Walk-n-talks, also known as “walkthough consultations”, are characterized by short duration (perhaps only 30 minutes), usually no contract, no written report and substantially reduced fee, as compared to a full home inspection done per NYS minimum standards. These are often performed by a contractor, but sometimes a licensed home inspector, who walks through a home with a buyer client and discusses various conditions observed.
Walk-n-talks have become more frequent, due to market pressure with limited housing supply. Some involved in selling a home have favored this practice to reach closing quicker in a strong seller’s market. Buyers are attracted to the reduced cost of the “inspection” and because a walk-n-talk can be done at a showing before making an offer. Also, relying on a walk-n-talk, buyers often waive a full home inspection, making their purchase offer more attractive in a competitive environment. Sellers may specifically encourage this in their offers for sale. We were advised that in some places in New York State the practice has become common and is encouraged by real estate industry professionals.
In response to our inquiry to the Department of State, the NYSAHI Board was advised that since there is no written report produced, walk-n-talks are not home inspections under the professional licensing law and thus are not regulated. They also advised that licensed home inspectors are accordingly not prohibited in that law from engaging in walk-n-talks.
After further exploring the practice, we have concluded that walk-n-talks are contrary to the public interest that the NYS Home Inspection Professional Licensing Law was enacted to protect, and that all parties who engage in the practice do so at great risk, especially licensed home inspectors. Following are considerations that have led us to this conclusion:
- There are no professional standards. Licensing does not apply. Any unqualified person may engage in the practice.
- Buyers have limited legal recourse against any unlicensed consultant.
- Even if performed by a licensed home inspector, a walk-n-talk is by far substandard to a State-regulated home inspection. It is not possible to properly evaluate all of the systems of a home in a short walk through. Undisclosed issues and unanticipated expenses are sure to arise after sale.
- Without a written home inspection report a buyer has no professionally documented tool to use as a reliable basis for negotiation and no written documentation of the conversation that happened during the walkthrough.
- There is no Code of Ethics to protect a buyer from from conflicts of interest or collusion among their walk-n-talk consultant and others on the seller's side.
- Walk-n-talks fast-track the home buying process, shorting due diligence at a time when it is most needed for a life-changing major investment.
- Accepting a purchase offer where a home inspection is waived, especially if in any way encouraged by the seller, can expose the seller to a claim for damages resulting from undocumented defects and/or those not detected in a walk-n-talk. Did the seller prevent the buyer from exercising due diligence? Did the seller imply that waiving the inspection contingency was a requirement of sale? A full home inspection protects both buyer and seller.
- Professionals practicing within a real estate transaction can be named in legal actions if they in any way recommend a walk-n-talk in lieu of a full home inspection or encourage a buyer to waive a home inspection. Realtors especially have a duty to both buyer and seller to recommend a home inspection prior to sale.
- Any inspection you perform without a written report is very likely not covered by your insurance. Without a report, that service is not considered a home inspection, which is your insured business. Your company and perhaps all your personal assets are on the line.
- As a licensed professional you are held to a higher standard under the law. Regardless of anything you say or agree to, a buyer has a rightful expectation to trust you to protect them from buying a house with undisclosed defects. Will you find them all in a half-hour?
- Without a written Home Inspection report, any legal action against you may be based on hearsay. This can place you at a considerable disadvantage and in an indefensible position in court.
- Providing a walk-n-talk could be tantamount to encouraging the buyer to purchase a home without a proper home inspection exposing you to substantial liability.
- A walk-n-talk performed without a contract further increases liability.
- Lawsuits against home inspectors involved in walk-n-talks are reportedly on the rise...
* As per NYS Home Inspection Code of Ethics
NYSAHI was instrumental in changing the NYS Licensing Exam
A mere 4 months later, language was inserted into the 2020 budget proposal to amend the law once more to allow the DOS to accept either exam, much to our chagrin. Our lobbtist contacted members in the senate delegation to oppose this 180-degree change in the governor's position and the line item was subsequently changed to read as follows (underlined is new text):
23 property law, as amended by chapter 541 of the laws of 2019, is amended
24 to read as follows:
25 (c) have passed the National Home Inspector examination or an examina-
26 tion offered by the secretary. Any examination offered by the secretary
27 must meet or exceed the national exam standards set by the Examination
28 Board of Professional Home Inspectors in consultation with the New York
29 State Association of Home Inspectors t
30 state-specific procedures, rules, and regulations, and changes to state
31 and federal law, and be updated annually;
32 § 2. This act shall take effect immediately and shall apply t
33 cations for a license as a professional home inspector received on or
34 after November 25, 2019.
(See the new law on nysenate.gov here: https://www.nysenate.gov/legislation/laws/RPP/444-E, paragraph (c) )
So NYSAHI is memorialized in the NYS home inspector licensing law.
The DOS hired a point person with a background in education and exam psychometrics to spearhead the creation of a new exam. In her own words regarding the original exam: "This exam sucks". To that end, three NYSAHI board members served as subject matter experts to help with the development of a new test, which is now being offered. The new test is psychometrically valid and is continually updated. For example, if everyone gets a particular question right or wrong, the question is tossed. License applicants can still take the NHIE (the exam required by ASHI) if they prefer, although the main complaint about the NHIE is that it is not NYS-specific.
Initial Training Requirements
Low standards for attaining and maintaining a Home Inspector license are a disservice to individual inspectors, the profession, and consumers of inspection services. NYSAHI has performed various surveys and has found that the majority of home inspectors agree that harm to the public perception of this profession could result from weak standards.
During the regulatory development period following enactment of the Home Inspection Professional License law, the New York Department of State (DOS) consistently expressed and acted upon a concern that certain provisions of the law could unfairly limit individuals from being able to attain licensure. This continues to be a guiding concern for the DOS and has resulted in weak initial educational requirements, minimal continuing education requirements, and a Mod 5 (field training) that clearly does not meet the requirements of the law for true on-site, and real-life training. The facts show that this concern on the part of the DOS is totally without basis. At least 10 other states have requirements more stringent than New York, including New Jersey, where reciprocity would be out of the question. New York inspectors who wish to work in New Jersey currently have to obtain a separate license under more stringent conditions.
Consumers believe that a New York State license is their assurance of a properly trained and knowledgeable professional. Under the present law, nothing could be further from the truth. Despite the massive, multidisciplinary knowledge base required to perform a proper residential inspection for the most important and expensive purchase that most people make in their lifetimes, and despite the many life threatening safety concerns that can exist in homes, the hours of training to become a home inspector are a small fraction of those required by cosmetologists, barbers or hearing aid dispensers. The 140 hours of education and training pale by comparison with the 2,000 hours of training required of real estate appraisers, whose base of required technical knowledge is minimal compared to the home inspection profession. Unfortunately for the consumer, the minimal requirements for a home inspector license are incongruous with the responsibilities of a professional home inspector.It is clear to those of us in the profession that the present 140 hours of training are woefully inadequate to provide the knowledge necessary to properly evaluate all the structural, mechanical systems, as well as safety concerns found in homes. Ultimately a two-year degree focusing on the proper evaluation of these systems should be required, as well as significant supervised on-the-job training. Through our interviews with many individuals who teach home inspection licensing courses, all have expressed concerns that the current training requirements do not allow for sufficient time necessary to cover the intended subject matter, especailly Module 5, the field training section.
It is NYSAHI's position that the required hours of training should be raised from 140 to a minimum of 200 (30 hours each for Mods 1 through 4; 80 hours for Mod 5).
This need for additional training hours is also important for another reason: Many NYS licensed inspectors in the downstate area need to be able to practice in New Jersey as well as New York, in order to have viable businesses. Because of insufficient training requirements in New York State, New Jersey does not recognize our regulations as sufficient to allow our inspectors to practice in their state. Reciprocity with New Jersey is important to many of our members. We have asked the DOS to negotiate with New Jersey to determine and enact those requirements that would make reciprocity possible.
Inclusion of a rider on all home inspection purchase contracts
In most cases, purchasing a home is the most important and expensive decision people make. Purchasing a home with serious defects could financially cripple a family's finances, and lead to foreclosure. For this reason, several years ago, the Federal Department of Housing and Urban Development (HUD) required all purchasers who were buying a house with a federally insured mortgage to read and sign a rider included with the purchase contract. Although we feel that a home inspection should be mandatory for all home purchases, we do not want the purchasers to incur any additional expenses, especially during tough economic times. Including this rider will incur no additional costs. It is highly important that potential home purchasers know the difference between an appraisal, which is a determination of the home value in relation to recently-sold, nearby, similar properties, and a home inspection, which details major defects that can cost the unsuspecting purchaser thousands of dollars of necessary repairs. The purchasers also need to be protected form unethical players in the transaction who may conflate an appraisal with a home inspection, or attempt to dissuade them altogether from a home inspection.
Mandatory home inspections
Paid Referrals and Preferred Vendor Programs
e) Home inspectors shall not directly or indirectly compensate, in any way, real estate brokers, real estate salespersons, real estate brokerage companies, lending institutions or any other party or parties that expect to have a financial interest in closing the transaction, for future referrals of inspections or for inclusion on a list of recommended inspectors or preferred providers or any similar arrangement.
The Code of Ethics for Home Inspectors in the State of New York clearly includes a provision prohibiting paying for referrals. This is obvious to most inspectors, but can become muddied when hidden within a “preferred vendor” marketing program. The Code of Ethics sets forth the position that payment to be placed on a list of “preferred providers” is payment for referrals.
Professionals have a duty to act in good faith toward their clients. Paying for referrals and participating in preferred vendor programs, as interpreted by the Code of Ethics, violates our responsibility to act in good faith toward our clients. The home inspection client should be able to have a reasonable expectation that when a home inspector is being recommended, the referral is based on merit, experience, and knowledgabilty, not on the payment of what could be interpreted as a bribe to the referring party.
A major part of all ethical codes involves the avoidance of conflicts of interest that can compromise, or appear to compromise, professional independence, objectivity, and integrity. Referring individuals whose interests lie in the successful sale of real estate, and home inspectors, acting in good faith toward their clients, may well have conflicting interests.
Placement on a list of “preferred providers” constitutes a referral. There is no real difference between being recommended verbally or in writing, singly or as part of a small group, such as a short list of “preferred inspectors”. When placement on such a list is contingent upon payment of a fee, it represents a payment for referral. It is misleading to the client, who does not know that the home inspector paid for the privilege of being placed on that list.
The State of New York, under the enforcement division of the Department of State, is pursuing legal action against inspectors who participate in these pay-to-play schemes. In addition, disgruntled clients may use the existence of a contractual arrangement between an inspector and a real estate agency in a lawsuit against the inspector. Conflicts of interest aren’t just ethical violations, they are a source of potentially significant liability. Home inspectors should be very cautious about developing business relationships with realty agents or brokers that might compromise, or appear to compromise, the integrity of the inspectors, or the profession, and increase their liability. Any financial arrangement with a real estate agency constitutes a slippery slope toward a clear conflict of interest. Many home inspectors welcome and appreciate the referral of business from real estate agents, believing that such referrals represent a genuine expression, on the part of the agent, of confidence in the knowledge, competence and integrity of the inspector. We strongly believe that, in the long run, adherence on the part of home inspectors to the strong ethical principles embodied in the Code of Ethics, and the avoidance of potential conflicts of interest, will encourage rather than reduce future referrals and recommendations, and will work to the benefit of the profession as a whole.