The hot housing market in the Greater Boston area has fueled a controversial and potentially illegal practice among licensed professionals who inspect homes.
Inspectors say demand has increased for what is called a “soft” or “walk and talk” inspection. These services are far less comprehensive than traditional inspections, but some desperate homebuyers rely on them when sellers expect offers with no strings attached.
For a discounted rate, inspectors spend as little as 20 minutes on a home, examine only a few key areas, and produce no written report. Critics say these shortcuts leave consumers vulnerable during one of their biggest financial decisions and may violate state law.
“I just think it’s a recipe for disaster,” said Sean Rizzo, co-owner of Braintree-based Tiger Home Inspection. His company refuses to conduct walks and talks, he said, because the homebuyers who use them “have no idea” what they’re buying.
“You’re going to move in and you’re going to be like, ‘Holy crap, we spent $100,000 asking, and I didn’t know I needed a new roof and my heating system failed the first year,’” Rizzo said.
So far, state officials have kept quiet about a practice affecting shoppers throughout the Boston metro region, and regulators tasked with overseeing inspectors and regulations have not addressed the trend.
Traditionally, an inspector spends two to four hours examining a property, from the foundation, plumbing, and ventilation to the interior, insulation, and electrical system. Prospective buyers pay anywhere from $300 to more than $900 for the service, depending on the size of the property, and receive a written report detailing its condition.
An inspection is meant to protect and inform buyers, and ideally gives them the opportunity to negotiate the price or ask the seller to fix any issues before closing.
But in recent years, bidding contests have become so fierce in the Boston metro area that buyers are forgoing the protection of a full inspection, sometimes at the suggestion of real estate agents. Homes available for sale are at historic lows; supply in March was the tightest for the month in the 19 years since the Massachusetts Association of Realtors began tracking the data. And rising interest rates, driving up mortgage costs, have so far only added to the rush to close deals.
Buyers who opt for abbreviated inspections have little or no recourse if an inspector overlooks a problem that is discovered later, such as a water leak in a basement or a faulty heating system.
Some inspectors say they are doing brief property reviews to stay in business. They think they are helping buyers get at least a little bit of information about a property.
Alex Steinberg, owner of Cambridge-based JBS Home Inspections and president of the New England chapter of the American Society of Home Inspectors, said he has tried to find a compromise, offering clients a shorter version of their traditional inspection.
He said he spends at least 90 minutes in a home and focuses on the exterior, the basement and the attic, areas where the most serious problems can often be spotted. He produces a simple report for buyers and urges them to get a full inspection after they buy the house.
Steinberg believes this shorter service is legal, because it includes a report, as required by law. But he said he reluctantly offers the service.
“I don’t like these, and I have to hold my nose, frankly,” he said. But at the same time, he feels he’s giving clients “valuable insight so they can walk into a property with as wide an eye as possible.”
There are no legal standards for walks and talks, and the leaders of two large national trade groups disagree on whether they violate Massachusetts law. The legal responsibility of the inspectors in these abbreviated reviews is also unclear.
Amy Baxter, a new homeowner in Needham, said she and her fiancé made an offer without an inspection on a house but were outbid. For the house they eventually bought, the seller accepted her offer, on the condition of a full inspection. Luckily: her inspector found a colony of termites devouring a wall.
“They were swarming,” said Baxter, who works as a business consultant. “Can you imagine, if we hadn’t known this, going in to buy it?”
The seller agreed to fix the infestation. That’s the kind of problem a walk and talk might have missed, said Jay Rizzo, co-owner of Tiger Home Inspection in Braintree.
Brief inspections give shoppers “a false sense of security,” Rizzo said. “Someone is going to get hurt financially, hurt emotionally,” he said, or worse, “hurt physically.”
Tiger Home Inspection and at least two other inspection companies are demanding action from the state board that oversees the industry, the Home Inspector Registration Board.
The five-member unpaid board is an arm of the Division of Occupational Licensing, within the state’s Office of Consumer Affairs and Business Regulation. The board evaluates license applications, considers complaints filed against inspectors, and carries out state regulations for the industry. Meeting minutes from the past two years show that fewer than five members have typically attended meetings.
Rizzo attended the virtual board meeting in March and brought up the topic of walking and talking. He argued that they violate state law regulating inspectors, a law written specifically to protect consumers.
“These tour talks, tours and talks, inquiries…these are taking advantage of the customer,” Rizzo told board members at the public meeting. He urged them to take a stand on whether the practice is legal.
Two other inspectors echoed Rizzo’s concerns at the session, including Stephen Verbeek of Talon Home Inspection in Revere.
“This is a critical situation that I think most of you, some of you, are not aware of,” Verbeek said. “You have to discuss it. And it must be discussed very soon.”
Chief Executive Officer Keith Gleason, who took over the appointed role in January, told inspectors at the March virtual meeting that there had been “some initial discussions” with the board’s legal counsel. He said board staff wanted to gather information so members could make an informed decision.
The board did not address the issue that day or at its April meeting. The board turned down interview requests from WBUR. The group is scheduled to discuss walks and talks at their May 11 meeting.
Massachusetts is one of 35 states that regulate the inspection industry, according to the American Society of Home Inspectors. Under Massachusetts law, inspectors must be licensed, meet minimum education and training benchmarks, and follow established standards.
The purpose of an inspection, according to state law, is to provide purchasers with a report that “directly reveals the physical conditions” of a specified list of home systems that are “readily accessible and observable.”
But the law leaves a gray area. It says inspections aren’t “comprehensive” and inspectors aren’t required to report on every part of a home, including areas “specifically excluded” by the buyer.
Jameson Malgeri, owner of Another Level Inspection in Gloucester, estimates that “most inspectors” now go on walks and talks. He said he understands why they make them, but refuses to offer the service himself. He said he worries that buyers who rely on quick reviews are the ones who can least afford to forgo full inspections, the ones who are maxing out their budgets trying to buy a condo or a house.
“Buyers who don’t have the resources to be surprised are also the ones in this position,” Malgeri said.
There is another group of players at the center of the real estate market, profiting from the frantic buying and selling: real estate agents.
Inspectors say real estate agents bear some responsibility for the decline in traditional inspections. Sellers’ agents are in a position to encourage favorable offers from buyers who will forgo inspections and buy “as is.” And agents who represent buyers advise clients on how high the price should be, who to hire for an inspection, and whether they should forgo an inspection to compete for a property.
The official position of the Greater Boston Association of Realtors is that all buyers should get full inspections before closing, according to President Melvin Vieira Jr. But, he said, it’s not the realtors’ job to conduct police inspections.
Whether inspectors are willing to make quick assessments, he said, “that’s more up to them than up to us.”
Vieira also put the responsibility on the buyers. He argued that people entering this competitive real estate field must take responsibility for the risks they are willing to accept. As an agent, he said, he advises clients to get a full inspection, but he should also inform them of all their options, including waiving contingencies like inspections and appraisals.
“It’s his decision, totally,” he said.
Without instructions from the state, buyers and inspectors are largely on their own. Steinberg, the Cambridge inspector, argued that everyone associated with the real estate industry should be responsible for addressing this problem.
“Home inspectors, real estate agents and attorneys, and everyone who touches a real estate transaction needs to think about this,” Steinberg said. “It’s a sad state of things.”