[Technically Speaking] WDI inspections--let the buyer and seller beware

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May 31, 2005

Our professionalism comes under its greatest scrutiny when we conduct WDI inspections. Why? Because we have those among us who forget they represent the BUYER during these inspections. Regardless of who is required to obtain the inspection, the ultimate responsibility is to the buyer. However, recently I have seen sellers take an interest in the WDI inspection because the treatment cost typically comes out of their pocket.

It’s interesting to hear the rhetoric regarding these inspections. For example, many inspectors fear raising prices because agents won’t recommend (hire) them anymore. Then there is the fear of rendering a report that may affect the transaction (failure to "clear" the property). I’m convinced such inspectors are working for their agents, not the buyers.

I never understood why companies conducted inspections and provided reports for $20.05 (the year of the inspection, next year it will be $20.06), $29, or even $39, much less how they could afford it. To cover all its expenses, even the smallest of companies needs to charge $55 to $60 per hour to break even, including driving time and increasing fuel costs.

MAKING ENDS MEET? Based on several personal experiences, there are several ways companies charging these absurdly low fees can make ends meet:

· Their real estate agents give them all of their clients because they will get what they want at a bargain price — a "clear" report or a cheap spot treatment to correct any findings.

· Another approach is to spend no more than 15 minutes per inspection. I haven’t figured out how to do a WDI inspection of even a small house in less than 45 minutes (I guess I still have a lot to learn). I envision the day when inaccessible areas are pre-printed on the WDI report to save time — because listing everything as inaccessible eliminates the need to do a thorough inspection and significantly reduces the company’s liability.

· I have heard attorneys recommend and seen companies attempt to limit their liability for the inspection to the amount charged for the inspection — nothing!

· In the absence of infestation or evidence thereof, another way to make a cheap inspection pay off is to place a ransom on the report (require treatment prior to issuance) or indicate that there is infestation or evidence thereof and recommend treatment. We are being paid for our professional inspection not a "CYA treatment" in case we missed something. When there is compelling evidence that there could be active infestation, treatment may be warranted. This should be the exception not the norm.

EXAMPLES. In the past few weeks I have been asked by sellers to offer a third opinion on WDI reports and treatment recommendations. In the first case, there was no evidence of termite infestation (mud splattered on the wall of the crawlspace was the "evidence" the company used to recommend treatment).

The second case was more complex. There was ample evidence of previous infestation albeit extremely dry. Reportedly, the company found live termites at the time of inspection. I found none several days later. The ethical problem I had with this inspection was that despite knowing that the inspected structure was under contract with another company, the inspecting firm proposed a complete treatment and made no recommendation to confer with the other company.

My own experience with these unscrupulous practices was an inspection of a house I sold seven years ago (I lived in the house for the 11 years since it was built). The house had a poured concrete foundation, no wood-to-ground contact, more than 6 inches clearance around the foundation, visible band boards and rim joists and no evidence of infestation. The inspector told me that even in the absence of an active infestation (or any evidence) the house would have to be treated for the buyer to get the report.

Real estate agents are equally at fault. Their No. 1 priority is making sure the sale goes through, otherwise they don’t get paid. The buyer’s potential problems with WDIs are a secondary concern (if a concern at all). Recently, I attended a real estate convention and the first agent I met to discuss our association’s new WDI credentialing program didn’t want to know how the program would benefit him and his clients, only how much it would cost. One would think that his interest would be finding the best inspector to represent his clients’ interests.

We need to keep the potential liability of WDI reports in perspective. Except for a collapsing foundation, the most costly post-purchase disaster a buyer potentially faces is hidden termite damage. Whether buyers consider this information in their buying decision is not a decision for the WDI inspector. The inspector needs to provide an accurate report based on a thorough inspection with a treatment recommendation commensurate with the findings. After that, let the buyer and seller work it out.

RAISING THE BAR. As painful as this might sound, it’s time the state regulatory agencies and NPMA become more involved. Some thoughts I have on raising the bar are:

· Establish mandatory WDI training and certification requirements (some states and associations already have done this).

· Enforce label violations if treatments are performed when the house is under contract with another firm and there is no evidence of infestation or disruption of the barrier.

· Set standards, such as NPMA established with regard to defining an "active infestation" (termites in or on the structure).

· Do not allow the inspecting company to perform a recommended treatment.

· Require companies performing WDI inspections for sale of property to be responsible for a complete treatment if active infestation occurs within one year of purchase.

These unscrupulous practices by a small element of the industry can spread like wild fire and damage our reputation. We have a hard enough time defending ourselves when legitimate mistakes or oversights are made, much less creating problems through unethical business practices.

The author is president of Innovative Pest Management, Brookeville, Md. He can be reached at 301/570-3900 or via e-mail at rkramer@giemedia.com.