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Published by OREP, E&O Insurance Experts | September 2013

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When the agent undercuts the fee, the home inspector suffers. Here's how to handle and prevent this unpleasant occurrence.

What to Do When Agents (Mis) Quote Your Fees
By Natalie Eisen

The unique roles of a home inspector and agent in a real estate transaction are each clearly defined.  But there can be times when one professional steps on the other’s toes. Take fees for instance. 

When an agent quotes a home inspector’s fee to a client, they are potentially setting the client up to pay more or less than what the inspector expects to receive. When the agent undercuts the fee, the home inspector suffers.  Here’s how to handle and prevent this unpleasant occurrence.

“I try to talk to my client directly prior to inspection day,” says Muhammad Rizwan Qureshi, home inspector in Toronto. “When I use my online agreement for them to sign/agree to electronically, the inspection fee is there for them to see.”  Seasoned inspectors use this strategy to remove doubt from the equation. Delivering a hard or electronic copy to the client beforehand, with the fee clearly shown, gives the client a clear idea what your fee is. If an agent attempts to quote a lower price later, you can end the conversation by showing the signed agreement.

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Although the law states that electronic signatures are just as valid as pen and paper, some prefer using hard copies of forms in order to have a physical signature. “My clients and I sign the agreement face to face before the inspection,” says Stephen Lagueux, Quebec home inspector. “A hand-signed contract is tangible proof of our mutual agreement.”  Whether forms are completed electronically or on paper is a personal preference and usually rests on what is most convenient for the inspector and the client. As long as the agreement reaches the client far enough in advance- so they have time to review the agreement and express concerns, the format should not be a problem.

Justin Castronova, lead inspector at First Choice Inspectors in Illinois, agrees. “Clients can say they weren’t given adequate time to review the agreement, when they sign it in the driveway just as the inspection is about to begin. The inadequate review time excuse goes out the window when you have an email timestamp showing they had the agreement for several days before signing.”  The important thing is to ensure that the client receives the agreement early, whether to short-circuit excuses or bolster trust (hopefully, both).

What if it’s too late to prevent an agent from misquoting your fee?  If an agent who sends a lot of business my way does this, I would probably honor his quoted price (just once) and then discuss it with him privately. I would respectfully explain why he should not do it again,” says Qureshi.  Consensus among inspectors is to honor the price at times like these but to make sure the agent knows that quoting your fee is unacceptable.

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Whether or not you continue business with them depends on how long you have been working together and how much business they send you.  If they have known you awhile, it’s important to ask why they’ve suddenly undercut you. Did they think you wouldn’t notice? Was this a special situation? The reason may influence whether or not you work with them again. If the agent is new to the business or new to working with you, let them know how you like to work.

About the Author
Natalie Eisen is a staff writer at Working RE / OREP, a leading provider of E&O Insurance for appraisers, inspectors, and other real estate professionals in 49 states.


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