Copyright The Chicago Sun-Times, Inc.

Licensing home inspectors
Manipulation by realty agents is fearedby some inspectors

By Sally Duros

Jim Starkman of Tomacor Inc. is examining a crack in the exterior wall of a 1960s bungalow in a trendy North Side neighborhood. Starkman's inspection is interrupted by the sound of the back door slamming shut. "Why are you spending so much time back here?"

It's the seller's agent, and she's chiding Starkman to move the inspection indoors. "I have another appointment." I introduce myself as a writer on assignment for the Sun-Times learning about the home inspection process. Her eyes engage. She looks me straight on and silently mouths the words: "This is the worst inspector."

We go inside and Starkman continues his inspection in the basement. We can see light coming from the outside through the crack in the foundation. Starkman points to a lead pipe, saying lead can be a concern with children. "This is the worst inspector for you," the agent mouths again. She takes me aside and says in a low voice: "This is not a good article for you." She is shaking her head, standing with arms folded, her displeasure evident. "This home inspector is notorious," she says. "Notorious for blowing deals."

But Tom Corbett, owner of Tomacor, says this charge is designed to confuse homebuyers and obscure the findings of the inspection.

"We're under tremendous pressure by real estate agents to gloss over problems," he says. "Tomacor has made a living simply telling the truth. If we were notorious for killing deals, the sellers would be suing us. They're not. It's the Realtors who are angry."

A poor report from an inspector can destroy a deal, taking the bread (sales commission) out of the mouth of the agent. The conflict has come to a head over legislation to regulate home inspectors that is awaiting Gov. George Ryan's signature. If he signs it (he has until Aug. 5), the Home Inspection License Act would make Illinois the 21st state to regulate the industry.

Some inspectors see regulation as an attempt by realty agents to stifle inspectors' independence. Some simply see no need for regulation. Others are comfortable with regulation. Some who are comfortable wish it were being done differently.

"It's horrible, horrible. It's like the fox guarding the chicken coop," says Frank Lesh of Home Sweet Home Inspection Co. and a member of the board of directors of the American Society of Home Inspectors, a professional organization whose national headquarters are in Des Plaines. "There was no need for licensing [in Illinois]," Lesh says. "The complaints against home inspectors were miniscule."

Sixty percent or more of all referrals to home inspections come from the real estate agents, Corbett says. "Given the already close relationship between the real estate industry and the home inspections industry, it is in the consumer's best interest to guarantee the independence of the home inspectors," he says.

Corbett and others object to the fact that oversight would be put in the hands of the Office of Banks and Real Estate, instead of the Department of Professional Regulation, and that a realty agent would sit on the seven-member oversight board.

The legislation also calls for pre-licensing training, continuing education, standards of practice and a licensing exam, the specifics of which have yet to be determined.

"There is a certain paranoia at work here," says Greg St. Aubins, chief lobbyest for the Illinois Association of Realtors. "This was not an IAR bill. We did not go to the legislature and pass this bill. The legislators have come to us and asked us: 'Will you help?' We were asked for input and we provided it."

State Rep. Kevin A. McCarthy (D-Orland Park), a main sponsor of the legislation, says the goal of the bill is to protect homebuyers. "The main goal of the legislation is to bring a higher level of professionalism to the industry," he says. "Since we have such a global economy now, we have people moving from other areas of the country. They don't know the area and they need some assurance of professional standards."

McCarthy, who hasn't purchased a home in 20 years, says, "I don't think that I would buy another home without going to a home inspector. It's money well spent."

Some inspectors would have liked to see licensing put under the Department of Professional Regulation, which oversees electricians, plumbers, architects and engineers, rather than OBRE, which regulates banks and trusts and oversees licensing of real estate professionals and mortgage bankers, brokers, agents, appraisers and auctioneers.

"I would rather have seen the licensing power with the architects and engineers, but I don't think it will make that much difference," says Steve Preins, president of Morningside Inspections and chairman of ASHI's national public relations committee.

While refusing to speculate as to why the licensing authority was placed with the Office of Banks and Real Estate, he did say it is legitimate to see home inspectors as ancillary to realty agents.

ASHI Executive Director Rob Paterkiewicz says, "My understanding is that OBRE in Illinois has a good handle on the real estate activities in this state. The inspectors have indicated to me that they were comfortable with it because it is a more organized area of the state. "[OBRE licensing] is one of those compromises arising from politics. The key thing is that there cannot be a conflict [of interest] in any way."

OBRE has been working very closely with ASHI and will continue to do so, says Claire Thorpe, OBRE spokesperson. But even a well-intentioned law can cause unexpected problems, according to Lesh. "I think [licensing] will confuse consumers," he says. "They will think because a home inspector is licensed they are all the same."

Preins sees where consumers may be confused. "Anytime you start licensing, it implies some kind of safety to the consumer," Preins says. "It sets up false security for consumers and also a layer of bureaucracy that we have to go through."

Licensing is seen as a panacea for regulation, says James E. Baumhart, president and CEO of the Better Business Bureau, "but it is also a search for revenue" from licensees. Nevertheless, he adds, "Licensing will help eliminate the bottom feeders, those who are really predatory."

ASHI representatives say they expect that the association's input will help put the meat on the bones of the legislation. Illinois has loosely based its legislation on the ASHI model. And ASHI will strongly encourage the state to use the industry's model licensing test, which adheres to ASHI standards.

By and large, ASHI members are good home inspectors, Preins says. Out of the 1,000 firms and individuals actively conducting home inspections in Illinois, perhaps only 150 have achieved full home inspector status as recognized by ASHI, Preins says.

Corbett says home inspectors should prepare for the next round with the real estate industry: Having input into the regulations themselves.

"I don't think we need this legislation," he says. "But now that we are going to get it, we better pay attention to who gets on the board."

Corbett says home inspectors appointed to the board should be more than part-timers. He would like to see appointees for whom 75 percent of their work is home inspections. "The state should encourage us to keep our standards high and avoid conflicts of interest," he says.

Sally Duros is a Chicago-based consultant and free-lance writer.