Home Inspection Fees

Originally Posted By: denni
This post was automatically imported from our archived forum.



Questions to ponder for a discussion.


Why is it commonly accepted that real estate agents receive a 6% commission for selling a house?

Do prospective home sellers go around price shopping to select an agent to sell their house?

18 years ago it was commonly accepted that real estate agents received 6% for selling a house. House prices have quadrupled since then. An agent who received $6,000 on a $100,000 house 18 years ago is now poised to receive $24,000 on the same house 18 years later.

18 years ago it was commonly accepted that a home inspector charged $125 to $200 to inspect a house. House prices (i.e.: liability) have quadrupled since then. The average home inspection fee has only doubled to around $250 to $400 over the past 18 years, why?

Why has the idea of a percentage, such as 1/10 of one percent of the selling price, plus a base fee never caught on for home inspectors?

18 years ago E & O insurance was available for $500 with a $500 deductible, what is the cost of your E & O now?

18 years ago home inspectors carried a small tool bag with very basic testing equipment, today most of these tool bags include CO testers, gas detectors, circuit testers, moisture meters, cameras & more. 18 years ago most reports were hand written and took less than 45 minutes to complete. Today most inspectors use computers to prepare reports and many add photo documentation.

Which "stakeholder" takes on more liability in the real estate sales process, the real estate agent or the home inspector?

Which "stakeholder" earns the least in the real estate sales process, the real estate agent, bank / mortgage company, attorney or home inspector?

Why do prospective homebuyers consider one of the most important criteria of a home inspection to be the cost?

When you need good legal or medical services, is your top criteria for a service provider, price?

How many weeks of paid vacation do you take each year? If you were working for a major corporation and had 10 or more years of service, how many weeks of paid vacation would you receive?

How many paid sick days do you get each year? If you were working for a major corporation and had 10 or more years of service, how many paid sick days would you receive?


Originally Posted By: Nick Gromicko
This post was automatically imported from our archived forum.



Denni:


Oh God, I can't believe I'm going to defend real estate agents on a home inspection message board, but I'm trying to keep the two industries working together (I understand you and I differ on the merits of this goal). Anyway, agents don't make more than inspectors.

Agents get paid 0% for most of the work they do. They only get a portion of the commission on the homes they sell and close. The average (non-RE/MAX) agent only earns $34,000/year. RE/MAX agents earn much more because their risk is higher. RE/MAX agents typically don't split their commissions with their brokers but instead pay RE/MAX rent or a desk fee. My real estate partner and I pay over $3500/month even though we both work out of our own homes. This bill is due every month even if we don't sell. On top of it we have to pay for our own advertising, phone bills, vehicles, insurance, Board dues, lock boxes, etc. just like home inspectors do. However, this is above and beyond what we pay RE/MAX.

My E & O insurance premium for real estate is much more than E & O insurance for home inspections and it has a $10,000.00 deductible! (One of the reasons I'm retiring from real estate next year).

Both industries have evolved. More high tech equipment for inspectors. Over 35 different forms/contracts to sell a home.

Neither industry gets paid vacation.

Both industries have price-shoppers.

Agents can do everything right and still not get paid (if there is no closing). And there's a lot that can go wrong before then.

I have been at the top of both industries and I assure you, home inspections is the better and the more profitable business.

Anyway, real estate agents and home inspectors need to work together and not complain about each other. We have tips on how to handle home inspection price-shoppers at http://www.nachi.org/success_tips.htm and REALTORs often help home inspectors...visit: http://www.nachi.org/idaho.htm to see how NACHI and a Board of REALTORs worked together to put thru legislation that helped both industries.

An idiot home inspector (no names please) from another association uses the tag line "one team, one fight" I think it is a good line as it applies to agents and inspectors.

Nick

PS Things have changed in the last 18 months. The entire real estate industry is moving into cyberspace. Nearly all home buyers do one thing they didn't do 3 years ago...they shop for their homes online first. This presents a golden opportunity for NACHI as our dominance on the internet will continue to assure that a NACHI inspection is in every home buyer's shopping cart (in many cases...NACHI owns the shopping cart, so its easy for us). Anyway, within 2 years, nearly all home inspections will be generated from online real estate sites. You can't fight this market trend. I am announcing a wedding in cyberspace. NACHI inspectors and REALTORs are getting married and will live profitably ever after. (Sorry Denni, I hope you're not about to vomit).


Originally Posted By: gbeaumont
This post was automatically imported from our archived forum.



Hi Dennis,


I could not agree with you’re post more I know that we are the poor relations of the real estate business, and unfortunately the realtors seem keen to keep it that way!. I think one of the problems is that as an industry we are too reliant on that source for most of our work, so we are not in the most case in control of our own destiny. Also we do not collectively put out a consistent message to our real customer as to what we do, how we do it, what it really costs to do it. It is a shame that we do not have the collective power to promote ourselves and our profession properly, and to get homeowners to realize that we are by and large highly trained professionals.


I think another of our problems is that we are members of many different professional bodies who seem to be happier squabbling amongst themselves than projecting a “common front” to our customers and the R.E. business in general. Most professional bodies have at least formed coalitions under one banner to promote for the good of their members, and to raise awareness of their qualities and abilities, in order to raise perceived values. In fact the realtors really show that trait to a great extent, but we seem incapable of following suit.


When all is said and done there are reckoned to be 20,000 Home inspectors in North America & Canada you would think that as one profession we would be able to promote ourselves better, and realize our true potential.

By the way in terms of costs I'm just starting out and have spent over $4,000 already on tools and equipment, and I still have a wish list !!


Gerry Beaumont


Originally Posted By: denni
This post was automatically imported from our archived forum.



Nick,


I wasn't trying to really compare agents and inspectors money wise, but trying to point out that inspectors do not charge enough. Gerry, points out a couple of the reasons why.

The main point of my posting was to get some thinking and awarness on this issue.

Dennis


Originally Posted By: nlewis
This post was automatically imported from our archived forum.



Denni,


I don't think it is any of my business what the price of the house is. Buyers ask me all the time what I think the house is worth.There's no way I'm answering that question. I tell 'em that is the appraisers dept.


Do you want to charge alot less for an inspection of a house because it is in a poor city area. That same house would sell for considerably more in an affluent neighborhood. Same type of house, same length of inspection, completley different inspection fee just because of location. Where's the sense in that?

BTW-realtors split the commission four ways. In N.J. there alot of agencies that take a lot lower commission than 6%, that is their competitive edge. Some sellers do try to negotiate commission with realtors.


Originally Posted By: gbeaumont
This post was automatically imported from our archived forum.



Hi Guy’s


after my last post I realised that in one of my recent conversations with a realtor friend of mine, I was discussing how I wanted to price my services, she said “hell I can get an inspection anyday for $150:00” needless to say despite the friendship I will not be asking her. But it does raise the question of whether The RE business is using our low cost to help them sell houses, i.e. “well if you’re really interested I can get you an inspection for $150:00”. Kinda makes you think ?


Oh by the way I'm not agent bashing I just don't think there any good for MY business.

Gerry


Originally Posted By: jremas
This post was automatically imported from our archived forum.



Looks like this is going to be a hot topic. I know this is public, but I will proceed anyway. The first question out of every realtors mouth to me is “how much do you charge?” Why do they want to know? If we are “lucky enough” to get a referral or be put on one of their “lists” maybe we should not worry. I am really stuck on this one. In this area, most inspectors charge under $200 and when I tell them I am $215 I get a shake of the head and a comment about how many other guys are less expensive than me. Why should they care? They should be trying to get the best inspection for their client, not the cheapest. I want to talk to the client directly, not give prices through the agent. If we don’t give the agent a price, we will never get to talk to the client. I don’t want to make this sound like agent bashing, but maybe they need to have some more training in ethics and priorities and learn not to shop around for their clients. The bottom line is that they are selective and they do shop around for the buyer, even when they are the listing agent. I do not think this is fair or just but neither is life. Is there an answer to this? Who knows. We will never be able to bring the prices up to a “standard” if we continue to have agents shopping for their clients. Just give them a list of inspectors and let us do the rest.






Jeff Remas
REMAS Inspections, Inc.
Northeastern PA & the Poconos
www.NEPAinspector.com

570-362-1598

Originally Posted By: Nick Gromicko
This post was automatically imported from our archived forum.



HOW TO DEAL WITH A DAMN PRICE-SHOPPING REAL ESTATE AGENT.


I'll use "she" to refer to the agent since most are women.

Rule 1: A price-shopping real estate agent is a blessing and an opportunity. If an agent is price-shopping, that means she doesn't have a regular inspector. Be happy she called.

Rule 2. A price-shopper is often just a shopper who doesn't know what else to ask. If an agent asks for your prices, she is most often just gathering information for her client because its her job. This is an opportunity to educate her. The main thing you want her to do when she meets with her client later, is to recommend you. Here's what you can say: "Sure, I'll be happy to give you our prices. Do you have a pen and paper?" Of course she does. At this point you should have the world's longest list of great things about you and your service. DO NOT GIVE HER PRICING UNTIL THE END! You should have a script already written. Talk slow as if you expect her to write it all down. Agents (like me) are dumb. If we think we are supposed to write something down we write it down. At the end of her price shopping she will have some numbers from company A (cheap prices). She will have some numbers from company B (cheaper prices). And she will have a list of great things about your company and high prices. What great data for her to present to her client later. She will say something like "well, it appears that this (your) company is the best but they charge more." Guess who is getting the inspection?

Rule 3. Americans believe that they get what they pay for. High prices support your contention that you are the best. Don't counter your own marketing. Keep your prices high.

Rule 4. Local agents are the source of the most profitable inspections. An agent who's office is local will have most of her inspections local. These are the most profitable agents because travel costs and time are cut. Go after these agents. Even if they price-shop.

Rule 5. You can make a lot of money giving your services away for free. Sometimes a price-shopping agent has a regular inspector she likes but is price-shopping today because she truly has a cash poor client. It happens. DO THE JOB FOR FREE. Then afterwards while she's thanking you, say something like "You can make it up to me by sending some inspections my way. Does your office maintain a list of preferred inspectors?"


Nick

PS I'm repeating myself here but again...A price shopping agent is a blessing and an opportunity! ATTACK!


Originally Posted By: denni
This post was automatically imported from our archived forum.



Jeff,


You have hit on one of the factors as to why most home inspectors are stuck charging low fees.

The following link is a letter I sent off to a number of people, regarding the control real estate agents have over potential buyers and home inspectors.

http://www.ihina.org/realestatecomplaint.pdf[/url]


Originally Posted By: denni
This post was automatically imported from our archived forum.



Here is a proposed new law I have submitted to my state rep. If you think getting business from agents is the way to go, this new law may be a bit scary for you to read.



At the time of the signing of the first written contract to purchase, real estate brokers and salesmen, or the seller if no broker or salesperson is involved in the sale, shall distribute a brochure, published by the office of consumer affairs and business regulations, educating consumers about the home inspection process. Real estate brokers and salesmen shall not directly recommend a specific home inspection company or home inspector but may, upon request, provide a complete list of licensed home inspectors prepared by the board. This prohibition shall not apply if there is a written contractual agreement or a written agency disclosure between the buyer and the real estate broker specifying that the real estate broker is acting exclusively for the buyer as a buyer's broker.

No real estate agent (broker, salesperson, or their employee) shall hinder, interfere, or prevent a licensed home inspector from performing a full and thorough inspection of any property for his/her clients. No agent shall interfere, in any manner, with any contractual relationship that a home inspector has with their client. No real estate broker or salesperson shall advise or comment to any real estate buyer regarding typical or specific home inspection fees or a range of fees.

No real estate broker, salesperson, or real estate firm shall display or distribute to any potential real estate buyer any literature that advertises any particular home inspector or home inspection company. The foregoing limitations specified above shall not apply to a real estate agent acting in a fiduciary capacity as a ?buyers? broker? on behalf of a client provided that the parties have entered into a written contract specifying that the ?buyers broker? shall act exclusively for the client and, in return, that the buyer client is obligated to pay the fees to said buyers? broker. An agent operating under a dual agency agreement shall not be considered to be a buyers? broker.

The restrictions stated above shall be given, in writing, to a potential buyer at the beginning of the first meeting with a potential buyer.


Originally Posted By: Nick Gromicko
This post was automatically imported from our archived forum.



I operated a multi-crew inspection company for many years. Most of my old employees and competitors are members of this association and frequent this message board. They can attest to (or for that matter contradict) what I am about to say.


My company charged more than any inspection company in our market ($329 for a basic inspection + add on inspections making an average price of close to $600) and we were swamped, I mean SWAMPED for years. Thanks mostly to cheap price-shopping real estate agents!

The main advantage we had was that we "converted" nearly every call into a scheduled inspection. How?

I made a huge flow chart starting with my greeting. Regardless what the caller asked, objected to, or stated... I had the perfect marketing response that slowly lead the caller toward scheduling the inspection with us. From the second I heard the voice on the other end, I was leading them toward scheduling, following a script (which I constantly improved over time). If the caller says "Hi, I need an inspection and I'm trying to get some information..." Ask them "What are you MOST concerned about?" They will tell you! It might be schedule (can you do it quick?), area (do you go there?), price(see Nick's previous post), qualifications, specific expertise (do you inspect old houses?). LISTEN to them. Sales is 99% listening. The other 1% you should already have written out and hanging in front of you before you answer your phone.

Nick

PS I will assemble a telephone flow chart for NACHI members. I don't want to post it for all to see, so I'll email it to all the members.


Originally Posted By: Robert Patterson
This post was automatically imported from our archived forum.



Guys,


See the thread "Need Work". You will see that lack of HI's sticvking together hurts us all.

Bob


Originally Posted By: jremas
This post was automatically imported from our archived forum.



Thanks to Nick’s post and Igors advice, I can see how this problem can be dealt with to not be a problem. This message board is a great resource and I appreciate it. I hate to complain, I want to work on a solution. This is a great example & we will see how this works out.






Jeff Remas
REMAS Inspections, Inc.
Northeastern PA & the Poconos
www.NEPAinspector.com

570-362-1598

Originally Posted By: Nick Gromicko
This post was automatically imported from our archived forum.



Denni started it. I love his posts!


Nick


Originally Posted By: jmyers
This post was automatically imported from our archived forum.



Dennis,


If I am understanding you correctly you are saying that our industry lacks professionalism status and real estate agents, in whole or part, are responsible for the low fees we charge.

Just one question....do you have any other ideas on getting our industry that professional status....so we can charge larger fees?

Jeff...I can verify what the Nick states is the truth. I used to work with Nick, although he does'nt like to admit it publically! ![icon_smile.gif](upload://b6iczyK1ETUUqRUc4PAkX83GF2O.gif)

Joe Myers


Originally Posted By: rkuntz
This post was automatically imported from our archived forum.



Bob


It seems to me that you want all inspectors to stick together as long as they don't hurt your business. Lets face it, while we need to stick together, we still compete with each other. New inspectors need a way to get business and to get their name out there. Sometimes that means reducing rates or giving out freebees to get a chance to prove themselves.

Case in point, I did a free listing inspection for a top realtor in my area. He loved my presentation and report, plus the house sold in one week. Now I am on his short list of inspectors that he recommends to his clients. A week later he recommended me to a fellow realtor. She loved my work. Now I have 2 realtors in this office recommending me.

I would have had to mailed about 1000+ flyers to get 1 or 2 realtors to try me. So giving away a free inspection was much cheaper for me and produced better results. Its a sound business practice.

Ron Kuntz
Pro-Spect Professional Home Inspections


Originally Posted By: Nick Gromicko
This post was automatically imported from our archived forum.



Ron:


Nice post. It helps support my Rule # 5 for "dealing with damn price-shopping real estate agents" aforementioned 2 of my posts ago. Anybody ever see those free hours from AOL CD's?

Denni:

I don't see anything wrong with your proposal as within States that have buyer-agency, a listing agent is usually prohibited from talking directly to a represented buyer anyway (much like a plaintiff's attorney wouldn't talk directly to a represented defendent). Uh-oh...I see some common ground! Any chance of you joining NACHI denni?

Nick


Originally Posted By: Robert Patterson
This post was automatically imported from our archived forum.



Ron,


Any business person does not want his/her business harmed. I'm fairly sure that if something was harming your business you would not like it. I said that we need to stick together. Not only in refusing to get involved in bidding wars, but in many other areas. Giving away an occasional free or reduced inspection is not the same as doing it on a continual basis. But if you read the whole thing, you will see that I bear no ill will towards those that need to do it in order to stay in business, as I stated "It's a business decision" and it's called free enterprise. I pretty much agree with your statement. This appears to be a veiled accusation of "getting my piece of the pie", which I have been accused of many times on these threads. I will reiterate, I'm not rich, but if I did no inspections the remainder of this year, I would still be having ribeyes, so I'm not worried about that. I am concerned, however, with increasing the professionalism and esteem of the HI. I'm in this business because I enjoy it, not because I have to. How many appraisers cut their prices? Not many IMO and they are held in some esteem (although some RE agents will disagree). I also do not solicit RE agents, but as you can see by past posts, I have nothing against those that do, this also is a business and personal decision.

Bob


Originally Posted By: jmyers
This post was automatically imported from our archived forum.



Ron,


You are sure to find out sometime real soon why you should not cut your prices or offer free inspections. We understand better than anyone how difficult it is to get anyone to use your inspection services because we were once in the same position.

What about the agent now thinking you will do free or reduced rate inspections and the rest of us inspectors are just greedy and money hungry.

Bob and I were merely pointing out that when you do this it does reflects directly on us (the other inspectors) and the industry. It takes away some of the professionalism of the industry in which we are a part of also.

Yes, if you or anyone else wants to do reduced rate or free inspections you certainly can. Neither Bob or myself was trying to say that you could'nt we are saying we can give you plenty of reasons why you should'nt.

Joe Myers


Originally Posted By: rkuntz
This post was automatically imported from our archived forum.



Bob and Joe


I agree with you for the most part. When I started in this field I was very superised to see that home inspectors where offering coupons and discounts. I agree that this makes us look less than professional and cheapens our field. I will not offer a coupon or run discounts. i have done 3 free inspections (2 for my brother and one for a home seller). All 3 of these have resulted in referrals and happy agents who now recommend my services. As a new inspector I don't see a big problem offering free inspections, but there comes a point when a company should stand on its own and stick to a set pricing standard.

Ron Kuntz
Pro-Spect