The fallacy of the Rule of 3
By Tom Sutko, AmeriSpec Home Inspection Services
In today’s real estate industry, Realtors are often encouraged by their respective broker firms to refer three names of companies when their customers are in need of services in support of buying or selling their home. Many of these realtors believe that they are legally obligated to provide their customers with several alternatives (aka “The Rule of Referring 3”) in order not to violate any RESPA (Real Estate Safety Protection Act) policy.
After spending time with an attorney familiar with RESPA, I’ve learned that there is no legal requirement for multiple referrals
The real reason why Realtors are being encouraged to use the “Rule of 3” is to manage their risk. It is believed that by suggesting three names and having their client select one of the alternatives, it relinquishes the Realtor’s responsibility in the event their client’s expectations are not met by that service provider.
This mentality is partially true when the services being provided by all three alternatives are very similar. But when one company clearly stands out as the industry’s differentiator (market leader, more value, less risk), it actually brings more risk to the Realtor in the event the customer selects one of the lesser alternatives, but their expectations aren’t met.
In the area of home inspections, I believe this happens today when Realtors name AmeriSpec Home Inspection Services as one of their three home inspection firms to investigate, and the customer arbitrarily selects one of the other alternatives.
With AmeriSpec’s Protection Beyond the Inspection program, Realtors and their respective customers are assured through AmeriSpec’s $1 million Errors & Omission policy that we will stand behind our services like no other inspection company.
Unlike AmeriSpec, most home inspection companies limit their liability to the cost of the inspection itself (on average $350), thus exposing their customers to financial loss if something is deemed to have been missed during the scope of the inspection.
For your Protection Beyond the Inspection, contact AmeriSpec Omaha and Lincoln at 402-393-3696.