Attention Home Buyers: Here is the Inside Scoop About The Home Inspection Business
If you are a home buyer or you hope to be one in the near term, there are some things you should understand about selecting a home inspector to work with. This article is an inside look at an industry that could be important to you when it comes time to buy or sell a house.
Home inspection is a new industry
Home inspection is a startlingly new industry. My parents bought several houses in the 1970’s and 1980’s and did not even have home inspections prior to buying their houses. As late as the early 2000’s the home inspection they did pay for was rudimentary, “just a guy with a flashlight and a screwdriver,” was how my father put it. A lot has changed.
It is not too difficult in many parts of the country to wake up one day and call yourself a home inspector. In my home state of Washington, we have relatively stringent licensing standards. We are licensed by the Department of Licensing and they require that you take at least 120 hours of classroom training as well as 40-hours of ride-along inspections and pass a national home inspector exam to get your license. This is a far cry from simply declaring yourself a home inspector, but to anyone who has been in the business a while, completing these requirements is little more than a head of steam at the one-yard line. Proficiency with home inspection takes time and experience and arduous work. Yet there are currently only 31 states that require some form of licensing at all, which leaves 19 states where a career change is just a business card, screwdriver, and flashlight away.
Challenges of the business
Home inspection is a difficult job to do well. If you are a one-man operation you are responsible for continuing education, report writing, marketing, sales, bookkeeping, computers, software, insurance, inspecting, scheduling, social media, and keeping all your tools in operating condition. Quality home inspectors are likely to own and use over $10,000-$20,000 worth of tools and equipment and this does not include a car. When codes change, you spend your evenings reading up and re-learning what you thought you knew. When tools break you fix them or order new ones in the evening. The work literally never ends as there is always more to do to get better.
Mired in gray area
Many people are surprised to learn that a home inspection is not a code compliant inspection. Building codes are critical, they constitute the basis for our opinions of what is correct or incorrect. But after a house is completed, important systems such as the structure, wiring, and plumbing, are concealed behind finishes which present impediments to visual inspection. In addition, home inspectors often evaluate over 200 years of construction. Our perceptions of “good construction” seem to constantly change and it is impossible to keep track of the sequence of all these code changes over the years. What home inspectors are really offering you is their opinion on the quality of construction of a house. One of my alternative definitions of a home inspection is:
A professional home inspection is a series of observations that tell you how worried you should be about what you don’t know.
The quality of this speculation and opinion has a great deal to do with the experience an inspector has evaluating and contrasting houses in a specific region.
You are hiring individuals or small companies with different business models
The home inspection industry has largely resisted corporatization, so in many respects, home inspection represents a last-stand of free-market capitalism where individuals compete for your business. Because no one company has taken control of the industry you will find that the standards and quality of a home inspection vary widely. To view home inspection on a quality scale from “poor” to “excellent” you might look at it this way:
- On the poor side of the scale are home inspectors who write reports on their phone by checking some boxes and spend just an hour or so on site doing the inspection. On this side of the ledger, you could include inspectors who, to some degree or another, collude with a Real Estate agent to sugar coat findings to try and get a sale to go through.
- On the other side of the scale are home inspectors who do technically exhaustive inspections. They might spend seven hours on site and then 7 hours more writing a report. They might even have licensed professionals work with them such as electricians and structural engineers to assist with the evaluation. On the quality side of the ledger are inspectors who put their clients’ interests first and harness excellent communications skills to be certain their clients are educated about what they are buying.
Most home inspectors fit in the middle between these two extremes. There is no one correct way to do an inspection, though our client’s interests should always be paramount. Every service represents a different level of detail and likely a different cost. Sadly, we do a poor job of drawing distinctions between these levels of service. They all get billed as a “home inspection.” The industry could do more to help consumers by better defining the scope and thoroughness of what you are buying with your home inspection dollars.
I am startled by the number of phone calls I get from people “price shopping,” for a home inspection. While paying more for a home inspection does not guarantee a quality inspection, hiring the least expensive home inspector you can find is a great way of ensuring a poor outcome.
Understand that every home inspection company has a different business model. Some inspectors will compete on price and charge less and typically deliver less. Some of these companies are busy. An inspector might do three or four jobs a day and write a quick report. An inspector running this type of business is more vulnerable to missing something important and being sued, but this is just a cost of doing business. Other inspectors might charge more and deliver carefully written reports; they do fewer inspections and try and be more careful and thoughtful about the inspections they choose to do. Some inspectors advertise a lot and market to real estate offices and may even have a multitude of employees. Other inspectors are one-person operations and let their work speak for itself and can stay busy simply by doing a good job. Many companies are now offering “warranties” that read a bit like disclaimers from used car lots. You need to read into all of this and decide what type of inspection service best suits your needs.
Before you hire a home inspector – think about how important this service is to you
I have worked for some home buyers who hire two separate home inspectors. They are that concerned about knowing and understanding what they are buying that they double down. This is not without precedent. Many manufacturing companies build redundancy into their product inspection procedures if they cannot afford to miss something – think airplanes. This level of due diligence is not for everyone but points to the need to investigate your new house to a level that makes you comfortable. You need to understand that even the most diligent inspectors will “miss” something. So if the thought of this drives you insane, you need to shop carefully and select a thorough inspector to work with… or even two.
To this end, it is helpful to identify your ability to take a risk with your house purchase. Some home buyers, such as builders, are risk-tolerant and may just buy a house and let the chips fall where they may. Other homebuyers might have young children and be at the top of their budget and using all their resources to stretch into a house – such a home buyer has much less tolerance for safety issues or unexpected repairs. Shopping for the least expensive home inspection, in this case, is likely a poor consumer choice.
I hope these insights help you make an informed home inspection choice. Happy house hunting!