Thread: From the Wise One

Inspecting the Inspector
Careful who you hire to approve your volatile-market home by Walter Jowers
If you’re thinking about buying a house, it’s a good idea to do it now, or soon. Right now, your dream house will probably cost you less than it would have a year or two ago. If you’ve got some down-payment cash on hand, a steady job and a solid credit history, you’re in business. There are houses, real estate agents and sellers aplenty, eagerly waiting for you.

And there’s this: You’ll probably be able to hire a home inspector dirt cheap. There are about 760 licensed home inspectors in Tennessee right now. That’s way too many. Tennessee could get by with a couple hundred home inspectors, maybe less. When you’re ready to get some help picking out your dream house, you’ll have your pick of price-cutting home inspectors.

But that’s not good. In the 20 or so years that I’ve been doing home inspections and criticizing the construction practices of local builders, I’ve never seen a good underfunded builder or a good underfunded home inspector. Lack of funds usually means lack of a decent construction library, lack of continuing education, lack of proper tools, lack of decent insurance, rampant corner-cutting and a raggedy truck. In these semi-desperate times, low pay for a home inspector can even mean lack of gasoline. Recently, I read an online discussion in which some home inspectors were considering adding 10 bucks to their inspection fees, to cover the cost of gasoline. Believe me when I tell you, if you’re running a home inspection business and you have to worry about coming up with 10 to 20 dollars a day for fuel, you’re running on empty.

Folks in the home inspection business are getting antsy, and looking for ways to increase their business. The usual method of doing that is to go begging for referrals from real estate agents— not the usual polite and businesslike begging, but outright groveling. For instance, here’s a little something from a home inspector’s website in his “Agents” section:

WE WILL NOT KILL YOUR DEAL
What’s that mean? It means you’ll always receive an uncompromising, thorough and objective inspection that will be delivered and communicated in a way that will not scare your clients.

When a home inspector starts promising rosy reports to the real estate agents, he’s betting his business. If he finds more problems than a real estate agent is willing to disclose, his referrals will dry up instantly.

Here’s another sample of desperation, from a home inspector’s report written a few years back:

The home is in good condition and the bedded plants both maturing and exotic. The young oak trees compliment these grounds and along with resident squirrels are pleasing to look at. But the beauty is in the tropical outdoors. The private back yard, especially when viewed at sunset from the rear deck (and with a nice cold beer in hand) watching the baitfish scatter is confirmation of the fact that Central Florida is truly a beautiful place in which to live.

These two home inspectors—neither of which works in Tennessee, thank goodness—have ditched their duty to their customers, and have joined the sales team outright.

You can learn a lot about a home inspector by looking at his website. If he has a special “Agents” section there, chances are he’ll be working for the real estate agent, not you, on inspection day. If your home inspector of choice doesn’t have a website, that’s another indication of lack of funds and maybe a lack of technical expertise. You want a home inspector who can at least use Google to find out things that he needs to know. For instance, a home inspector I know once Googled a certain brand and type of furnace and found out that it had been recalled, and that the recall would be in effect for just one more day. The home inspector called the furnace manufacturer, explained his findings, and his customer got a new furnace. You want a home inspector with 21st century tech skills.

Which brings me to this: before you hire a home inspector, ask him directly: “Do you write the report yourself, or do fill in the blanks using a software program?” You want a home inspector who understands what he sees and can create a clear written record of what he saw. Today many, if not most, home inspectors use generic point-and-click “comment libraries” to fill in the blanks in their reports. If your home inspector uses off-the-shelf reporting software, words that end up in your report will have come from somebody who never saw the house you’re about to buy. If your inspector makes one wrong click, your report could suggest that you install snow dogs on your roof, even if you live in Key West.

Right now, Tennessee home inspectors are getting close to their license-renewal deadline, and they’re going to have to decide whether or not they want to pay licensing fees to the state and premiums to their insurance companies. I’m guessing that the home inspector population will be cut by half over the summer. With any luck, the good ones with stable businesses will be the ones left standing. When you get ready to buy a house, hire one of those home inspectors. In the long run, a smart expensive one will cost you a whole lot less than a dumb cheap one.

Talk about "hitting the nail on the head" - WOW

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Can't say I totally agree with you on this Jerry. While some things the author says ring true and make sense, some things are over-the-top, scare tactics, or just unsubstantiated conjecture.

Recently, I read an online discussion in which some home inspectors were considering adding 10 bucks to their inspection fees, to cover the cost of gasoline. Believe me when I tell you, if you’re running a home inspection business and you have to worry about coming up with 10 to 20 dollars a day for fuel, you’re running on empty.............The last I saw gas is over $4.00 per gallon and shows no signs of stopping. This is an operating expense and cuts into the bottom line. How high does it need to go before an inspector is justified in building this expense into his fee structure? Some of us end up driving 30+ miles one way for an inspection and may end up paying tolls along the way.


If your home inspector of choice doesn’t have a website, that’s another indication of lack of funds and maybe a lack of technical expertise............All this says to me is that the inspector is behind the marketing curve and is losing out on a prime way to market. However, some inspectors have been at this so long and are busy enough that they may not need a website.

“Do you write the report yourself, or do fill in the blanks using a software program?” You want a home inspector who understands what he sees and can create a clear written record of what he saw. Today many, if not most, home inspectors use generic point-and-click “comment libraries” to fill in the blanks in their reports. If your home inspector uses off-the-shelf reporting software, words that end up in your report will have come from somebody who never saw the house you’re about to buy.............Whether the report is generated by point-and-click auto-fill comments or the inspector generates most of the verbiage by scratch, the only thing that matters is that all the noted defects are documented and appear in the report in a clear and concise manner. We all know there are some defects that pop on on nearly every inspection. Having auto-fill comments built into the report for these situations is not just a time saver, it is the smart thing to do. It's not always just about working harder, it's often about working smarter.

If your inspector makes one wrong click, your report could suggest that you install snow dogs on your roof, even if you live in Key West..................Uh, no.

Good post Jerry. As to the cost of gas and inspection fees. this is going to be a subject that will be up for more post as time speeds by and gas takes off up, up and away.

You are correct Wise One. This market is going to weed out alot of inspectors. I known of 3 inspectors in my area that are gone or at least doing things part time now.

Best

Ron

I would have to agree with Nick. One of my biggest expenses is gas, and with that having gone up nearly 20% in the past year, it figures in the cost of the inspection.

I do not have a website. Haven't needed one. And, I would bet that the vast majority of inspectors that have websites hired someone to put it up. Having a website does not make one "computer savvy".

Ditto on software and "point-and-click". The software does more than give shortcuts. In most cases, it helps create a good presentation, which is really the only forum that we as inspectors have to show our work.

Oh, yeah... I too have read reports that describe the landscaping and the general "feel" of the home. My thought is usually; "What th.....?"

Concerning raising your fees based on gas prices:
What would you consider a good reason to raise your fee? Don't businesses generally adjust their prices according to the market/costs? Of course I agree that if an inspector needs that extra ten bucks to make it to the inspection there is a deeper problem with his/her business but I don't think it's wrong to adjust your fee accordingly. Anyone here charge what they charged last year?

The Wise One Seems a little over the top on a couple of points.

That said I think the Point He was trying to make on needing the 10 bucks for gas was operating a Business without Capital Reserves coupled with slow cash flow.

A non sustainable Business Model.

Ya know Walter Jowers almost sounds like Mike Holmes and vice versa, they both are opinionated, and egotistical.

Rising gas prices, raise your price $10? Go for the gold!!!

Gas prices are just a small component of your over all expenses.

The question you should be asking yourself is: " can I maintain my current standard of living and not raise my prices?"

With all business expenses going up, combined with the inflation of food, consumer goods, taxes, utilities, etc. etc.! can you afford NOT to raise prices?

You need to look at the entire economy, how that is effecting your spending habits, and adjust your prices accordingly.

Great article... thanks.

I think the point is if you're raising your prices as a knee jerk reaction to cover today and tomorrow's costs you lost the battle yesterday.

I drive a fuel guzzling diesel and live about 15 miles out of my metro area so trust me the rising cost of fuel is hitting home. That being said, if you look at the difference between now and a year ago it's marginal. My average job costs me about $17 dollars in fuel vs $10 a year ago. Granted, that's a big jump but as a function of an average $330 inspection fee it's not much.

The other stuff in the article is personal choice but I'm on board with it. A webiste is helpful and a good report is too. I'm not saying you must have them to be sucessful. They just help put you in a better position.

The great thing about this business it that we can all do whatever we want. As long as the phone keeps ringing, whatever you're doing works.

Walter is right about there being way too many home inspectors in TN.

He is also kind of an egotistical windbag who thinks that HIS is the ONLY opinion worth considering.

Like others, I think he has it wrong about not raising prices to adjust for higher gas prices. I have to admit that I haven't raised prices yet, but since it's a cost of doing business, and part of the overhead, I think I will probably make an adjustment soon.

If I was selling widgets, and my costs of materials went up 15%, I would be stupid not to adjust my prices. Otherwise, my profits have been reduced by 15%.

All that said, Walter does make good points.

Inspection prices will have to rise given that oil prices will affect all consumer goods as everything is based on an oil economy. Food, travel, manufacturing, clothing..... its not so much about costs of inspections and cost of gas to get to the job sight, its about the cost of everything increasing beyond what the economy can realistically bare and individuals can afford, this will also affect people buying homes. It ain't over yet. How long will people resist from increasing their prices, not long I expect given the daily price increases for gas.

Cheers,

I've long held the opinion that most inspectors charge far too little for their service. When you consider the value of the information they provide about what is generally the largest investment folks make in a lifetime its dam ridiculous. But, oh well, there are many reasons for this sad fact of life and perhaps the major contributor is that most inspectors have no idea of their cost factors. Sort of like the general contractor who claimed he lost only a little each job, but made up for it in volume.
PS: Walt may be a bit of a windbag, but his wind carries a s___ load of wisdom.

Originally Posted by Jerry McCarthy

Inspecting the Inspector
Careful who you hire -- by Walter Jowers
.
-- begging for referrals from real estate agents— not the usual polite and businesslike begging, but outright groveling. For instance, here’s a little something from a home inspector’s website in his “Agents” section:
.
WE WILL NOT KILL YOUR DEAL
What’s that mean? It means you’ll always receive an uncompromising, thorough and objective inspection that will be delivered and communicated in a way that will not scare your clients.
.
When a home inspector starts promising rosy reports to the real estate agents, he’s betting his business. If he finds more problems than a real estate agent is willing to disclose, his referrals will dry up instantly.
.
--sample of desperation, from a home inspector’s ---
.
These two home inspectors—neither of which works in Tennessee, thank goodness—have ditched their duty to their customers, and have joined the sales team outright.

.

Surely Walter isn't talking about our friends in Kansas City.

They Explained all that.
.
Bulldoginspect
.

Jerry

I have to start off that no matter what I charge for my home inspections I know I am charging to little. I am not trying to make excuses here but in my area there are multiple inspector inspection companies that have been around for three or 4 times longer (and more) than the 4 years I have lived here. My dilemma is that they have a long lived reputation in the area and get a serious amount of inspections and keep there 5, 8, 10 inspectors busy all the time. I will also include that their inspections are all inclusive including a termite inspection. There minimum is what my minimum is and I am not an all inclusive inspection company. I charge extra for pools, termite inspections etc. etc. For anyone to, how do I say this, Bash the home inspectors for charging to little is simply not right unless they know the conditions that inspectors have for basing their pricing.

We have been in business in this area since xxxx and have thousands upon thousands of inspections behind us and are an all inclusive inspection company and our credentials are such and such.

In essence I am charging much more than them when all the goodies are added up.

I have been busy since I started inspecting in this area four years ago (thank God) except for the past week. I have finally gotten tired of putting 60 some odd dollars every couple of days into my little ranger that I use for inspections and have gone up slightly with my pricing to counter that. The reality is it was hard enough battling pricing then and it is even harder now and I am actually seeing my percentage of calls to inspection ratio dropping. Did you happen to read a post where I said there are at least 12 to 1500 home inspectors in the metro area where I live and work that actually have active licenses.

Just a little thought for all you folks. Stop with the continuous barrage about the cheap inspector and if you have to charge more now you were not doing a cost analysis and, and, and.

Oh yeah, you folks in north central Texas that have actually sent me emails about pricing. I know who you are and what you charge. How could I not after hearing for 4 years from potential clients and Realtors.

Thanks for listening

Ted

Ted,

I agree with WC Jerry in that we all (myself included) charged too little, meaning less than what we were/are providing is worth.

The price you charge, based on staying in business with the local prices, is all relative, as you yourself stated.

*YOU* are charging more than the other, yet you are also staying busy (enough).

The large inspection firms charge less as they need more volume to make up for less $$$ per inspection (because they have to pay their inspectors). You need to charge what it takes for you to make a decent living, and you are.

Could you charge more in your market? Possibly. The only way you will know is to try it (when the market conditions are good is a good time to try it).

Would you make more money doing fewer inspections because you charged enough to put you above much of the market? I don't know the answer to that. All I can say is it worked for me for many years, it worked well enough that I average 100 inspections or fewer the last several years before I retired, yet made more money than before.

My last year in business before I retired I only did about 50-60 inspections, yet made about $135k. And I charged too little.

Hmmmm........visions of sugar plumbs.....I'm gettin dizzy!

Being the math whiz I am....thats around $2000 a pop huh Jerry?

Nice work if you can get it. Any little marketing tips you can give us to successfully bump our fees by 500 - 600%, when its a grind to attempt even 20%?

I agree, a good many of us are worth much more, and reputation is everything in this business. I realize you don't get there overnight, but thats a different kind of ceiling we're talkin about.

"Most people who participate in this board will not get the price shoppers anyway."

Sorry Fritz, unfortunately I still find that people are people, with most being rather short sighted about their big investment, that the average client still comparative shops even when the realtor has left their favorable finger tap on your card.

I am seriously interested in knowing how to corner your type of client market.......wonder if any others are?

Client education, thats the snag.

Rick

Jerry

Well, I guess I need another box of hankies after reading my post and then yours. There is a difference between staying busy and actually being able to take a nice vacation. The part about multi inspector companies having to pay there inspectors, hmmm, I am seriously wiping away the tears now. Not being sarcastic here Jerry but now it sounds like you are doing what I was trying not to do. Make excuses.

If anyone can keep prices up instead of down it is the long lived, long reputationed (is that a word) multi inspector companies and or long lived individuals. If not for the long lived companies or individuals who have gained that reputation, keeping the price up, price has no place to go but down. I had people working for me most of my life. The more people you have the less profit you make per individual due to expenses but because of those multiple people you actually make more money.

I was not crying about me but for the understanding of where other individuals stand on there battle for position and money. If they did not automatically start out with a large referral base no matter where it comes from then those folks may not be on their knees literally begging but they are trying anything to get a foot hold. (holding price down)

Lets see. Making multi billions a year at thirty dollars a barrel of oil and how many muti billions at 139.00 per barrel. I don't want to do that math. I know, poor example.

In a real estate market that is still somewhat stable in my area (except the past week) (now I am crying) but with the massive amount of home inspectors gettin pooped out a few times a year and the multi folks holding price down, and the beginners holding things down, it is getting a little tough.

I guess what may be relative here is what each individual calls busy.

Thanks

No matter what anyone has to say I extremely enjoy your opinions.

Ted

Ted,

One thing that JP did not mention is that while he only did 50-60 inspections, his inspections took multiple days and his reports were hundreds of pages long. I doubt that his hourly rate was ridiculously high. This was partially because he went way beyond any SOP (other than his own), but also because he was apparently inspecting homes the size of a small hotel.

Some clients are suspicious of low prices and expect to pay more for quality.
Market to them. It feels good to get paid.

Originally Posted by Rick Souter

Being the math whiz I am....thats around $2000 a pop huh Jerry?

Actually higher than that.

Gunnar has the answers: more time (days) per inspection and larger homes.

My average inspection was 2 days, sometimes 3.

Many inspections were 3-4 days.

A few were 6-7-8 days.

The 'average' price does not reflect the true cost for the higher ones. I had a few over $10,000.

Originally Posted by Jerry McCarthy

Inspecting the Inspector
Careful who you hire to approve your volatile-market home by Walter Jowers
Which brings me to this: before you hire a home inspector, ask him directly: “Do you write the report yourself, or do fill in the blanks using a software program?” You want a home inspector who understands what he sees and can create a clear written record of what he saw. Today many, if not most, home inspectors use generic point-and-click “comment libraries” to fill in the blanks in their reports. If your home inspector uses off-the-shelf reporting software, words that end up in your report will have come from somebody who never saw the house you’re about to buy. If your inspector makes one wrong click, your report could suggest that you install snow dogs on your roof, even if you live in Key West.

Are you kidding me ? Every inspector that I know of that uses software customizes the boiler-plate comments to their way of saying things and to their area. This is NOT a "generic point-and-click comment library" but is a library of a wealth of years of experience of doing inspections and making sure the wording is they way they feel is right for each situation. You also have the option in most software to very easily customize the comments for each situation by changing a location word in the comment or degree of the situation. It is completely out of touch to say that the report will end up with comments from someone that never saw the house. Clueless to say the least.

Most people who participate in this board will not get the price shoppers anyway.

Fritz, correct me if I am wrong, but I think you statement is being read differently than intended. I think Fritz means that most of the experienced inspectors who frequent this board will not be doing much business with those people buying their home inspection based only on price. Yeah, I get the calls all the time and it depends on how good a salesman I am as to whether I get the job. Most of the time I confess, I just give them a quote and never hear from them again because I am not the cheapest guy in town. If I have my marketing hat on and ask a few pointed questions to spur the conversation a little deeper than price alone, I stand a chance of getting the job.

From my old econ class, this job has a very low (or no) barrier to entry, and in most cases very little qualification to be in business. People always think that they are underpaid, even someone making over $100 K a year. How many of us think that the appraiser's job is much easier, yet how many of us take the two years of apprenticeship to become an appraiser? I love this job, and right now wouldn't think of doing anything else, although a new challenge may be in my near future. I'm working less hours and making more than I ever have in the past by working for someone else.

Lots of consumers will price shop. That's just human nature. When was the last time you heard a realtor lobbying for business by cutting their percentage? Unless home inspectors can all get together and agree on pricing terms the odds are that the average home inspection fee will decline, not rise.

Even in a busy market place where the homes are still selling you can only saturate the home inspection field so much before the lower pricing home inspectors and the just price shoppers have a serious effect. Fritz's last statement rings so true about getting to the point of not having patience with the price shoppers. I just recently went up by a lousy 25 dollars because I have not for some time. That twenty five dollars is knocking my percentage down of those calling and me securing that inspection. I can do a 2 hour round trip to a slightly better market and get more money for inspections but then I have 2 hours of gas being sucked up at 4 dollars a gallon.

I won't get into the whole requirement thing to become a home inspector but I will say this, background, education, maybe apprenticeship for all is looking better all the time.

Econ 101: If one chooses to compete by being the low bidder, or matching the area’s low bidder, I can only say that such a choice is a sure receipt for failure. I mean, why bother? Why not go to work for another inspector or franchise? If you don’t understand why some folks make a good annual income and you’re not, you’re in the wrong line of work.