Focus on Ethics

The ASHI Code of Ethics Committee is charged with developing ethics education and awareness for ASHI’s membership and answering Requests for Interpretation of our Code of Ethics. One Request for Interpretation (RFI) within the last year is included here. Whether participating in real estate marketing programs is ethical or not has been a bone of contention among ASHI members for several years. We hope that this RFI and its response help clarify the distinction between legitimate marketing or advertising and unethical payment for referrals.

In each of our monthly Focus on Ethics articles, we present one or more RFIs and the responses developed by the committee since the new Code of Ethics was approved. Our membership is encouraged to submit RFIs to the committee if serious questions about the intent and applicability of the Code should arise. The necessary form is available at the ASHI Web site under Downloads/ASHI Forms & Documents.

– Keith A. Oberg, Chair, 2007 ASHI Code of Ethics Committee

Request for Interpretation

e061102  Disclosure of Marketing Agreement
Is participation in a marketing program with a real estate broker a violation of the Code of Ethics section 1.C., if the real estate broker agrees to disclose to all of its customers the nature of the agreement, including notification that the broker is receiving fees related to their advertising efforts?

RESPONSE

Simply disclosing a conflict of interest to a home inspection client is not generally considered to be a sufficient remedy for a conflict of interest to become ethical, because the adequacy of the communication of the conflict of interest could never be assured to be sufficient to properly alert and protect the consumer. The significance of the disclosure could easily be overlooked by the client.

The primary question here is whether the marketing program is truly advertising or paid referrals via a listing. If a list of inspectors or any related materials included in a marketing program are titled “preferred home inspectors” or “recommended home inspectors,” or if any promotional materials regarding the list refer to the list in such a manner or similarly, or if there is any agreement to refer participating inspectors, then the program would violate 1.C of the Code, which prohibits paying for referrals.

Further, these “preferred vender lists” can be construed to be in violation of Section 3.A. of the Code of Ethics, which states that advertising shall not be deceptive or misleading.

However, advertising or joint marketing with a real estate firm does not necessarily mean that an inspector is paying for referrals in violation of the Code. If the list is titled “paid advertisers” or “marketing partners” or in some other fashion clearly indicates that the inspector has paid for this advertising, and no quid pro quo or side agreement to refer those on the list is included, then the program would not be misleading to the public and would appear not to violate either section of the Code.