"Flat Rate" Inspection Fees?

[CD Cameron]

Searched for a previous discussion relating to this topic, but to no avail. SO:

As a newbie, I'm still trying to get my business off the ground. With that said, I am aware of a well established, and quite frankly thriving home inspector in my area that charges a flat rate for their home inspections, regardless of square footage (as far as I know anyway). I came by this info via a good friend of mine.

The idea of a flat fee has never occurred to me before now. Initially, I thought it was crazy (picturing inspecting a 4000 square foot home for the same fee as a 1200 square foot home).
However, now I find the idea more and more intriguing.

So my question to anyone that cares to respond, is simply: What do you think?

Thanks for your help!

[Raymond Wand]

Formerly I charged a flat fee when I started out, but then started charging more for larger homes. My fees are now based on selling price of the home.

My own view is that if you charge a flat fee for any size house you may get more inspections but your selling your service short. But at the end of the day you have to do what you feel is right for your area, experience and what is a business decision.

[CD Cameron]

Formerly I charged a flat fee when I started out, but then started charging more for larger homes. My fees are now based on selling price of the home.

My own view is that if you charge a flat fee for any size house you may get more inspections but your selling your service short. But at the end of the day you have to do what you feel is right for your area, experience and what is a business decision.

Thank you Raymond! My thoughts as well.

[CHARLIE VAN FLEET]

raymond--can you give me prices on your inspections--i charge $325 for any home up to 2000 sqft--and it climbs after that--charging by price how do you know what you are getting into--i have never heard this before thanks cvf

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raymond--can you give me prices on your inspections--i charge $325 for any home up to 2000 sqft--and it climbs after that--charging by price how do you know what you are getting into--i have never heard this before thanks cvf

[Matt Fellman]

I guess it depends if the flat fee is $200 or $600. Some new inspectors trying to get into the business are happy to work no matter how long/hard they have to work for a few bucks. Others who have been in the business set aside a block of time for an inspection no matter how big or small the house and expect to be compensated for that block of time (opportunity cost of other work, etc.).

[CD Cameron]

I guess it depends if the flat fee is $200 or $600. Some new inspectors trying to get into the business are happy to work no matter how long/hard they have to work for a few bucks. Others who have been in the business set aside a block of time for an inspection no matter how big or small the house and expect to be compensated for that block of time (opportunity cost of other work, etc.).

The fee I was told they were charging was $400.

[Raymond Wand]

Good evening Charlie

Fee Schedule 2014

Also Alan Carson wrote about structuring fees on selling price on his blog. Now that I go to find the article I cannot find it.

[Lon Henderson]

I've always had a tiered price based on square footage. It's simple and works for me. I'd like to charge by the hour sometimes.

[Scott Patterson]

I base my fees on how much time I feel I will have invested in the inspection, including writing the report. I also add in a little extra for older homes, homes that require some additional travel, etc. Again, how much time will I spend doing the job.

As a new person I would set my fees based on the size more than anything. A good example would be a 2000sf home that is under 20 years of age on a slab foundation and is a few miles away. Most likely it will have 3 bedrooms and 2 bathrooms, a split HVAC system, etc. A simple home to inspect. I would expect to see fees ranging from $300 to $375 for this type home with various inspectors in my area. I would be at $325.

[Russel Ray]

My fees are now based on selling price of the home.

I would love to do that. Would make the $5 million, 2,000-SF La Jolla home overlooking the Pacific Ocean a heck of a lot more fun than the $150,000, 2,000-SF home in downtown El Cajon overlooking the dumpsters at the mall, especially when the El Cajon home takes twice as long to inspect as the La Jolla home.

[David Edenburn]

As Raymond said, it all depends on what is common in your area. These days I do mostly design work and consulting, in this business it is common to charge a percentage of the project budget. However, when I started out doing home inspections years ago in Baton Rouge, I went down to a local realtor office and grabbed a couple dozen HI brochures from their lobby (do they still do that?). Every one was charging by the square foot and the prices per square foot were all about the same (except for one guy who was a PE and charged a lot more). So that told me how, and how much, to charge for my services. Check with a bunch of realtors and see what they expect to pay for a HI.

[Marshall Brown]

I have stuck with the plan since opening the doors about 15 years ago.

A flat fee up to 2000 sq.ft. The average MN and ND home is a little less than 2000 sq.ft.

Between 2000 an 3000 sq.ft. we add $0.10 and above 3000 sq.ft. the increment drops to $0.05 per sq.ft.

No travel fees, nothing extra for a crawl space, just a simple plan that seems to work for us.

Your mileage may vary.

A lot of the "competition" comes in cheaper and leave the business sooner.

[Markus Keller]

Fee should be based on the size and type of house. Flat fee just under sells your skill set. Each size and style house takes different amounts of time. I have to go do a green house tomorrow. That has more components and systems than a regular house, therefore costs more. A 4 bedroom City house should not be the same cost as a 4 bedroom suburban house. The City house has standard rooms. The suburban house has more 'other' rooms than you can keep track of.
Guy balked at my price the other day to inspect his $1.5mil house; 1st guy to do so in probably a year or two at least. I told him to call another inspector who would probably charge 2/3.
It all depends on what level of service you provide.
I have an ethnic client chain that buys in a particular neighborhood and calls me when one of them is buying a house. They aren't buying expensive houses, they don't make lots of money, I understand a home purchase for them is a big ordeal. I give them a break on the inspection fee; cheaper than any other good inspector I know would do the HI for. However, a guy buying a $1.5 house can pay full freight. Is that fair? I don't know. I like to look at it as a bit of Pro Bono work.

[Marc Morin]

Having been to Brian Hannigan’s ‘Cost of Business’ seminar three times, $500 per inspection is the goal for coastal Southern California which is partially driven by the real estate pricing. There is a flat fee provider in our area who charges $150 up to 3000sf. Now, a 3000sf water front home could be as much as $30,000,000 (http://www.lagunabeachrealestate.com/listing/np14014622-102-emerald-bay-laguna-beach-ca-92651/) so are those folks looking for that $150 guy? True, the buyers may tear it down…but will likely rent it out as they design and wait for approval of the new home—which makes them landlords and open to liability from renters at which point they want the $795 inspector.

[Lon Henderson]

In the same week, I had one lady ask me why I was so expensive and another guy ask why I was so cheap. I got both inspections, but I've been under bid many times. It amazes me when someone buying a million dollar home balks over a hundred bucks on an inspection, but maybe being frugal is why the guy can buy a million dollar home.

[Raymond Wand]

I have been asked by potential clients if I will lower my fee $20 because my competitor another inspector they called is $20-50 cheaper. At which point I tell them that I don't lower my fee and if they can get it cheaper go with the competitor. My service doesn't cost, it pays.

Some of the competitors are only charging the low low fee of $199. Good for them, if they want to deal with that type of client thats their prerogative thats fine with me.

Couple of weeks ago a client chose my service because I charged more then my competitors, so there are astute clients and those are the type I choose to deal with.

[Bruce Ramsey]

Pricing seems to be a hard part of this gig. Ideally we are in this to make a profit. How much profit is enough?

Like mentioned before the Cost of Business program helps you figure out how much you need to charge to make the profit margin you want. Then you have to sell that pricing structure to clients.

I ran the numbers once and realized I was charging up to $.27 sq ft for under 1500 sq ft and about $.10 sq ft for over 4000 sq ft homes. Changed my pricing structure so that I was always charging more similar pricing across the spread of square footage.

Everytime I raised my prices, I got more business. I got better clients who complained less and the homes were in better condition.

[michael Rodney]

When I first started out, setting a price was a big challenge. Just did not know how much to charge. So I then set a simple formula that was based on the type or style of home it was. I got a lot of questions from agents and clients because my pricing formula was different than most inspectors. I have since change it.

Now I set the price based on the information I collect about the house: age, finished or unfinished basements, number of bathrooms, square footage, etc. This gives me an idea how much work is involved. The problem with this formula is what they tell you is often times not what you see when you arrive.

I kind a like the idea being floated here. That is based the inspection cost on the selling (I guess you mean asking) price. Must look into that to see how well it works...from those who do it.

[Marshall Brown]

What ever method you choose to use to establish fee structure it should actually yield you a level of living you are content with, be explainable to clients and Realtors and simple enough to actually use on the run.

I guess I am a little amazed at anyone having the time to bid each inspection based on the house and a few other factors. In our area we have low income rural communities, prosperous mid sized towns and many lake homes. Take the same house and move it between the communities and the price will change drastically while the inspection effort stays the same. So basing fees on price doesn't work well for us. We are typically booked fairly solid through the typical contingency period and so are on the job or on the road to/from a job. This means we really need to keep pricing effort to a minimum. I follow a KISS philosophy, keep it super simple.

When asked about our fees being higher than some others I just point out the price difference between the "cheapest" and the best is usually only a few dollars. Do they want cheap or good?

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