Today, I had a call from a potential client who was surprised that I do not provide an estimated cost to repair anything that I write up in my inspection report. I explained that I stop at describing it as a minor repair, maintenance item or major repair (over $500.00). I feel that any ballparks that I would provide are worthless and that real pricing should be obtained from contractors who would do the work. I also don't want to be libel for giving an incorrect ballpark and have someone come after me because the repair cost more than I estimated. This guy was shocked and told me that every other inspection he had ever done provided this information. He also wanted to know if I would provide an appraisal and was upset when I refused. I finally told him that since I could not provide the type of inspection service he was seeking, that he should call someone else and that I was not interested in doing his inspection.

My question: Do you provide estimated cost of repairs in your reports? I would be interested in what other HI do. Thanks.

Hey Ken this may be a bit more then you ask for. but this is the code for Calif. H.I.

Best

Ron


Overview of Real Estate Inspection Law in California

The first law that home inspectors should be familiar with is in the Business and Professions Code, sections 7195 et seq. This section of the law was originally created by Senate Bill 258, in the 1996 legislative session, and it has been in effect since January 1, 1997. This law defines home inspections and home inspectors, as well as imposing certain duties and constraints. A home inspection is defined as “a noninvasive, physical examination, performed for a fee in connection with a transfer, as defined in subdivision (e), of real property, of the mechanical, electrical, or plumbing systems or the structural and essential components of a residential dwelling of one to four units designed to identify material defects in those systems, structures and components. A material defect is defined as “a condition that significantly affects the value, desirability, habitability, or safety of the dwelling. Style or aesthetics shall not be considered in determining whether a system, structure, or component is defective.” These definitions are also incorporated verbatim into CREIA’s Standards of Practice, effective April 15, 1999.
Other sections of this law contain provisions similar to those in the CREIA Code of Ethics, including prohibitions on repairing properties on which an inspection was performed in the last 12 months, accepting kickbacks, and on payment of referral fees to agents. The law also has a 4-year statute of limitations on the inspector’s liability, beginning with the date of the inspection.
This law and others can be viewed on the web at www.leginfo.ca.gov. From the main menu of that website, click on “California Law.” On the next menu, check the box for the Business and Professions Code, enter 7195, and click on “Search.”
B&P 7195 was altered in 2001, and now includes language indicating that a home inspector may provide energy information as part of the inspection. The law that created those changes was Assembly Bill 1574. It also includes a provision mentioning home inspectors in the Public Resources Code. Section 25401.7 of that code and states that inspectors shall provide contact information on home energy for a nonprofit organization, a utility provider, or a government agency such as the State Energy Resources Conservation and Development commission.
Another important section of relevant law is found in the Civil Codes. Section 1102 contains the information regarding required disclosure by sellers and agents, and the language for the Real Estate Transfer Disclosure Statement. Section 1102.4 contains a provision whereby an expert can relieve the seller and agent of liability by providing “substitute disclosure” within the area of their expertise. The named types of experts include licensed engineers, land surveyors, geologists, structural pest control operators, contractors, or “other expert.” The California Coalition of Home Inspectors (CCHI) has long been at odds with the California Association of Realtors (CAR) over the wording of this section. One point of contention in the discussions surrounding SB 1332 in the 2002 legislative session was the proposed re- wording of this section to include Certified Home Inspectors, and to make other clarifications regarding the expert’s need to specify their intent that the report be used as substitute disclosure.
In addition to these pieces of legislation, there is also another body of law referred to as case law, wherein the interpretations of a court are found to have the effect of law. Perhaps the most historically significant example of such a law was the Easton decision in 1984, which spawned the disclosure requirements we now have in California.
History of Home Inspector Legislation:

Though there is no formal state-sponsored licensing of inspectors in California, there have been numerous pieces of legislation affecting inspectors over the last 2 decades. One of the key steps in regulating any business is a “Sunrise Study” which describes the business in question and addresses the need for regulation. There have been 3 sunrise studies on the home inspection business. The first study, widely discredited, was created in 1986. The next study was created by the California Association of Realtors in 1994. The third study was created by the California Coalition of Home Inspectors as part of the process for SB 1216 in 1999.
There are numerous other laws pertaining to real estate, contracting, small businesses, and building codes that all affect real estate inspection businesses. The California Coalition of Home Inspectors (CCHI) monitors legislation in all those areas, and reports to the CREIA membership through the Inspector magazine and through the local chapter representatives. The CCHI also maintains a highly effective lobbying presence in the Capitol. CCHI and CREI-PAC (the political action committee for home inspectors) are funded by your voluntary contributions.
The status and text of current bills can be viewed at www.leginfo.ca.gov
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§ 7195 California Business & Professions Code -- Home Inspectors

Download § 7195 (PDF: 12KB)
Chapter 9.3. HOME INSPECTORS
Historical and Statutory Notes, 1996 Legislation

Section 1 of Stats.1996, c. 338 (S.B.258), provides:
“It is the intent of the Legislature in enacting this act to assure that consumers of home inspection services can rely upon the competence of home inspectors. It is the intent of the Legislature that, in ascertaining the degree of care that would be exercised by a reasonably competent home inspector pursuant to Section 7196 of the Business and Professions Code, the court may consider the standards of practice and code of ethics of the California Real Estate Inspection Association, the American Society of Home Inspectors, or other nationally recognized professional home inspection associations.”

§ 7195. For purposes of this chapter, the following definitions apply:
(a)
(1) “Home Inspection” is a noninvasive, physical examination, performed for a fee in connection with a transfer, as defined in subdivision (e), of the real property, of the mechanical, electrical, or plumbing systems or the structural and essential components of a residential dwelling of one to four units designed to identify material defects in those systems, structures and components. “Home Inspection” includes any consultation regarding the property that is represented to be a home inspection or any confusingly similar term.
(2) “Home Inspection”, if requested by the client, may include a inspection of energy efficiency. Energy efficiency items to be inspected may include the following:

• (A) A noninvasive inspection of insulation R-values in attics, roofs, walls, floors, and ducts.
• (B) The number of window glass panes and frame types.
• (C) The heating and cooling equipment and water heating systems.
• (D) The age and fuel type of major appliances.
• (E) The exhaust and cooling fans.
• (F) The type of thermostat and other systems.
• (G) The general integrity and potential leakage areas of walls, window areas, doors, and duct systems.
• (H) The solar control efficiency of existing windows.

(b) A “material defect” is a condition that significantly affects the value, desirability, habitability, or safety of the dwelling. Style or aesthetics shall not be considered in determining whether a system, structure, or component is defective.
(c) A “home inspection report” is a written report prepared for a fee and issued after a home inspection. The report clearly describes and identifies the inspected systems, structures, or components of the dwelling, any material defects identified, and any recommendations regarding the conditions observed or recommendations for evaluation by appropriate persons.
(d) A “home inspector” is any individual who performs a home inspection.
(e) “Transfer” is a transfer by sale, exchange, installment land sale contract, as defined in Section 2985 of the Civil Code, lease with an option to purchase, any other option to purchase, or ground lease coupled with improvements, of real property or residential stock cooperative, improved with or consisting of not less than one nor more than four dwelling units.
§ 7196. Standard of care
It is the duty of a home inspector who is not licensed as a general contractor, structural pest control operator, or architect, or registered as a professional engineer to conduct a home inspection with the degree of care that a reasonably prudent home inspector would exercise.
§ 7196.1. Construction and application of chapter; certain professions
(a) Nothing in this chapter shall be construed to allow home inspectors who are not registered engineers to perform any analysis of the systems, components, or structural integrity of a dwelling that would constitute the practice of civil, electrical, or mechanical engineering, or exempt a home inspector from Chapter 3 (commencing with section 5500), Chapter 7 (commencing with Section 6700), Chapter 9 (commencing with section 7000), or Chapter 14 (commencing with Section 8500) of Division 3.
(b) This chapter does not apply to a registered engineer, licensed land surveyor, or licensed architect acting pursuant to this or her professional registration or license, nor does it affect the obligations of a real estate licensee or transferor under Article 1.5 (commencing with Section 1102) of Chapter 2 of Title 4 of Part 3 of Division 2 of, or Article 2 (commencing with Section 2079) of Chapter 3 of Title 6 of Part 4 of Division 3 of, the Civil Code.
§ 7197. Unfair business practices
It is an unfair business practice for a home inspector, a company that employs the inspector, or a company that is controlled by a company that also has a financial interest in a company employing a home inspector, to do any of the following:
(a) To perform or offer to perform, for an additional fee, any repairs to a structure on which the inspector, or the inspector’s company, has performed a home inspection report in the past 12 months.
(b) Inspect for a fee any property in which the inspector, or the inspector’s company, has any financial interest or any interest in the transfer of the property.
(c) To offer or deliver any compensation, inducement, or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company.
(d) To offer or deliver any compensation, inducement, or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company.
(e) A home protection company that is affiliated with or that retains the home inspector does not violate this section if it performs repairs pursuant to claims made under the home protection contract.
§ 7198. Waiver of duty of care; liability limitations; public policy
Contractual provisions that purport to waive the duty owed pursuant to Section 7196 or to limit the liability of the home inspector to the cost of the home inspection report, are contrary to public policy and invalid.
§ 7199. Commencement of legal actions; time
The time for commencement of a legal action for breach of duty arising from a home inspection report shall not exceed four years from the date of the inspection

No Repair $ Estimates not even Minor, Major or under/over what ever $ figure you might pick.

If It needs repaired Contact a Licensed Whatever.

Minor trim repair could turn into thousands of $ after non visible portion of the repair is revealed.( Structure, mold, foundation, ect. )

I am not an Appraiser.

I perform a Visual Home Inspection that is not Technically Exhaustive. ( My state Law Even Say's So. )

__________________
It Might have Choked Artie But it ain't gone'a choke Stymie!
Billy J. Stephens HI Service
Memphis TN.

Ron,

Not sure why you even posted that. Ken is in New York, not CA, so it is not relevant to his question at all. Further, there is nothing in the Business & Professions code that requires or prohibits cost estimates.


By the way, are you doing home inspections now? I thought you are a pest inspector.

__________________
What is the circumference of a moose?

Ken,

No home inspector in my area provide cost estimates, at least that I know of. I tell people that bidding on a job can require hours of time and knowledge of material, labor and overhead costs that I do not keep up on. I invest my education time in learning about the systems that I inspect and ways to provide a better inspection.

The unfortunate reality is that people are generally not really interested in how much it is likely to cost to get the work done, they are more interested in how much they can get off of the asking price of the house (I don't tell them that though).

__________________
What is the circumference of a moose?

Gunnar go check you shoes for rocks. That an inside joke. L.O.L.

Sorry Ken this is a west coast thing. Gunnar is having a statistical fit.
he will be OK in a day or 2.

Best

Ron

P.S. ken i hope you got something out of what i posted for you.

Here in Florida, especially the east-coast of Florida estimating the cost to repair/replace a defect is the norm, furthermore it is an area of expertise that will allow you to distinguish yourself from your competition.

This is where working a half-century or more directly in construction prior to becoming a home inspector will pay dividends. If you have the expertise to add defect cost estimating and building code specific language comments to your reports you will no doubt be able to command more money for your services which should offset any implied risk, but then again your name would most likely be Jerry Peck or Jeff Hooper.

On the other hand if you have never cracked a codebook, or have never prepared a cost estimate, or are unfamiliar with the construction process, then you will need to spend whatever time and effort is necessary to be able to competently perform these services, the skill unfortunately is not acquired overnight. Furthermore, cost estimating is a skill that becomes easier (read accurate) the more times it is performed.

I would not provide any estimates on repair prices unless you are willing to perform the work for the price that you quoted. ( Which would go against any ethical standard and the home inspectors law in Indiana )

If you do provide estimates and your estimate is lower than what can be found but the client bought the home and planned to have the work done themself based on your repair estimates, you may well end up paying the difference.

I used to provide a standard one page thing in my report that had the most common repairs and current pricing based on the national average, which is higher than the average in Indiana, but I don't do that anymore. There are just too many variables that may not go in your favor.

__________________
Integrity Inspection Service, LLC
www.irsindy.com
(317) 345-1828

I will provide verbal estimates for my clients. They are always "ballpark" type range estimates and sometimes they are "coliseum" (aah, very big ballpark) type range estimates. My clients understand that they are not hard numbers, and they are really looking for an idea of how much these things will cost because they are going to go back to the sellers and ask for some money.

As hard as it may be for us HI's to believe, most layman don't really know if we are talking about a 100's or 1,000's to repair things in the home. But then again I am not required to provide these numbers. I do it when I am comfortable (85% +/- of the time) and it does help that I spent 20+ years in construction prior to becoming a HI.

Nobody has ever come back to me and gotten upset because my numbers were off and that is not to say that they were or weren't, it's just that when people ask for estimates they are really just asking for accurate numbers they can use to negotiate with the seller.

Providing estimates is very common here. I do it, in the form of a range, only for major problems, only when asked to do it, and I make it clear that they are "ball park" and, as required by PA law, I urge clients to obtain more accurate and reliable estimates from appropriate contractors. Haven't had a problem yet.

All wives-tales, no home inspector has ever been sued for the difference between a cost estimate and the actual cost of the repair, not one incident ever on record. This is the same type of misplaced logic that prevents home inspectors from becoming building code experts and using building codes in their reports, to me its pure and simple fear mongering steaming from a lack of experience.

Thanks for the replies.

I have been a construction professional for 25+ years. As a specialized subcontractor, I know how varied estimates can be which is why I shy away from them in my inspection reports. This particular caller made me even more wary.

I agree, you have to do what feels right for your business and whatever it takes to maintain your peace of mind. On the other hand though, because so many home inspectors shy away from including cost estimates and code references in their business plan these items can create a very lucrative profit center or help an inspector acquire more than his fair share of business in an otherwise down market, something to think about.

I would hazard a guess that if that if someone is ever sued because of a cost estimate or some bogus code related mistake, the rest of the report was most likely riddled with other super negligent items and the whole report was hopelessly SNAFU from get go.

As Joe B. said, and at least in the areas where I inspected, cost 'guesstimates' (do not have to be "estimates") are the norm, and if you try to do home inspections without providing cost guesstimates, you will soon find yourself with no business.

The norm (down here) is to provide the guesstimates as the norm (down here) is not to get the seller to fix anything, that just makes the entire deal more complicated and take longer to complete, and then you have to worry about re-inspections and if the work was done correctly or not - big snake pit to get into, so ... down here ... the norm is to give guesstimates and for the buyer and seller to negotiate on how many $$$$ the seller gives the buyer at closing.

The buyer, never getting it all anyway, really has little room to complain that something 'cost more' (and they never complain when something 'cost less') than guesstimated by the HI - they (the buyer) made the negotiations with the seller and settled for some agreeable (to the buyer and the seller) amount of $$$$$.

All of the above, though, is based on the HI providing "realistic" guesstimates and not trying to pump them up for the buyer nor trying to knock them down for the seller. I do suspect, though, that is an HI said it would only cost $500 to replace a roof and the buyer settled for $400, then found out that it actually cost $8,000 to replace the roof, that the HI would be sued, not because they 'guess wrong', but because of the flagrant fraud they committed giving a number they knew would not in any way cover for the work.

I've seen some HIs who intentionally err on the low side for the agent and the seller (to get more work from the agent) and some HIs who err on the high side to get more $$$ for the client, but the HIs who give the 'closest-to-realistic' guesstimates are held in higher respect.

There are times when the HI 'just does not know', because the work could be to much more than expected, or so little, or the work is so unusual ... in those cases, it is best for the HI to say '$$$$ unknown - get an estimate from ... ' or however they want to address it.

As Joe B. said, it does not take long to get a good feel for those guesstimates, and the more you do them the easier they are to spit out in your report - you do not need to look up and make "estimates", that threads on dangerous ground if you are not a licensed contractor to make those "estimates".

Giving guesstimates really works best for your buyer, they get a feel for the $$$ needed for the repairs, and they do not have to fight over what gets repaired by the seller, only 'give me this much money'.

Also, guesstimates goes right along with the real estate contract (which we are not part of) in that those contracts do not require the seller to "fix things" only to "spend $X" to fix things. Thus, the contract is about how many $$ the seller is obligated to give to the buyer, and the information you give your client is about $$ they need to make those repairs which the seller said where okie-dokie but were not, which helps the buyer get those $$ from the seller.

__________________
Jerry Peck, Construction / Litigation Consultant
Construction Litigation Consultants, LLC ( www.ConstructionLitigationConsultants.com )
EastWestData (www.EastWestData.com )

I suspect a lot of HIs err on the high side also to cover their butts.

We don't give estimates for repairs or replacements.

I'm not in the repair business.