Inspection Report

The inspection report is the exclusive property of the client (typically the buyer) and the inspection company.  The report may be shared with others with the permission of the client.

While a home is in "subject to inspection" status, can the seller's agent make copies of the inspection report and distribute it other potential buyers? It seems really unethical to me since the buyer paid for the service.

Marci and John are both correct... I'd be surprised that the listing agent would choose to proliferate an inspection report... consider these scenarios...

1. The inspection turns out great, therefore the deal will go through.  What's the agent's advantage to spreading it around?
2. The inspection turns out poorly, therefore the deal begins to sour or fail. What's the agent's advantage to spreading that around?

Additionally, another buyer would be very hesitant to accept an inspection from the listing agent (even one done by a potential buyer) on it's face value, without having one done themselves.  So I don't see any value in the listing agent distributing the report to anybody, not to mention the ethical boundary she's crossing by distributing private property without permission.

The agent that did this was trying to drum up multiple offers, because she was convinced that the buyers' financing would fall through.  She made multiple copies of the inspection report and handed it out at open houses that she continued to hold while the buyers were going through the purchase of said property.  Interesting scenerio.

Agents can continue to market a property (including holding open houses) even after it is under contract and try to obtain a backup contract.  After all, it's not really "sold" until all paperwork is completed, recorded, funds received, etc.  I'm sure many people on this forum can attest to contracts that have fallen through for whatever reason.

If the seller purchased the inspection report, then the listing agent can, and should, make it available to others since we are required to disclosed all know material defects and providing the report is a means of disclosure.  If the buyer purchased the report, then the listing agent should not distribute copies without authorization.  However, the defects still have to be disclosed.

Another thing to consider: an inspector's E&O and “hold harmless” insurance is valid only for the specific buyer/property. In fact my insurer (FREA) will no longer cover a subsequent “pre-closing inspection” for the same buyer/property – their logic is that I am assuming liability for anything which may have changed since the report, and would have to repeat the entire inspection/report to have coverage if I reenter the property after date of the initial inspection. Since most inspectors operate as a LLC or Corporation with very imited assets, my attorney tells me that at least in my state (IL)  someone depending an a second hand report to make a purchase decision would have a very tough time recovering significant damages even in the case of an incorrect report.

The agent was wrong in doing so. The report is the property of the inspector and the individual client. The seller is selling the house and he/she must disclose known defects but the inspection was not the vehicle to do so. The federal/state disclosure docs are to be used for that purpose. Buyer Beware if you the purchase based on another individuals inspection report.