced to the real estate world locally via our MLS.  When I went to my inspector contacts and asked if they were aware of the change, none of them knew the change had happened and that a disclosure requirement existed.  Interesting….

Anyone else have a comment on this new law?

Share this: