e060706 Hiring a Real Estate Brokerage for Marketing

Identifier: e060706

Date: 07/06/2006

Question

If my company were to offer an annualized home inspection (inspect the home every year) to the home owner with the service unrelated to any and all real estate transactions, closings, or estate settlements, could I pay a third party, a licensed real estate broker, etc, to market the service for my company for the marketing and administrative services performed in the placement of the annual home inspection service business?  The payment to the third party, licensed real estate broker, etc. would be a good faith estimate of the third party's expenses for promoting, advertising, and soliciting the business.  Naturally, the agreement for payment between the inspection company and the third party, the real estate broker, etc. would have to be disclosed on the agreement between the home owner and the inspection company.

Response

The Code of Ethics states that "Inspectors shall not.... compensate realty agents.... for the referral of inspections."  You would, at least in part, be paying a real estate agency for referrals and therefore technically be in violation of the Code.  Any business relationship with a real estate broker that involves payment for referrals can clearly result in potential conflicts of interest to the detriment of the home inspector’s consumer and the integrity of the inspection report, when that consumer is a prospective home buyer.  Presuming that you will also be dealing with the same broker with regard to inspections for home buyers, the intertwining of financial arrangements between the real estate broker and the home inspector can create at least the appearance of a conflict of interest for the inspector’s homebuyer clients. 

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