Seller's agent shared buyer's inspection report without consent

51 Replies

We are the buyers in a 4-property multi-family deal.  The property inspector we usually use wasn't available. The seller's agent/listing agent recommended someone she's used before, and we agreed to hire him for the job. He requested/demanded full payment ($1,500) before the reports were delivered. We complied (that's on us) and paid him $1,500 on Monday, October 26. He delivered four reports on Monday, October 26 - to the seller's agent. By Wednesday, we still hadn't seen any reports, so we asked about them. The seller's agent then forwarded the reports to me on Wednesday afternoon. The email she forwarded to me shows that she sent the reports to her client, the seller, as soon as she received them on Monday. 

She shouldn't have received the reports at all, and we called the property inspector about it. The property inspector said something about thinking that the seller's agent was representing us, and he apologized. On a scale of inappropriate to unethical to illegal, 1) where does the property inspector fall on sending the reports to the seller's agent and 2) where does the seller's agent fall on sharing our inspection reports with her client without our consent? 

I really just want to know what kind of leverage it gives us in renegotiating the deal. (The inspection reports showed some things that need addressing immediately.)  What would you do? Seller's concessions? Ask the seller to cover the cost of the four appraisals (about $1400) to compensate? I'd love to hear your thoughts. 

Hi @Tara Piantanida-Kelly , I'm sorry to hear about your frustrating surprise here!

The fact that the seller obtained it from the inspector seems like the piece of the puzzle that is most regrettable here.  Depending on your state's specific real estate contract the inspection report may be required or expected to be provided to the seller, as it is in my state (though this is a little known fact).  

I personally wouldn't push on it at all, but would speak again with the inspector and emphasize how inappropriate that was. 

I personally provide the inspection report to the listing agent and seller every time so that they can understand how reasonable I'm being by not asking them to fix all of the things that need to be repaired on the home.  Perhaps them having a few extra days to stew on the report will work out to your benefit in the end.

Hi @Tara Piantanida-Kelly , I agree with @Will Fraser on this. 

Any good listing agent is going to request a copy of the inspection report before approving seller concessions for repairs willy-nilly. In this case it seems like it just wasn't done in the right order.

As for your ethical concerns about the listing agent, I am not sure this is significant enough for the local real estate board to really do anything about.

I think the real lesson here is that a rolodex of inspectors is vital if we are representing buyers. I would never want to rely on a seller’s agent’s inspector as you never know what underlying relationship exists between the two/three. It seems like it’s in our buyers best interest for us to find a inspector that is unaffiliated with the seller's (and their agent) if possible. My broker has been a great resource for finding great inspectors.

I would talk to the inspector and tell them that they should only be providing that to the person who paid for it and not any of the realtors whether it is your realtor or the listing agent.  On the plus side, the sellers have a list of the problems. If there are any surprises, sue that to negotiate a lower price.

I concur with some of the other comments on here and think you're making a mountain out of a mole hill. If you are intending to renegotiate as a result of the inspections then the listing agent and seller are going to be given a copy of the report anyway. The inspector goof'ed for sure by sending the report to the listing agent instead of to the buyer, but giving him the benefit of the doubt I would say that that was probably just an honest mistake.

If you want to push this you could file a complaint with whatever commission/board overseas Home Inspector Licensees in your state (if there is one), but I wouldn't waste your time or run the risk of souring a relationship over something so trivial.

Listing agent can share it without issue when they receive it, ragardless of how they received it.

Also, you would have ended up sending it to them anyways in your next step of negotiations, so it really looks like you are trying to create a problem where one doesnt really exist.

Originally posted by @Russell Brazil :

Listing agent can share it without issue when they receive it, ragardless of how they received it.


Think you're waaaaaaaaaay off base.  

The only one with unlimited rights (unless expressly granted to another) to access/distribution of the report is the person that paid for it.

What if the listing agent got it without the buyer knowing?  Of the buyer said for the listing agent only?

 

Originally posted by @Steve Morris :
Originally posted by @Russell Brazil:

Listing agent can share it without issue when they receive it, ragardless of how they received it.


Think you're waaaaaaaaaay off base.  

The only one with unlimited rights (unless expressly granted to another) to access/distribution of the report is the person that paid for it.

What if the listing agent got it without the buyer knowing?  Of the buyer said for the listing agent only?

 

An agent has a duty of confidentiality to their client only. They do not have that duty to non-clients.

in fact the agent likely had a legal obligation to share the report with their client as a fiduciary.

 


An agent has a duty of confidentiality to their client only. They do not have that duty to non-clients.

Again, I think that statement is also way off.  We have higher loyalty to our principal.  However, what your saying is if a seller tells me somethingin confidence I can tell it to any potential buyer I represent?  So if he tells me, I've listed at $100K, but from your client I'll take $90K?

 

 

As a licensed home inspection professional they should not be making sloppy mistakes like that. I would politely explain to him you will be sharing your negative experience online as well as reporting to state and request a $500 credit on the fee, etc. $1500 is an excessive fee regardless. My inspector is $600's and is very thorough for 4 unit buildings. 

As for the realtor sharing it with their clients. As long as the realtor is not also representing you this actually is not illegal as they have no fiduciary duty to you.


As for the realtor sharing it with their clients. As long as the realtor is not also representing you this actually is not illegal as they have no fiduciary duty to you.

OK, for the sale of argument, I understand if a party expressly states that you can share a report they own with anyone - IN WRITING

However, wouldn't the assumption be that, after asking and approval to share with party A, that you can share it with A, but no one else?

I just hate and advise against giving out reports without a lot of limits since it can come back and bite you (eg sellers says I never said you could publish it to the free world - It's happened, to a friend :)  ).

 

@Tara Piantanida-Kelly could it just be an honest mistake? In this industry communication is Key, ask the sellers agent if this was intended. If not, then Id say let it be, does it really affect the deal that much?

Originally posted by @Steve Morris :

An agent has a duty of confidentiality to their client only. They do not have that duty to non-clients.

Again, I think that statement is also way off.  We have higher loyalty to our principal.  However, what your saying is if a seller tells me somethingin confidence I can tell it to any potential buyer I represent?  So if he tells me, I've listed at $100K, but from your client I'll take $90K?

 

Did you read the post? Are you aware that the agent in question here represents the seller, not the buyer? They have no duty of confidentiality to the buyer. They have a fiduciary duty to the seller.

 

Just use this to your advantage and refer to each thing in the inspection report that needs to be addressed and ask for concessions. In the big picture, that should get you farther than whatever the cost of the inspections are and with less drama. 

@Tara Piantanida-Kelly

It is unfortunate the inspector made the mistake. I’m curious what were the consequences? Was there something negative in the report?

In California buyers are obligated to share inspection reports. We had a deal fall through and walked away from the deal. We were obligated to share the reports we had paid for free of charge to the second buyer. We saved him a bundle in inspection fees, septic inspection, and well water testing.

Illegal? Really? Your argument makes no sense because you would need to share the report with them if you actually intended to use it as a way to negotiate. Sounds like you are TRYING to find a way to take advantage of a mistake/bad decision on the inspectors part.

@Tara Piantanida-Kelly

So sorry about your unpleasant experience.

I will suggest you negotiate repairs or get some concession from seller and move on.

As mentioned, Agent have Fudiciary duty of Confidentiality to their clients NOT customers but must treat customers fairly and with honesty.

Goodluck

@Tara Piantanida-Kelly

All in all, I think you are SOL. First, your home inspections are way too costly. I hear NJ is supposed to be so expensive. Ours are about $625 wihich includes the radon test. Also, our inspectors only “deal with” whomever pays them. As part of their contract with the customer, it indicates the various parties (ie buyer’s agent and buyer’s attorney) and whether they should directly receive a copy of the report.

I’m sorry to hear your deal did quite go as professionally as it should have.

You can not take back what they have.  Now they will have to declare any problems to the next potential buyer, so you have an advantage.  Use it.

Since you have the inspection report, notice on page 1..fix that.  ON page 3...fix that too!  and so on!

Hi @Tara Piantanida-Kelly, I think it's an honest mistake. You should request the official reports form the Property Inspector and  then inform the seller of any necessary repairs that you want done. The seller has the full report, so you can always ask for more repairs to be done, or you can renegotiate your offer.

This is not that big of a deal. Did the inspector screw up? Yes, but he probably thought the listing agent was representing you. Honest mistake. One of the many reasons you should have your own representation if you don't. 

 If you were going to request the seller to fix anything or for them to give a credit you are going to have to provide inspection report pages to back your requests anyway. Also, in my experience it is not the worst thing in the world for sellers and agents to see the report, often the inspection looks worse on paper. 

Originally posted by @Russell Brazil :
Originally posted by @Steve Morris:

An agent has a duty of confidentiality to their client only. They do not have that duty to non-clients.

Again, I think that statement is also way off.  We have higher loyalty to our principal.  However, what your saying is if a seller tells me somethingin confidence I can tell it to any potential buyer I represent?  So if he tells me, I've listed at $100K, but from your client I'll take $90K?

 

Did you read the post? 

Seller's agent shared buyer's inspection report without consent


 

 

@Tara Piantanida-Kelly

Very unfortunate circumstances.  Many of the posters live in states where the reports are automatically shared, and New Mexico used to be that way.  Recently however our contract and process changed such that the buyer does NOT share the report unless making requests for repairs or price adjustments, and then only the relevant section (s) if the report go to the seller.  The full report can be requested in writing, although the buyer doesn’t have to agree.

Now that the seller knows what’s wrong, they would have to disclose to any future buyers, so here’s your chance to negotiate additional items that you may not have asked for previously.  This may work in your favor.  Good luck!

Hi @Tara Piantanida-Kelly ,

It sounds like a very frustrating experience and I suspect that the frustration in the transaction is not limited to this mix up regarding the ownership and disclosure of the inspection report.

The issues here are two-fold; the actions of the Home inspector and the actions of the Listing Agent.

If you signed a Home Inspection Agreement with your Home Inspector this is the contract that will determine what is or is not ethical and legal. The Errors and Omissions Insurance company that your Hone Inspector uses will have determined what Standards of Practice ( SoP) and Code of Ethics the Inspector must adhere to and will have delineated these on the Home Inspection Agreement. Normally the ASHI, ( American Society of Home Inspectors) is the standard ( but you would need to check your agreement because if you have one it will be on there) and their SoP specifies the confidentiality of the report findings;

ASHI Code of Ethics part 2C“Inspectors shall not disclose inspection results or client information without client approval. Inspectors, at their discretion, may disclose observed immediate safety hazards to occupants exposed to such hazards, when feasible.”

And so if the Inspector did not abide by the Code of Ethics his behaviour could be construed as unethical. In terms of the legality of his behaviour...

The law in your state will have compliance requirements of the Home Inspectors that will address this issue; normally they are required to abide by their Code of Ethics by law. You would need to check with the Organisation that licenses Home Inspectors in your state to understand which law applies. If compliance is required by the law of your state to both the contract ( the Home Inspection Agreement) and to the Code of Ethics then he may well have acted illegally.

There are often conflicting duties of a Home Inspector and an Agent.

As for the Listing Agent; the agent will only have fiduciary duties to the broker and the broker will have fiduciary duties to the seller if the brokerage that the seller has the Listing Agreement with is of a certain type. Fiduciary duty, at least in FL, and it may be different in your state only confers with a Single Agency Brokerage relationship, not with a no brokerage relationship or with a Transaction Broker relationship and so the type of Listing Agreement would determine what duties the Listing Broker will have to the seller ( and by extension what duties the Agent will have to the seller.) 

Either way the Listing Agent's duties and responsibilities would be determined by that contract and that would govern their behaviour. They would certainly not have any fiduciary duty to the buyer but they would, if they were Realtors - not Real Estate Agents - be bound by a strict Code of Ethics as set down by the National Association of Realtors - and in the Code of Ethics;

REALTORS® shall not, however, be obligated to discover latent defects in the property, to advise on matters outside the scope of their real estate license, or to disclose facts which are confidential under the scope of agency or non-agency relationships as defined by state law.

Your relationship with your Home Inspector is one such agency relationship if you did indeed sign a traditional agreement. However just because the Agent is not bound to disclose to their principal ( if indeed they are in a principal: agent relationship) does not make disclosure unethical, it just means that they don't have to undertake that disclosure.

The ethics of the Agent's actions is a grey area and would depend on the various factors outlined above - at least those would be the factors in FL and I stress that the structure may be different in your state.

How and ever if you feel distressed about these events you may well have recourse to the law and to the licensing authorities and this would be the appropriate course of action in redressing these issues. Often licensing boards take a dim view of unethical behaviour and there are protocols in place to protect the public from harm, including financial compensation.

As it relates to the transaction you are in, I would suggest that you negotiate the repairs you feel are required, in line with the parameters of the contract you have undertaken with the seller - this would be your strongest position in securing a more favourable deal. Hopefully your agent can do that on your behalf. 

I find that creating and sustaining a respectful, honourable and extremely professional relationship between the two sides in a transaction is probably the biggest determining factor in getting my clients the very best deal that could be achieved in the circumstances.

I am truly sorry you're in this spot, hope this clarifies things a little for you.