Home & Garden

About the House: Conflicts of Interest and Expertise in Contracting

By Matt Cantor
Thursday May 08, 2008 - 10:58:00 AM

I had a slight tense phone call with a rather difficult person this morning. Not a great way to start the day, but I guess it goes with the business and I’m lucky to be employed.  

This was the listing agent on a recent deal and I was working for the buyer so it was an experience I don’t have everyday. In fact, it’s pretty rare in our immediate environs due to local realtors having figured out that it’s not in the best interest of their clients to have their experts being grilled by the opposition. And yes, that’s what it was.  

Her intent was not to tell me how great I was or to invite me out to a few rounds of croquet. It was to see if she could find some chink in my arguments or to use my thinking to deflate the validity of the bids that had come to lean against her client’s house in the course of the deal. 

Since I’m not paid enough to lie (I keep trying to figure out how much that would be) it’s best to keep me off the phone with the opposition because I will tell them the truth whether that’s good for my client or good for these other folks. In fact, without a specific request from my client to do so, it’s really a conflict of interest for me to be talking to the listing agent at all (unless I’m representing a seller). 

Anyway, this agent said that after seeing all these bids from various contractors, that she was disinclined (my word. Hers was somewhat less refined) to believe the need for any repair that hadn’t been listed in my report. I was stunned. I think, in some odd, alternate-universe, sort of way, that I’d been complimented. Of course, it was out of expedience and not respect, but still, it was still stunning. She was saying that I was a reliable source of information because I lacked a conflict of interest. That is, I wasn’t selling anything; at least anything beyond my services as an analyst.  

So how does this work and who falls on one side of this matter of conflict of interest and on the who on the other? 

Inspectors, engineers and architects are sort of on one side of this grouping of skilled help when you’re buying a house or, perhaps, getting set to make some changes. On the other side are people who sell services (not to cast aspersions but let’s call them contractors).  

Now, let me be very clear about this. Selling contracting services is not a crime, is not the vocation of subterranean troglodytes or the daytime cover of serial killers. Contractors are, for the most part, working men and women of varying levels of expertise, dedicated to leaving, in their wake, a field of smiling patrons inclined to speak riant billboards of their worth. Nonetheless, contractors don’t make money if you don’t buy their services and while some charge to look at jobs or write up large estimates, most only make money when you buy the remodel, the sewer replacement, the new roof or the pest clearance. 

So, depending on the scale (or type) of work you’re leaning toward, it may well pay to get a “disinterested” party (or parties) involved before giving your bank routing number to Happy Feng Shui Organic Construction. Even if they’re the most honest and fair minded folks in creation, they still orient themselves toward cash flow. If they don’t they’re foolish.  

Any large concern, whether governmental or corporate, will always start with a study of what should be done and how. Experts get retained to design a project and specify, perhaps to a very fine degree, exactly what best serves the needs of the client. Then, contractors can be interviewed to determine cost (but Puleeeeeze not only cost), skill level, reputation, etc. of each. 

One reason not to ask the “interested” parties to design a project is that most contractors, even good ones, don’t know all about every part of a house or commercial building. Most know a lot about what they do but the best general contractors I’ve seen have rarely known a great deal about general seismic performance or about how a forced air heating system worked (or what things keep them from working optimally).  

Architects, engineers, inspectors, as well as manufacturing representatives and zoning officials know all sorts of things that they can bring to your set of criteria that contractors might not know because their careers are constructed around knowledge acquisition and deployment rather than the day-to-day operation of a construction jobsite. This is not to say that the contractor is any less intelligent than the engineer or inspector. I’ve met a number of contractors over the years that were of formidable brain-power, but their world is built around a different set of imperatives and activities. 

In a similar vein, the contractor is generally going to sell their best wares. The things they do best and know they can make money doing. These may or may not be your best choices (from our “disinterested” perspective) and, if you consult an expert first, you may end with Joan rather than Bud simply because Joan sells tile setting and Bud sells bamboo flooring. 

Lastly, let me say something about the cost of planning. A well-known aphorism in the construction trade is that “No job is so expensive as the one you have to do twice.” In other words, planning and making the right decisions may involve some extra expense at the front end, but in the long run, the cost of what you didn’t know can show up either during your project in the form of construction problems (e.g. cost overrun, delay or worse) or beyond, when you visit your friend’s house and discover the radiant electric heating under their bathroom floor tile that you were never told about and could have had. 

In my experience, the costs of these disinterested parties usually end up representing a small fraction of the total cost and can usually pay for themselves in mistakes avoided or through better ideas. With many small jobs these folks may not be required (but may be helpful for a small sum). With larger jobs, it is often the wiser woman (or fella) who seeks a bit of sage with her soup.  

Today I learned that aspersion can mean to sprinkle (as in) Holy Water (you clergy already knew that, right?). This may help me to remember that casting them is always a mixed blessing.