What’s wrong with asking real estate agents for home inspection referrals? Turns out - not much. Here’s my point-of-view on the matter.
Every home inspector knows that there are two distinctive camps when it comes to soliciting real estate agents for home inspector referrals. There are those inspectors who think that it is a normal part of doing business, and then there are those inspectors who think that it is an unethical practice. This heated debate has put inspectors at odds with each other for years on message boards, Facebook news feeds, and in the comments section of online articles (among other places). Sometimes, those debates can get outright mean and nasty due to opposing opinions.
In this editorial, I am going to present some “common sense” arguments, along with references to current laws, about why asking agents for referrals is completely and totally harmless. In fact, I will explain why it is a good sales and marketing practice that should be used every single day by inspectors who want to grow their home inspection practices. Let’s begin.
“Can you recommend a home inspector to me?”
When I purchased my first home, I remember asking the real estate agent this question and the agent replying with, “No. I suggest that you find your own home inspector. I don’t make recommendations for liability reasons.” Obviously, the agent thought that she was protecting herself from potential liability against blowback (legal or on social media) should I be dissatisfied with the inspector she recommended. Seems reasonable, right?
Mmmm…not really. There are really only four reasons why real estate agents would be affected by lawsuits against home inspectors.
- The first reason is if the agent accepted financial enticements or “favors” from the inspector that exceeded a specific value determined by state or federal laws in exchange for being recommended.
- The second reason is if the agent was aware that the inspector being recommended was not fully qualified, certified, licensed, or insured to perform the inspection.
- The third reason is if the agent knowingly neglected to disclose damage and defects that the inspector also did not include in the inspection report.
- The fourth and final reason is if the agent forces their client to use an “approved” home inspector of the agency. This usually happens when a broker maintains a “preferred inspector list” which home inspectors must pay to be on.
In all four scenarios, the agent can be liable for recommending the inspector.
After performing a Google search and asking local Facebook friends for inspector recommendations, I called the inspector I wanted to hire based on his online reviews and social media praises. He asked me who my agent was. I told him, and he admitted to having known her for many years and performing dozens of inspections for her.
Then, I immediately called the agent to tell her which inspector I had chosen, and the first words out of her mouth were, “He’s a good choice. I’ve known him for years.” I then asked, “So, do you think I should stick with him?” She replied, “Sure. He’s a great inspector.”
Here’s why that matters. Whether or not my agent chose the inspector for me, or whether she wholeheartedly endorsed an inspector I had chosen, she still recommended that I hire that inspector once I told her his name. In either case, I would have had the opportunity to perform my own due-diligence on the inspector regardless of who recommended him - and that’s exactly what I did. One example of this is asking local Facebook friends if they knew the inspector and trusted him. After 109 positive comments about the inspector, and five not-so-positive comments about him, the good outweighed the bad, so I hired him.
I trusted my agent enough to sell me a $267,000 home and recommend a few mortgage companies and local contractors, so my first inclination would not be to distrust her inspector recommendation on top of everything else she had already guided me through. The tragedy for my agent, though, is that she firmly believes that if she recommends a home inspector, and that home inspector gets sued (or even just gets bad reviews), then there is a possibility that she might be named as a defendant or have to defend her reputation. Somebody is feeding her bogus information.
That said, I cannot find a single case in the United States where a real estate agent was prosecuted by a court of law for merely referring an inspector to a home buyer client after the client filed a lawsuit against the inspector. None. Unless the agent accepted an illegal or unethical enticement from the inspector for the inspection booking, and unless the inspector intentionally provided a “soft inspection” at the request of the agent, there would be virtually zero grounds for any court of law to prosecute agents for providing recommendations to clients. History has proven this.
I am not a lawyer, and the dispositions of lawsuits are the final word of judges, juries, and district attorneys. However, the laws written about agents recommending home inspectors to clients are nearly non-existent. Many of these laws pertaining to how real estate agents operate in a marketing-related relationship were primarily written to address collusion between real estate agencies and mortgage brokers - not between individual agents and home inspectors.
Add to this that several home inspection trade associations have their own Standards of Practice (SOP) and Code of Ethics (COE) to address the marketing-related interactions between inspectors and agents, and they don’t always fully-align with one another. Whether or not they do, the fact that state and federal governments trust private-sector trade associations to create and manage the ethics between inspector and agent interactions speaks volumes to the legitimacy and validity of real estate agents offering home inspector recommendations, without fear of prosecution, when asked for them.
Old Challenges Meet New Attitudes
Here is where I flip the coin on its side and talk about YOU, the HOME INSPECTOR, asking real estate agents for inspection referrals. I previously discussed why it is not illegal, immoral, or unethical for agents to recommend home inspectors should clients ask (unless it violates state law, federal law, or a trade organization’s SOP/COE) to set a precedence for the next part of this article. But, is it illegal, immoral, or unethical for a home inspector to simply ask real estate agents for client referrals?
The arguments against it include the following:
- If the inspector is given a lead by the agent, then the agent may require the inspector to write a soft report so that the agent doesn’t lose the sale. (This is illegal.)
- If the inspector doesn’t comply with the agent’s demands, then the agent might blacklist the inspector from receiving future inspection referrals. (This is possibly illegal depending on the circumstances, but it is definitely unethical for agents to demand that inspectors bend to their will.)
- The agent might stop giving the inspector referrals if the inspector’s inspection report doesn’t meet the agent’s standards. (This is unethical since the home buyer is the inspector’s client, not the agent.)
As you can see, there really aren’t many arguments against inspectors asking agents for referrals. When you run into an unethical agent, then you simply “fire” them. There are far more ethical agents than there are unethical ones. As
Mike Crow of the
Millionaire Inspector Community was quoted saying in
WorkingRE Magazine, “We have run across agents trying to tell us how to report, but it’s not very common. One of the reasons we don’t see it very much is because we’ve weeded out the agents who try to push us around.”
Mr. Crow also said, “When you know how to market properly and you know how to make the phone ring, you’re not at the mercy of an unethical agent trying to push you around. Home inspectors talk about the fear of being blacklisted but it also works both ways. We blacklist some agents as well. If there are agents who aren’t working in the best interests of the clients or who aren’t ethical, we turn those appointments down.”
Home inspectors have been asking real estate agents for referrals, or to be recommended, for decades. These tactics are colloquially founded on “Inspection Marketing 101” - it’s just the way things have been done for years. Before there was the Internet or World Wide Web, home inspectors handed out brochures and business cards to real estate agents hoping that those agents would forward their printed media to home buyers or place them on a vendor table somewhere in their offices.
Inspectors also had the Yellow Pages® , billboards, and local TV/radio to advertise on if they could afford it. Most home inspectors could not afford these advertising mediums, so many of them had no choice but to approach real estate offices or open houses for referrals and to be recommended. The inspectors would either walk into an office to introduce themselves, or they would pick up a landline telephone and start dialing numbers to introduce themselves to individual real estate agents.
The modern era of online marketing and search engines has all but replaced the need for ambitious inspectors to speak face-to-face, or over the phone, with up-and-coming real estate agents. Today, consumers can simply search for inspectors online through web browsers, browse their websites, and make a decision without ever having asked an agent for a recommendation.
The “art of the sale” has been all but lost and replaced with search algorithms, SEO (Search Engine Optimization), social media, and online referral services. Home inspectors are more dependent than ever on passively being found online instead of actively finding leads and sales through activities such as “cold calling” by email, phone, or personal visits to develop warm markets.
This really makes me wonder if the reason that some real estate agents are declining to refer home inspectors has less to do with fearing liability and litigation while having more to do with the fact that modern communications technologies just gives them one less thing to do for their clients in order to earn their commissions. Maybe those agents recognize that more and more home inspectors are becoming so dependent on search technologies that agents simply don’t feel the need to be in the “recommendation business” anymore.
Regardless of the answer, there are still 2.3 MILLION real estate agents in the United States, and each one of them owns a telephone and email address. Fortunately, there is still a large percentage of those agents who would still offer inspectors a shot at performing an inspection for one of their clients if an ambitious inspector would just ask them for it. After all, the vast majority of agents and inspectors are ethical and compliant with the law. You have the right to walk away from those who aren’t.
Analog vs Digital Marketing
If your home inspection appointment calendar is full, then something you did got you to this point. More than likely, you started your inspection business with a foundation of introducing yourself to real estate agents who could recommend you. Some did, some didn’t, but you have a growing and possibly thriving home inspection business today because of those who recommended you. The bottom line is that your hard work and dedication have paid off, and your inspection business is now being referred to other home buyers by your customers.
But, you shouldn’t forget your roots – what got you to this point in your career. Here’s why.
Think of it like a car with a combustion engine (analog marketing) compared to an electric car (digital marketing). Each cylinder of the combustion engine is a marketing tactic – cold calls, brochure drops, networking, open house visits, candy bowls and breakfast biscuits, etc. As long as those cylinders are constantly being fueled and fired, the engine will eventually get you from Point-A to Point-B. This is comparable to how you likely started your business, and you are here today because of it.
Then, there is the electric motor. Give it electricity, and the motor runs. There are no cylinders in it, and there are far fewer parts to break. However, should one circuit burn up, or one wire gets disconnected, the whole thing breaks no matter how much electricity you feed it, and your motor dies. This is comparable to depending entirely on the Internet to feed leads and sales to you – aka, waiting for the phone to ring. If your competitors do anything – and I mean anything – to improve their online presence and searchability against you, your phone stops ringing. (Hopefully, you have a lot of agents and former customers in place who can recommend you!)
But, therein lies the real problem – nearly every full-time home inspector is doing the same thing to attract inspection buyers. If your local competition upgrades their website to attract more leads, then others will, too. If they sign up for online referral services that successfully farms leads, then others will, too. If they start producing videos on YouTube that actually generate sales, then others will, too. If they buy Facebook or Google ads that are helping them to build a six-figure inspection company, then others will, too. I hope you see my point.
The digital environment makes it easy for your competitors to rise above you, compete against you, and attract more leads than you. It’s a constant game of keeping up with the Jones’. And, even if you change words and pictures on your website, sign up for online referral services, and improve your SEO, it can take six-to-twelve weeks before the Internet indexes your changes. For example, if your competitors have already been using Google Business successfully, then any changes they make to their listing will be indexed in less than one week. However, if you are new to Google Business, it will take a bare minimum of six weeks for your new listing to be indexed.
Every competitor in your service area is going after your prospective clients, and they are as hungry as you are. Should your electric motor (digital - Internet) fail to work for whatever reason, you need to make damned sure that the combustion engine (analog - cold calling) that you stored away in your barn is still working.
The “analog” efforts that you built your business upon once will help you to build it again – maybe even better than before. You are an older, smarter, wiser, and more capable home inspector than when you first started. Because of this alone, you have more credibility when speaking to real estate agents and other referrers. That is an asset that you can utilize today to farm more referrers and refill your pipeline with allies who can refer new business to you in the near future.
How to Ask Real Estate Agents for Referrals
Call them. Ask them for a referral. Send them information about your company. Repeat.
Sounds easy, right? Well, it is easy. The biggest challenge that most home inspectors face is that they do not like “rejection” (aka, people saying “no” to them), and they shy away from making phone calls to ask for referrals. The second-biggest challenge that inspectors have is the time to engage in calling. Today’s busy inspectors simply don’t have the time to “dial for dollars”. They are busy inspecting and writing reports for clients that the Internet and word-of-mouth have given them.
Fortunately, nearly all of your competitors who have been in business for at least two years are running their respective businesses with an electric motor (online marketing), and many have simply discarded their combustion engines (cold calling). This is to your advantage.
The Internet and all of its features function more like an order-taking service. People call you when they need you, and the Internet helps them to find you – as well as all of your local competitors, too! Conversely, a cold call puts you, and just you, in front of people who can be groomed into becoming warm-market referrers from this day forward. Remember, whereas digital marketing allows you to be found by inspection buyers, cold calling allows you to find inspection buyers through the agents you call.
Digital and online technologies are always changing. Search engines are always changing their search algorithm rules. Online lead-generating services are always changing owners or going out of business. Email and website hosting services can go offline or fail from computer viruses and malware. Your competition can make changes to boost their online presence over yours. However, practically nothing can stop someone from making phone calls to ask agents for referrals, set a handshake appointment, or provide more information to an interested party. TIME and FEAR are the only two realistic barriers.
Referrers are the life-blood of your home inspection business. Without them, the income you earn from inspecting homes would be crippled. It is simply unreasonable to think that the Internet and its digital marketing tools can sustain a small home inspection shop in an environment where everyone has nearly the same skillsets and access to the exact same digital toolbox.
This is akin to two evenly-matched swordfighters (inspectors) trying to best one-another for the hand of the princess (a client). Sure, one of you is going to win the battle, eventually. But, what happens when ten more evenly-matched swordfighters (other inspectors in your service area) appear on the battlefield wearing the same armor, brandishing the same swords, having learned their martial arts skills from the same trainers (ASHI, InterNACHI, AHIT, etc.), and all of them are vying for the hand of the same princess? This is digital marketing. Now, imagine that you show up to the battlefield with a dozen additional "advisors" (real estate agent referrers) who can introduce you to a dozen other princesses if you just ask them to.
This is the advantage of actively developing a warm market of real estate agent referrers who introduce you to, and can help you find, new clients as opposed to depending entirely on passive Internet-based marketing. Very few of your competitors want to "cold call", and the Internet represents the path of least resistance for them. If the Internet allows small businesses to level the playing field, then cold calling real estate agents to introduce yourself to offer your services is the clear differentiator because it is something that your competitors aren't willing to do even though it is how most home inspectors got their start and established their first clients.
Beating your competitors requires you to have an advantage and a differentiator. So, if doing the same thing over and over again and expecting different results is the definition of "insanity", then is doing the same thing that your competitors are doing and expecting to beat them also not the definition of "insanity"? Well, maybe not "insanity" per se, but you can't be an unstoppable object that is constantly fighting an immovable force. If you want to beat your competition and build your inspection business to six-figures, then you might want to consider going around the immovable object so that you can reach your sales goals.
Cold calling to build (or rebuild) your pipeline of lead-generating referrers is the one action that you can take today that will help you to achieve your goals faster -- and not everyone is doing it. That is your differentiator. Take advantage of it.
Contact:
Robert Humphries
(678) 743-1450
robert@diversecompaniesllc.com
callingforclients@gmail.com
