Thread: Market Research - How Large Is My Market?

In any given geographic area that is within a reasonable driving distance to make inspections, how does an new inspection company measure the size of their market? And how large of a geographic area is reasonable before the driving distance and time of travel makes it unfeasible to take work beyond that area? How do I learn the number of competitors are in my area? What is the average market share for average companies? (I know you are all above average, but lets talk about all of the other inspectors like me.) In any given market area where there are 10 inspectors, what is a normal spit? If one inspectors says he is "very busy and works more than 50 hours a week", is he the busiest? Or, are all the inspectors in that market equally busy? What is the drop-out rate of new inspectors who do not achieve acceptable volume?
In other words, what is the risk to new startups? Is it about failure rate as might be found for all other small businesses? What if the market will not support one more inspector regardless of his inspection and reporting capability or marketing prowess? Are there markets that will simply not support one more inspector, and how would I know how deep the water is before I put my boat in the lake?

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In my view you might want to seek some of your answers from Realtors for accurate numbers and other questions you seek. Why? Because I would not depend on your competition for truthful answers.

It may take 3 years to become established in your market area. Again many factors come into play.
I have repeatedly read on various forums what I consider embellished numbers as to how many inspections are being conducted per day, per month, per year. Some are multi inspector firms, others claim to do 3 inspections per day.

High turn over rate in this biz. Hope you have another means of income to tide you over while you try to establish a niche.

As Raymons says, don't depend on what HIs tell you about their volume or $$$ numbers. For many reasons people in any business will "puff up" their true numbers. Yes flat out lie.

Your seem to have a grasp of the questions to find answers for. What you have to do is the brain and leg work which equals a lot of effort and time by you. It is research pure and simple then it is developing a plan that works for you.

Find out how many homes are being listed and sold (including all market conditions such as time on market before sold) in a increasing radius from you. Look for where the most sales are occurring. Look at the type of property is being sold. It is like going hunting or fishing. You have to learn When, Where, What is out there. Maybe develop a specific market area (type, location) and concentrate on it. What you need to develop is a business plan.

Like I said its research. It took me 1 min to find this on Ill HIs. Just think what you could do in 3 hours of research and organization of information.

This was the drill down process.

https://www.idfpr.com/DRE.asp

https://ilesonline.idfpr.illinois.go...nseLookup.aspx

Home Inspector
Active Lic
Illinois
Cook County

Search:
Yields: https://ilesonline.idfpr.illinois.go...nseLookup.aspx

Which is about 100 HIs lic in Cook County, Ill.


Have fun, good luck...

Personally, I do not like being boxed in. It limits your prospective.
Look at it this way, "how large do you want your market to be?"
If there are 10 home inspection business in your area, well now there are 11.
All you need is 10% of each business.

1: Marketing; When 2 people will tell 2, now you have 4 potential clients all marketing your name. Remember, the more people you market to, 2 people tell 2 people and so on and so on, the more your business name gets around.
Cheapest and best way to marketing yourself, "build a website." Build it and they will come. Gees, good theme for a movie.
I use Weebly.

2: Branding. Brand yourself. Do not box yourself in. Be different than the compatition but do the same thing.
Best tools and education in the business, InterNACHI.
I know many here have mixed feeling about InterNACHI but business success, As well As well as state and provincial recognition do not lie.
Get past the past and look at how INACHI homies continually help the industry. Roy Cooke, Vern Mitchinson. Raymond Wand, The Alberta chapter.

As for clients. Are there homes where you live?
To approximate the prospective number of new clients you can obtain from your area within any given driving distance, a 25, 50, 100, 150 mile radius of your point of service, try this link or other radius search tools. Radius Home Search on Map - Real Estate Prices of Homes, Houses for Sale.
Side note; You do not have to go to real estate agents for answers to your questions all the time. You'd be surprised at what you hear sometimes.
Too bad.
So sad.

Best of luck with your business!
If you were in my neck of the woods...you could shadow me anytime. Always looking for a tool caddy.
Now is that a par four dogleg in the plumbing supply service? Wonder which tool I would use to get onto the green copper. Hmmm?

Originally Posted by Garry Sorrells

As Raymons says, don't depend on what HIs tell you about their volume or $$$ numbers. For many reasons people in any business will "puff up" their true numbers. Yes flat out lie.

Well Garry, lying might be a bit of a harsh narrative to portray Pinocchio inspectors.
Remember there noses don't grow.

IMO, they have learned to OMIT what they find as...well..., hmm how can I explain it....embarrassing situations also known as "the truth."
Yes, they might be colorful fellows, fictionally talented, tell tall tales, draw looooong conclusions, as well as use a very creative license while trying to explain themselves.
IE: My home inspection business income tripled from last year to this year. That's how hard I work. They omitted or left out that they earned $1000:00 dollars the previous year, and that they were wallflower inspectors waiting for the phone to ring smoking cigarettes and watching Captain Kangaroo.

Garry, thanks for the post.
Hope you don't mind, though. I thought that statement needed some clarification.
Best regards.

I wouldn't worry about "marketshare" or what percentage of it you want to capture. It has little to no correlation if you will succeed as a home inspector.

As a startup or new inspector your service area or the distance you will travel should be important but not written in stone. I list on my site that I cover a 100 mile radius of Nashville but I also adjust my fees for travel time, etc. I would say that about 60% of my inspections take me 30min to an hour to drive. Several times a year I will take jobs that are 3-5 hours away, but those are usually specialty type inspections (log home, EIFS, AMSV, etc.) Two years ago I had a client fly me to Montana to look at a mega log home. I'm only limited to the fee that folks are willing to pay.

We have about 50 or so home inspectors in the greater Nashville area, I know about a dozen of them and we are all good friends. You need to diversify and develop a niche market or specialty that puts you above the others. I think the marketing folks call this something like a unique selling feature.

I have a little different perspective when it comes to the number of inspections that I do. I'm happy with 250 or so inspections a year. I charge enough that I do not need to do more which leaves time for me to work more consulting gigs and teaching.

As others have noted it will take you about three years before you will realize that you are going to succeed in this profession. And Yes, home inspectors will lie about their numbers. Just do the math when you have a solo inspector saying they did 450+ inspections in a year, even 350 is a full load!

I belong to Home | American Society of Home Inspectors, ASHI ASHI does not promote as heavily as the other organizations but they are the oldest and most respected of the home inspector organizations. I would look at their training school as you will need the education to get a license in IL. Home Inspection Classes - Hands-On Training | The ASHI School

What others have said. When I moved to Knoxville in 94 there were maybe 10 inspectors in the area. Now there is probably 70 or so. I could count by going to the State licensing site and count them up, but I haven't for quite a while (its not that important to me).
When we get together at ASHI Chapter meetings and the conversation gets around to how busy we are, we are pretty much the same for the most part. The newer guys are usually not as busy as us old farts. But honestly, we don't talk about it all that much.
I will travel up to a hour away most of the time, further for the right job. However, there is a tourist area close to Knoxville, that I will not service (too much traffic time), so I refer those jobs to a friend that lives near.
You will find that the longer you are in business, the larger your referral base, and more jobs. I'm blessed to have a pretty good market share in Knoxville. I stay busier than I really want to be. Most years I do over 400 inspections. I did over 350 in 2015, and that was with taking off a lot of time to travel and have relatives visit. But my goal is not number of inspections, but $$$ earned. I keep close tabs on average inspection fee, and always try to gets those numbers up.
The drop out rate for beginning inspectors is fairly high. It is hard to break into an existing market, especially if there are a high number of inspectors per properties sold. Not a big enough pie to split up. A lot of inspectors dropped out during the recession (in my area).
It used to be very easy to determine how many inspectors were in the area by looking at the phone book. However, that has changed. With licensing, its pretty easy. Its also easy to see how many houses are sold in a given month. However, that does not give you an accurate number of inspections done.

Originally Posted by Jack Feldmann

It used to be very easy to determine how many inspectors were in the area by looking at the phone book. However, that has changed. With licensing, its pretty easy. Its also easy to see how many houses are sold in a given month. However, that does not give you an accurate number of inspections done.

Thanks Jack. What are the average percentage of properties that will be inspected? Of 1,000 sales (or listings) how many are inspected for the sellers, and how many are inspected for the buyers? Is there a typical number of inspections done based on the number of sales? Do Realtors know these numbers? Is there a way to gain information about the number of inspections? How specific is this to a given market, or is it very similar across all states (provinces)?

You can easily find out who is in the area by doing some Google searches and other research online.

Some inspectors may do 50 inspections a year and some 500. It should not matter to you. How good you are as an inspector (technical, communication, report writing,) and marketing will determine how many inspections you do.

In the early years I would travel as far as I could tolerate to make money.

When you are not working you should be improving you knowledge regarding construction, codes, inspecting, report writing. Learn something every day.

Originally Posted by Mark Reinmiller

Some inspectors may do 50 inspections a year and some 500. It should not matter to you. How good you are as an inspector (technical, communication, report writing,) and marketing will determine how many inspections you do.

Thanks to everyone who has made a contribution here on this thread. - @ Mark Reinmiller, the questions that I have asked come from a need to understand the bell curve and the market. Your two examples of one inspector doing 50 inspections and another doing 500 might be the outliers of the data set. I began by thinking of myself as normal or average. Neither at the low end or at the high end of the spectrum of capabilities. But my questions are about the market itself, not about me. Once I know what is normal, I will quickly learn if I am above or below the norm. But I need to measure the market. It is somewhat like a riverboat captain who must know if there is enough water under him to keep his boat afloat. If I lived on the river all my life, I would look at the history of the times that ships ran aground. I would study how to make sure my ship stayed in the deep water. But I just moved inland from the ocean coast line and see a river and scratch my head wondering: "Will it float?"
From reading various threads on this forum, and doing my limited research, it appears that there actually is a potential to make a living in this industry even in a recession. But I like to base my choices on facts and figures rather than assumptions.
I made one random phone call today to a Realtor and got some interesting information from him. He felt that most (nearly 100%) of the re-sales of homes to his clients in this area have an inspection done by either the buyer or the seller or both. This was startling to me. How common is this in other markets? I had no way to know the number prior to my phone call to that Realtor. In my experience of building homes for several years, I only recall two home inspections being requested by the buyers. So, there seems to be a significant difference between new construction and existing homes in this area.
I did the search of the HI licenses in my geographic area (thanks for the search tip from Garry Sorrells). What I am unable to see is how many of these inspectors are full-time inspectors with only one business. Are they focused on home inspections or do they do it as a sideline to augment another income source. How many inspectors actually make a living at it? And I really want to meet the man who inspects 500 homes a year and watch how he does them, and the reports, and the marketing, and still has time for his family.
Thanks again to everyone.

Originally Posted by John C Hansen, LEED AP

What are the average percentage of properties that will be inspected? Of 1,000 sales (or listings) how many are inspected for the sellers, and how many are inspected for the buyers? Is there a typical number of inspections done based on the number of sales? Do Realtors know these numbers? Is there a way to gain information about the number of inspections? How specific is this to a given market, or is it very similar across all states (provinces)?

HI's would not have this data directly, as we don't track the homes sales in our market. How could we? We don't sell the homes, or track our competitor's data for "seller" or "buyer" ordered inspections.

NAR or your local real estate board may have this collected data available, but it may not be as complete as you hope. I don't think it's as relevant as you may think, unless you're in a tiny area with almost no sales.

Join a local group or association and start networking with other like-minded individuals, you should be able to get a handle on what you need. There's room in every market for a competitor to start. It's up to them to succeed and grow, or stagnate and fail. Plan for a tough start-up, as others have mentioned, initial failure rates are high.

Dom.

Like Dom said. It would be very hard to determine then number of inspections vs sales. The property transfers are very easy to track, yet some are not sales, just transfers to title.
You could ask several Realtors and get a feel for their numbers of clients that buy that waive the home inspection.
In my area, a lot of buyers of new construction waive the inspection contingency.

If you have a local home inspector chapter in your area, then go to a few meetings. Get to know the inspectors in your area, and you might get a lot of answers to your questions. You might also develop friendships that can help you down the road.

My advice would be to not try to micro manage the data, or worry about it that much. It would be a very rare market that could not handle one more inspector. Inspectors drop out all the time, for different reasons.
Good luck!

Originally Posted by Jack Feldmann

It would be a very rare market that could not handle one more inspector.

Thanks Jack. This is very good news.

John, with you being in the Chicago area you are in an area that could handle a few more inspectors. That is a huge market area and most of the inspectors I know in the greater Chicago area only work in their area of town, due to traffic, etc. Plenty of business to go around.