Real Estate Agents, Inspectors and Appraisers are Not All Equal

A Guide to Selecting Real Estate Professionals

By

George Wells, BSEE, MBA, CFI, CMI

© September 2009
 

You may think that because real estate agents are licensed they are all equally qualified but they are not.  The goal of licensing is to protect the public by establishing minimum standards.  You want - and deserve - more than the bare minimum from your real estate agent in a sale or purchase.  You want the very highest level of competency and capability. 

Look at your agent's experience, education, and additional certifications.  Professional certification requirements often exceed the minimum licensing requirements. 

Ask your real estate agent about continuing education.  Does the agent take a least 24 hours of continuing education classes each year?  We are living in a time when things change rapidly.  Real estate agents, like all professionals, need to work hard to maintain current knowledge and skills.

Does your real estate agent belong to trade associations?  Trade associations, such as National Association of REALTORS^® almost always exceed licensing requirements in technical, business, and ethics standards.  Trade associations that also certify professionals require members to maintain accurate records and usually require their members to agree participate in arbitration or mediation when there problems arise.

A real estate agent is not necessarily a REALTOR^®.  In spite of the fact that the word ends in "or" and is often incorrectly used as a pronoun, REALTOR is not a masculine pronoun meaning "real estate agent".  REALTOR^®.  is the registered trademark of the National Association of REALTORS  According to the association, "Only real estate licensees who are members of the NATIONAL ASSOCIATION OF REALTORS^® are properly called REALTORS^®.

Real estate agents must either possess a real estate broker's license or work under the supervision of a real estate broker.  The broker is ultimately responsible for the agent's actions.  If you real estate agent is not a licensed broker ask to meet with the broker before entering into any agreement with the agent.  In the normal course of events, you will not likely need to meet with, or work with, the broker but, should the need arise, you want to have confidence in, and be comfortable with, the broker.

Real estate agents tend to be one of two varieties.  There are those who are merely paper pushers and those are are promoter-negotiators.  Paper pushers merely write offers or present offers to clients.  As seller's agents, they do little beyond the basics of listing the property in directory such as the Multiple Listing Service^® (MLS) or local newspapers and schedule an occasional open house.  The paper pushers are often part-time agents who may sell a dozen or fewer houses each year.

The other type of agent is what I call the promoter-negotiator.  The promoter-negotiator is out there looking for sellers or buyers for your property.  They actively participate in the negotiation process.  They network with other like-minded agents.  They know who is looking and what they are looking for.  The promoter-negotiators are usually full time agents who are selling at least two or three houses a month.  Ambitious promoter-negotiators usually already know what is available in your market when you initially contact them.  If you are a seller, they know how to market your property based on experience and an in-depth knowledge of the local market. 

Find a promoter-negotiator if you can.  The easiest way to find one is to look in the real estate section of your local Sunday newspaper.  They are the ones with their photos and lists of achievements such as "top seller of the month" or "member of the billion dollar club" in the ads.

The idea of home inspections is not new.  Home inspectors have bee around for decades.  It has only been in recent years, however, that home inspections have become routine in real estate transactions.  There was a time when home inspections were a luxury but declines in construction workmanship and materials since the late 1970's has made home inspections imperative in today's market.  The risk to both buyers and sellers is too great to enter into a real estate transaction without the protection and peace of mind that an inspection by a highly qualified inspector provides. 

Your Inspector's Credentials

Home and commercial property inspectors are not all equal.  When shopping for a home inspector, try to find a Certified Master Inspector^® (CMI)  A CMI has to meet the industry's highest standards.  The requirements for an inspector to earn the prestigious CMI designation are four to six times greater than the typical requirements for licensing.  CMIs are in the top 1% of all home inspectors. 

You might think that you would have to pay a hefty premium for a CMI.  Sure, you might  pay a few dollars more for a CMI but the difference may not be as much as you think it would be.  CMIs are professionals who rise to the level of becoming a CMI because of their dedication to the craft.  They have to charge a little more because they are continually working to improve their knowledge and skills.  The additional peace of mind you will have by hiring a professional inspector that is in the top 1% of all inspectors is worth the small price you will pay for their services.   

If you cannot find a Certified Master Inspector in your area, be sure to look for certification by a recognized authority such as the International Association of Certified Home Inspectors (InterNACHI).  InterNACHI is the largest and most respected of the trade associations.  InterNACHI members have access to the largest body of continuing education resources in the World.  Unlike some other trade associations, InterNACHI members have to pass a rigorous series of tests and inspection report evaluation before they can become a member.  There are no unqualified "junior" or "associate" member categories in InterNACHI.

Pre-inspection Agreement

Ask your inspector to provide you with a copy of the pre-inspection agreement in advance of the inspection.  Have your lawyer review the pre-inspection agreement.  If you have questions about the agreement, ask them before you schedule the inspection. 

Talk to Your Inspector

Talk to your inspector before making a final decision.  It is imperative that you are comfortable with your inspector.  You need to be confident that you and your inspector will be able to communicate openly and honestly.  Don't be afraid to ask tough questions.  If the inspector gets defensive during the initial interview, what do you suppose will happen should you have tough questions after the inspection?

Does the inspector talk to you in a plain understandable way?  Does the inspector use a lot of jargon that you don't understand.  If you don't understand something, are you comfortable asking the inspector to explain it in terms that you can understand?  Homes and commercial properties have complex systems.  A good inspector should be able to explain those complex systems in ways that anyone can understand.

Your Inspector's Inspection Reports 

Technical knowledge and skills are essential but it will not do much for you to have an inspector who has great technical knowledge but lacks the skills to communicate effectively.  You need to understand what the inspector is telling you.  Your inspector should provide you with an accurate and comprehensive yet concise report that is clear and easy to understand.  Your report should not be a list of problems or a repair list.  It should be fair assessment of the home's or commercial building's condition. 

The real test is to read a few of an inspector's inspection reports before you hire the inspector.  Are the reports filled with statements such as "I'm not responsible", "Get a qualified expert",  "or "further evaluation by ... is recommended"?  Are the reports filled with all sorts of disclaimers telling you all the things the inspector is not responsible for?

Are the inspector's reports filled with all sorts of fluff?  Be wary of reports that have the real information buried in many paragraphs or even pages of generic information such as how a water heater or a furnace works.  You didn't pay hundreds of dollars for information that you could get from a $15 book.  An inspector may deliver reports in presentation kits that include supplemental materials such as "The Home Owners Handbook".  That is not what we are concerned with here.  Those are great kits.  Books such as the Home Owner's Handbook have excellent information in them.  Be very wary of a report that is filled with fluff that is used as filler to make pad the report, to make it look bigger and more impressive. 

Supplemental materials should be separate from actual report.  You want your report to be easy to read and understand.  The report should be as long as necessary but not longer.  The report should be balanced and fair.  It should present the inspector's findings in a factual manner.  It should not be written in such a way that it causes undue alarm with person who reads it.  The report should accurately describe the the property's condition.   

Most inspectors will use reporting software to help make the report writing easier and to maintain consistency in reporting.  Inspection report software is only a tool.  Even the best software will not make an inspector a good inspector.  It is only a tool but like any tool, it needs to be a good tool for it to provide any benefit to either the inspector or you, the inspector's client.

Insist that your inspector uses software that has been created by inspectors who have the skill to ensure that the finished reports provide you with the information you need in a way that you can understand.  Most inspection software is created by programmers who, at best, can claim that they have accompanied inspectors on a few home inspections.  The contributors to BestInspectors.Net inspection report software are inspectors who have performed tens of thousands of inspections.  BestInspectors.Net uses programmers to do much of the programming but the development is done under the direct supervision of actual inspectors.  

There are situations in which you may have an opportunity or a need to select an appraiser.  Ask the same types of questions you would ask of any professional.  In particular, formal credentials, relevant experience, and continuing  education.

You may think that because professionals may be licensed they are all equally qualified but they are not.  The goal of licensing is to protect the public by establishing minimum standards.  You want - and deserve - more than the bare minimum from the professionals involved in your real estate sale or purchase.  You want the very highest level of competency and capability. 

Look at your appraiser's experience, education, and additional certifications.  Professional certification requirements often exceed the minimum licensing requirements. 

Ask your appraiser about continuing education.  Does your appraiser take a least 24 hours of continuing education classes each year?  We are living in a time when things change rapidly.  Appraiser need to work hard to maintain current knowledge and skills.

Does your appraiser belong to trade associations?  Trade associations almost always exceed licensing requirements in technical, business, and ethics standards.  Trade associations that also certify appraisers require members to maintain accurate records and may require their members to agree participate in arbitration or mediation when there problems arise.     

©2009 George P. Wells