The real estate market in Greater Boston has sparked a controversial, and possibly illegal, practice among licensed professionals who inspect homes.
Inspectors say demand has risen for so-called “soft” or “walk-and-talk” inspections. These services are much less complete than traditional inspections, but some desperate homebuyers rely on them when sellers expect unconditional bids.
For a reduced fee, inspectors spend no more than 20 minutes at home, examining a few key areas, and not submitting a written report. Critics say these shortcuts leave consumers vulnerable during one of their most important financial decisions — and may violate state law.
“I think it’s a recipe for disaster,” said Shaun Rizzo, co-owner of Braintree-based Tiger Home Inspection. He said his company is refusing to hold direct talks because home buyers who use them have “no idea” what they are buying.
“She’ll move into the dorm and she’ll say, ‘Holy moly, we spent $100,000 on ordering, and I didn’t know I needed a new roof and my heating system broke down the first year,'” Rizzo said.
So far, state officials have remained silent about a practice affecting buyers throughout the Boston metro area, and the regulators charged with overseeing inspectors and standards have yet to address the trend.
Traditionally, an inspector spends two to four hours examining the property – from the foundation, plumbing and ventilation to the interior, insulation and the electrical system. Prospective buyers pay $300 to $900 for the service, depending on the size of the property, and receive a written report detailing its condition.
The inspection is intended to protect and inform buyers and, ideally, gives them an opportunity to negotiate a price or ask the seller to fix any problems before closing.
But in recent years, bidding competitions have grown so fiercely in the Boston metro area that buyers waive the guarantee of a full vetting, sometimes at the suggestion of real estate agents. Homes available for sale are at record lows; March supply was the lowest in 19 years since the Massachusetts Association of Realtors began tracking data. And rising interest rates, which have driven up mortgage costs, have so far fueled the rush to close deals.
Buyers who opt for abbreviated inspections have little to say if the inspector misses a problem that was later discovered – for example, a water leak in the basement or a faulty heating system.
Some inspectors say they conduct short property reviews to stay in business. They think that they help buyers get at least a little information about the property.
Alex Steinberg, owner of Cambridge-based JBS Home Inspections and president of the New England chapter of the American Association of Home Inspectors, said he tried to find a compromise, offering clients a shorter version of his traditional check.
He said he spends at least 90 minutes in a home and focuses on the exterior, basement, and attic—the areas where the most serious problems can often be detected. He prepares a simple report for the buyers and urges them to do a full inspection after purchasing the home.
Steinberg believes that this shorter service is legal, because it includes a report, as required by law. But he said he does the service reluctantly.
“I don’t like those,” he said, “and I kind of have to hold my nose, quite frankly.” But at the same time, he feels it gives clients “valuable knowledge so that they can enter the property with their eyes as open as possible”.
There are no legal standards for walks and talks, and leaders of two large national trade groups disagree on whether they are violating Massachusetts law. The legal responsibility of the inspectors in these brief reviews is also unclear.
Amy Baxter, owner of a new home in Needham, said she and her fiancé made an offer not to inspect a single home but it was outbid. For the home they eventually bought, the seller accepted their offer, on the condition of a full inspection. Good thing: their inspector found a colony of wall-devouring termites.
They were crowding in,” said Baxter, who is a business consultant. “Can you imagine, if we didn’t know about this, going to buy it?”
The seller agreed to repair the injury. This is the kind of problem that might have missed walking and talking, said Jay Rizzo, co-owner of Tiger Home Inspection in Braintree.
Rizzo said the brief inspections give buyers a “false sense of security.” “Someone will be hurt physically, emotionally hurt,” he said, or worse, “physically hurt.”
Tiger Home Inspection and at least two other inspection firms are calling for action by the state board that oversees the industry, the Home Inspector Registration Board.
The five-member, unpaid board of directors is an arm of the Professional Licensing Division, within the state’s Bureau of Consumer Affairs and Business Regulation. The board evaluates applications for licenses, considers complaints against inspectors, and implements state rules for the industry. Meeting minutes from the past two years show that typically fewer than five members attended the meetings.
Rizzo attended the virtual board meeting in March and raised the issue of walking and talking. He said they violate state law regulating inspectors, a law specifically designed to protect consumers.
“These face-to-face conversations, conversations, and consultations… they benefit the client,” Rizzo told board members at the public meeting. He urged them to take a stand on whether this practice was legal.
Two other inspectors echo Rizzo’s concerns at the hearing, including Stephen Verbeek of Talon Home Invitation in Revere.
“This is a critical situation that I think most of you – some of you – are not aware of,” Verbeek said. “It should be discussed. And it should be discussed very soon.”
CEO Keith Gleeson, who took over the appointed office in January, told inspectors at a virtual meeting in March that there had been “some initial discussions” with the board’s legal counsel. He said the board members wanted to gather information so that members could make an informed decision.
The board did not address the issue that day or at its April meeting. The Board of Directors denied interview requests from WBUR. The group is scheduled to discuss bios and talks at the May 11 meeting.
Massachusetts is one of 35 states that regulate the inspection industry, according to the American Association of Home Inspectors. Under Massachusetts law, inspectors must hold licenses, meet minimum standards of education and training, and follow established standards.
The purpose of the examination, according to state law, is to provide buyers with a report that “expressly discloses the physical conditions” of a particular list of “accessible and observable” home systems.
But the law leaves some gray area. It says inspections are not “exhaustive” and that inspectors are not required to report every part of the home, including areas that are “specifically excluded” by the buyer.
Jameson Malgaery, owner of another Gloucester Inspection Level company, estimates that “the majority of inspectors” are now taking walks and talks. He said he understands why they’re doing it, but refuses to do the service himself. He said he worries buyers who rely on quick reviews are those who can’t afford full inspections — those who tap their budgets to try to buy an apartment or house.
“Buyers who don’t have the resources to take on surprises are also put in the position,” Malgiri said.
At the center of the real estate market, there is another group of players taking advantage of frenetic 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 preferential offers from buyers who will waive inspections, and buy “as is”. Agents representing buyers advise clients about the high price, who should be assigned to conduct the examination, and whether the inspection should be abandoned in order to compete for a property.
The official position of the Greater Boston Association of Realtors is that all buyers should have full pre-closing inspections, according to President Melvin Vieira Jr., but he said police inspections are not the job of landlords.
If the inspectors were willing to make quick assessments, he said, “that’s more on them than on us.”
Vieira also put the burden on buyers. He argued that people entering this competitive real estate arena must take responsibility for the risks they are willing to accept. He said that as an agent, he advises clients to get a full screening, but also has to inform them of all their options, including waivers for emergencies such as inspections and evaluations.
“It’s entirely their decision,” he said.
Without state guidance, buyers and inspectors are largely on their own. Steinberg, the Cambridge inspector, argued that everyone associated with the real estate industry should have a responsibility to tackle this problem.
“Home inspectors, real estate brokers, attorneys, everyone who touches on a real estate transaction, needs to think about this,” Steinberg said. “It’s a sad situation.”