Thread: What's the inspection world coming to?

Got a phone call from a potential client a couple hours ago. Referred to me by a friend of hers. She said she was buying an 1100 square ft house and needs and inspection. I quoted her $275. She stated that wasn't in her budget and we talked a little more. Come to find out it was a two bedroom condo, so I dropped the price to $225.

She again stated that was outside her budged. Frustrated, I asked her what she had budgeted for the inspection. She stated, "$60".

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I've haven't tried this yet but have a good idea for the worst of the price shoppers.... tell them to keep you in mind for another service you offer - litigation support for people who go with the cheapest inspector in town and buy a house full of problems. I'm sure the dead silence on the other end would be priceless.

I was so amused by her price that I couldn't even get upset. But, it wouldn't surprise me if she doesn't find someone to do it for $60.

If I was her I would have been embarrassed to mention that she only had a budget of $60.

Its obvious she has no clue as to what the current rates are and likely even less knowledgeable about what home inspector do.

They walk amongst us!

I wonder if she is getting a sub-prime loan also?

I would have taken the 60.00 and let her pay me the other 300. over a few months. If you would have suggested this, I'd bet she would have taken your offer and probably sent you a ton of referrals.

Got to be a salesman nowadays and not just an inspector.

Just a thought.

rick

If she only has $60 to allocate towards an inspection as she claims, what is she going to do once she owns the house and something needs to be repaired or replaced? Shoe string budgets and new home ownership do not mix.

Your idea is creative Rick but I have a feeling it would take quite a while to get all that money. I'm sure some bill or issue or excuse would pop up and she'd come up with many reasons why she can't send another payment until the following month. Have you ever offered that as a payment option and had somebody take you up on it?

Per the study cited below, the average purchaser spends $14,206 on home improvements in the first two years of ownership.

"Faced with those kinds of potential costs, you can't afford a cheap inspection."

Home ownership has extra costs - The Macomb Daily Lifestyles: Breaking news coverage for Macomb County, Michigan

Originally Posted by Nick Ostrowski

If she only has $60 to allocate towards an inspection as she claims, what is she going to do once she owns the house and something needs to be repaired or replaced? Shoe string budgets and new home ownership do not mix.

Your idea is creative Rick but I have a feeling it would take quite a while to get all that money. I'm sure some bill or issue or excuse would pop up and she'd come up with many reasons why she can't send another payment until the following month. Have you ever offered that as a payment option and had somebody take you up on it?

I very recently began charging 8% for paying at closing. I have been doing it for free for too long. I give them the option of paying at the time of inspection or to pay at closing or 60 days from the time of inspection.

From the feed back I have received from Realtors you would think I was asking them to pay back the Bush tax cuts! They also say, "some of these buyers don't have the money until closing". Well guess what, those people won't have the money if the deal falls through either! They are the same people that have there credit card (which I take as back-up) maxed out, which is useless when you try to get your money!

The Realtors don't have a problem loaning out my money for free .

Originally Posted by Nick Ostrowski

If she only has $60 to allocate towards an inspection as she claims, what is she going to do once she owns the house and something needs to be repaired or replaced? Shoe string budgets and new home ownership do not mix.

Your idea is creative Rick but I have a feeling it would take quite a while to get all that money. I'm sure some bill or issue or excuse would pop up and she'd come up with many reasons why she can't send another payment until the following month. Have you ever offered that as a payment option and had somebody take you up on it?

Actually, Nick I have done this many times with new home buyers who may opt out of having a home inspection done anyway being they are buying a "new home".

I've never been burned once on it and the referral base is great.

Rick

You'd be surprised at how many buyers get confused by the difference between a true "Home Inspection" for the Buyer and a HUD VALUATION appraisal/ home "inspection" for HUD (or VA) for existing homes, townhomes or condos. HUD and VA still do actively encourage buyers to get a "Home Inspection" but the language in their materials, brochures, etc. is muddy, and even non-first-time buyers can get confused as to the difference between the two.

FYI and for example, Pre-program and post Condos see the "hot list" searchable database here: https://entp.hud.gov/idapp/html/condlook.cfm


$60-75 sounds about right for existing or repaired condo HUD/FHA "inspection" estimated list of expenses for closing.Seems IIRC reading some stimulating programs to aid the suffering condo/townhome market not to long ago, HUD/FHA, with the lending market for same having been tanked for so long.

Perhaps a question or two more to the buyer might have clarified what she was looking to schedule, and a little creative "education" and salesmanship might have generated a true "home inspection" line item with a realistic budget amount for pay at closing (or before), etc. that was looking out for HER interests., maybe even with you as as the payee.

Originally Posted by Rick Hurst

Actually, Nick I have done this many times with new home buyers who may opt out of having a home inspection done anyway being they are buying a "new home".

I've never been burned once on it and the referral base is great.

Rick

Out $800 in the first 5 months of this year!

I did an inspection in April that was supposed to be paid at closing but some how it got left off of the closing document when the house closed in June. I sent the lady an invoice and she asked could she pay me on October 29. She offered a post dated check and I sent her a promissory note for her to sign. She is paying 18% interest and the promissory note has a $200 late penalty included. She is aware that if we do have to go to court she will be responsible for the late penalty, all court cost and if I have to file an execution to collect the judgment the sheriff will seize and sell enough of her personal property to satisfy the judgment plus all cost.

She is very happy with the "loan" and so am I. I have done this on several occasion and have never not gotten paid.

I actually spent about 35 minutes on the phone with her explaining what exactly a home inspection was, what is inspected and how. She knew very well what the process was and approximately how long it would take before she offered me $60.

I never do the "pay at closing" as that violates ASHI code of ethics and our company policy.

In the end I told her she may be better off purchasing a home warranty.

Originally Posted by Ken Rowe

I never do the "pay at closing" as that violates ASHI code of ethics and our company policy.

Can you cite that part of the ASHI COE?

I think that you will find that it is only a violation of the COE if the payment is contingent on the sale of the home and not the closing or final settlement. Big difference between the two.

I determine in advance what I want for a job. I add $25.00 to that for the quote and then advise that I offer a $25.00 discount for payment at time of service. Works very nicely. For those who still opt for closing, I am clear that the whole fee is good for 30 days only. Interest kicks in after that.
If I'm to be a banker, then bring on the show.
JLMathis

Originally Posted by Scott Patterson

Can you cite that part of the ASHI COE?

I think that you will find that it is only a violation of the COE if the payment is contingent on the sale of the home and not the closing or final settlement. Big difference between the two.

Here you go Scott:

B. Inspectors shall not inspect properties under contingent arrangements whereby any compensation or future referrals are dependent on reported findings or on the sale of a property.

Please explain how there is a big difference between the sale of the property and closing or final settlement. If the property doesn't sell there is no closing or final settlement. There is no closing or final settlement if the buyers walk after the inspection.

Sounds like some lender has not done his homework if this girl is that strapped and has gotten this far in the purchase process.

Not true at all.

One does not have to have savings on hand or expendable cash to buy a home. If one has a credit score over 700 and the down payment, they can more than qualify for a home loan.

They don't care if you have cash leftover for inspections, mini-blinds or a Happy Meal.

rick

You could still do the pay-at-closing thing and be in compliance with ASHI COEs as long as you set the expectation with your client in your contract that they are still responsible for your fee even if the house never goes to settlement. I'd have to say if a home inspector is a flat out fool if he agreed the house must go to settlement/closing in order to be paid for his services.

Originally Posted by Nick Ostrowski

You could still do the pay-at-closing thing and be in compliance with ASHI COEs as long as you set the expectation with your client in your contract that they are still responsible for your fee even if the house never goes to settlement. I'd have to say if a home inspector is a flat out fool if he agreed the house must go to settlement/closing in order to be paid for his services.

We don't mess with it. Cash, check or charge before they get their report.

To get paid at closing or in some cases, no closing , is no different than getting paid at the time of the inspection. You are still accepting cash for an inspection. To wait till later to get paid......being against any SOP..........I am a little lost with that thought.

You are getting paid for an inspection.

If getting paid later, then I guess we should inspect for free. With that thinking, no man should ever accept money for an inspection. We are in fact inspecting for cash so in the thinking above about getting paid later has anything to do with being against SOPs is ludicrous. Cash now, cash later..................Still getting paid.

Originally Posted by Ken Rowe

Here you go Scott:



Please explain how there is a big difference between the sale of the property and closing or final settlement. If the property doesn't sell there is no closing or final settlement. There is no closing or final settlement if the buyers walk after the inspection.

What Nick and Ted said......

The ASH SOP basically says "Inspectors shall not inspect properties under contingent arrangements whereby any compensation is dependent the sale of a property."

I suppose there are ways I could get around the SOP, but I'm not that kind of person.

Originally Posted by Ken Rowe

The ASH SOP basically says "Inspectors shall not inspect properties under contingent arrangements whereby any compensation is dependent the sale of a property."

I suppose there are ways I could get around the SOP, but I'm not that kind of person.

Ken, nobody is trying to get around anything. You are misinterpreting what is being said in the SOP/COE. Just because you will wait to get paid at closing does not make that payment contingent upon the closing. The person (your client) still owes you the money regardless if the home closes or not.

Now, if you tell your client that they do not owe you any money if the home does not close or the deal falls through, then you would be in violation of the SOP/COE. Why? Well your payment is then directly linked (contingent) to the home closing and everyone including the agents getting paid.

This has been clarified a few times over the past several years by the ASHI Ethics Committee.

Originally Posted by Rick Hurst

Not true at all.

One does not have to have savings on hand or expendable cash to buy a home. If one has a credit score over 700 and the down payment, they can more than qualify for a home loan.

They don't care if you have cash leftover for inspections, mini-blinds or a Happy Meal.

rick

And that's the problem. Homes require continued maintenance and investment. If buyers can't afford an inspection then the question should be can they afford the utilities, a furnace breakdown, keeping the outside wood trim in good condition? If not then that may be a buyer who may eventually have to move out due to financial hardship. Lenders should be watching out for the client which in most cases they do not.

A few years ago a client told me that he couldn't afford to have any problems with the house he was buying - he was putting every penny into the purchase. No way should he have been buying the house with no reserves. I've had many clients that I wish I could have pulled aside and knocked some sense of reality into their heads.

Request for interpretation

e060426 Billing Through Escrow
Can I bill the inspection fee to be paid upon closing of the inspected property for sale if I have a contract stating that I will be paid in any case should the closing be cancelled for any reason?

Response

The Code of Ethics states, “Inspectors shall not inspect properties under contingent arrangements whereby any compensation or future referrals are dependent on reported findings, or on the sale of a property.” Since your contract states, as we understand it, that you will be paid whether the house closes or not, your inspection is not contingent on the sale and we see no violation of the Code.

Scott, You were right. I apologize for my error. However, I still believe that I'd but opening up a whole new set of problems by doing this. For example: the buyers walk after the inspection, hire you for another inspection and they walk from that one also. They hire you for the next inspection and close on the house. Now they owe you for three inspections and don't have the money to pay you.

Originally Posted by Eric Barker

And that's the problem. Homes require continued maintenance and investment. If buyers can't afford an inspection then the question should be can they afford the utilities, a furnace breakdown, keeping the outside wood trim in good condition? If not then that may be a buyer who may eventually have to move out due to financial hardship. Lenders should be watching out for the client which in most cases they do not.

A few years ago a client told me that he couldn't afford to have any problems with the house he was buying - he was putting every penny into the purchase. No way should he have been buying the house with no reserves. I've had many clients that I wish I could have pulled aside and knocked some sense of reality into their heads.

I did a little research on the address she gave me. Listed for sale at $49,000, $200/month association fees. 29 year old townhome. I'll bet it has the original furnace and water heater.

when you send your invoice to the title company to be paid at closing & the buyer walks you are paid out of the escrow funds. at least that's how it works down here. I'm not wild about the system and have tried to change it but they have been doing it this way for a long time and change comes slow. At least with this system you don't have to worry about being paid.

I don't understand why some buyers think we shouldn't mind waiting to be paid until settlement. Are they willing to wait until settlement to receive their inspections reports?

I've never agreed to be paid at settlement and will bat it away any time somebody asks about it. Luckily, Pennsylvania is not a state where payment at settlement is the norm.

Originally Posted by stanley frost

when you send your invoice to the title company to be paid at closing & the buyer walks you are paid out of the escrow funds. at least that's how it works down here. I'm not wild about the system and have tried to change it but they have been doing it this way for a long time and change comes slow. At least with this system you don't have to worry about being paid.

Have you ever thought about how that money gets into escrow?

One thing to think about when trusting escrow to pay your fee is that the funds placed there by the buyer is promised towards the down payment. The Seller has to sign off on the release of the funds or wait until a judge decides who get to keep it.
I have several hundred dollars still unpaid as a result of just such an arrangement.
Also a couple of thousand that promised to pay me Tuesday for a hamburger today.

I don't wait for payment at closing anymore. (notice the period at the end of that sentence)
Payment is due before the report is released. (notice the period at the end of that sentence)
I will accept cash, check, Visa or MasterCard. (notice the period at the end of that sentence)

Originally Posted by Jim Luttrall

One thing to think about when trusting escrow to pay your fee is that the funds placed there by the buyer is promised towards the down payment. The Seller has to sign off on the release of the funds or wait until a judge decides who get to keep it.
I have several hundred dollars still unpaid as a result of just such an arrangement.
Also a couple of thousand that promised to pay me Tuesday for a hamburger today.

I don't wait for payment at closing anymore. (notice the period at the end of that sentence)
Payment is due before the report is released. (notice the period at the end of that sentence)
I will accept cash, check, Visa or MasterCard. (notice the period at the end of that sentence)

Around here, most of the time we don't even go into contract on a house until AFTER the inspection. It makes much more sense that way instead of putting a contingent upon inspection clause in a contract.

If we don't like how the inspection went, then we just don't go into contract and look for another house. Therefore, it will be a hassle for an inspector to try and get paid.

No reason to wait for your money in my eyes. And if you do have to wait, interest should start accruing immediately after the service, not 30 or 60 days. Otherwise you are lending money interest free, who would say no to that?

If the girl was only willing to pay $60. you waisted your time. From experience they are the ones who call first when something doesn't work and you will have to go out again to reset a GFI or something stupid. We set the payment rules when we make the appointment "we are paid at the time of the inspection". Don't fall for the Realtor trick "hay the client is getting divorced, her kids left her, her dog bit her, she needs to pay at closing, I will guaranty she pays". BS, Seen it all heard it all get paid for your service when it is performed. Buyers and Realtors are liars! As a business you should make it as easy as possible for payment; that means accepting cash, personal checks, money orders and credit cards if that isn't good enough send them on their way they don't qualify.

Thomas W. McKay
ASHI Certified Inspector

Scott, The money depositd in escrow is the earnst money that is put up when the contract is signed. if the deal falls apart and the buyer walks the seller does have to sign to release the money however, they cen't put the house back on the market until they do.

Originally Posted by Lisa Endza

So you want to pay for the inspection at closing? - InterNACHI

No more free adds for inspector associations. If you want to mention it then just pass the info on by telling them they can go to the banner adds for the links and they can look up InterNACHI. No free advertising links. All advertisers must pay for advertising in the appropriate areas....not on the threads in posts.

If you respond to this you must remove all links to InternNACHI before responding.

You know...Like the ASHI banner below. That is how associations advertise including their associates.

It wasn't me.

Brian has this message board set up so that when you post a link (like the one I did to sample legal agreement language for when you are being paid at closing), somehow the page title appears in my post as the link title and perhaps some page titles sound like ads.

Brian probably set this up to improve Search Engine Optimization, but in any case, it is not me doing it.

I just had someone get pissed at me because they didnt buy the first house we inspected (due to findings) and they feel they should not have to pay the same price as they did for thier first inspection.

Originally Posted by Marc M

I just had someone get pissed at me because they didnt buy the first house we inspected (due to findings) and they feel they should not have to pay the same price as they did for thier first inspection.

No good deed goes unpunished

Originally Posted by Marc M

I just had someone get pissed at me because they didnt buy the first house we inspected (due to findings) and they feel they should not have to pay the same price as they did for thier first inspection.

Hmmm! I wonder if they get charged less at Wendy's, Target, Walmart etc just because they're repeat customers.

How about this. They don't have to pay as much as before and you don't have to work as hard as before. People don't get it - you saved them money as a result of your first inspection. Why they can't more fully appreciate the value of the inspection the second time around is beyond me.

Am I living in the woods? If you are making a formal signed contract in which you charge interest and you are not licensed as a lending institution then your butt could end up in the wringer. At least that's true in the two states I have lived in for the past forty years.

I got a referral call for a 12 unit apartment building. The buyer didn't want to use anyone from the realtors' list. I told the person calling to set it up that based on the size of the building, the fairest way to do it was based on an hourly rate. The person called back and said the buyer is OK with the hourly rate as long as the total fee did not exceed $800 - $900. HUH?????? So I keep working for free after the cap spending limit is reached?

I ended up having to relent and agree to a flat $900 fee because the caller said they had somebody else who would do it for less. I just know I'm gonna end up on the short end of the stick after all is said and done but things are so slow right now that it beats sitting at home earning nothing. Unfortunately, the ball is in the buyer's court right now.

I don't know where the idea ever came from that buyers get a discount on a 2nd inspection. I have offered a discount for repeat business in the past but I am getting away from it. The longer I do this, the more I know. The more I know, the more I find. The more I find, the longer the inspection and reports take to complete.

I'd like to believe the ball will at some point be back in our court and we'll all be busy enough again where we don't have to get in debates with callers over a few bucks.

Here's my fee. Take it or leave it.

Ya know...you would think you would get at least a THANK YOU for helping them, not to make a bad purchase. But what?? a discount to do what, inspect your house for 3 hours and then sit behind a computer for 2-3 hours typing a report? How do I benefit from this deal?
N.O., I had someone try that hourly thing to me. No way. The problem is your time is not tangible therefore, it's negotiable.

Originally Posted by stanley frost

Scott, The money depositd in escrow is the earnst money that is put up when the contract is signed. if the deal falls apart and the buyer walks the seller does have to sign to release the money however, they cen't put the house back on the market until they do.

I can assure you that if the inspector has not been paid at the inspection, he will not be paid with this $500 earnest money.

What if the inspection was more than $500 (as mine was yesterday)?

Originally Posted by Jim Luttrall

...
I don't wait for payment at closing anymore. (notice the period at the end of that sentence)
Payment is due before the report is released. (notice the period at the end of that sentence)
I will accept cash, check, Visa or MasterCard. (notice the period at the end of that sentence)

I agree 100%

I've only taken my fee at closing 3 times. Two times I charged extra for doing so. Once the title company would've forgotten me if I hadn't called the day after closing.