Inspection Industry

#21

I can reasonably foresee Real Estate offices requiring their agents use Inspectors from “approved” lists which could conceivably be comprised of larger (multi-inspector) firms which would give the impression of being more professional, better insured, uniformed, financially sound, etc. I’m definitely not saying the aforementioned is always true of large multi-inspector firms, nor am I implying the converse about one man shops. I am just saying from a stereotyping prospective, a Real Estate office with a reputation to protect would realistically opt for a large, established, and perhaps National or Regional firm.

However, I hope this never happens. I have no intention of becoming a large multi-inspector shop.

In addition, when/if Lenders start requiring Full Home Inspections be performed on every sale, and possibly, refinance transaction, there will be a plethora of new regulations. In fact, Fannie and Freddie would then also presumably be involved. Which would undoubtedly usher in standardized forms and reporting formats, FEES, perhaps stricter insurance requirements (including E&O as mandatory), and an entire new world of federal regulation.

Everyone say a little prayer tonight that this never happens.

#22

I need to add I was a franchise owner. I owned a Kitchen Solvers franchise in 2006/ 2007.

I was doing 600 to 800K a year with good margins and was home by 5 pm most days. I had a 6000 SF building with shop, office and small showroom and I bought the franchise thinking my sale when I exited the business would go better with a national brand.

Pros were national branded franchise.

Cons were 7% off sales plus 3% for marketing. 10% of everything I made which I considered net. Net was my retirement money plus the sale of my business.

I had to buy (at first) from approved vendors until I shopped around and found materials and services at much better pricing and as Nick said, the more I made the more I gave away. I agreed to a 2 year non compete and after some lawyer letters I left. Franchise then had a few bad years and I have no ill will nor regrets but it did cost me some real money.

#23

I’m not anti-franchise. I own a franchise myself (although not in the inspection industry) and I couldn’t be happier with it. Plenty of awesome franchises in the inspection industry. I’m just saying that within our inspection profession, the consolidation isn’t going to come from a franchisor that is willing to harm its own franchise owners (inspectors) in a futile attempt to preserve its own outdated business model. Impossible in a post-InterNACHI world.

#24

I don’t disagree about a franchise not causing consolidation, I think it would come from a warranty company or real estate firm.

My guess is Remax or a similar firm will start a home inspection company.

Amerfirst is owned by a warranty/ construction company isn’t it?

#25

Real estate companies can’t really start inspection companies for numerous reasons. The inspection industry is a tough one to consolidate nationally. One reason is that consumers simply don’t buy the service very often. When I drive across the country, Dairy Queen has a huge competitive advantage over its competitors in that I know what to expect at Dairy Queen. That advantage is meaningless in our industry.

#26

I suppose it was said years ago that RE Offices wouldn’t own or have an interest in Escrow/Title services… I think the rationale is now that as long as there is a separate door.

Would seem there would be a large firm, like BPG to partner up with an RE office… Just maybe

#27

Back to original post .
NACHI is why I have a business.
If Nick was a woman I would kiss him.

#28

Why let that stop you?

#29

Many used home commissioned sales people here use the franchise companies for many reasons. The inspector is trained by the franchise, to do the basics. He shows up wearing shorts and a t-shirt. Looks around for about an hour, reports the defects to his franchise company, then they generate the report. I have seen many of these reports. They are all alike, and only list defects they find that are “relevant to the opinion of the inspector”. It is only about a paragraph that is relevant. Then, payment is made by the home buyer, gets sent to the franchise company, which sends back “referral fees” to the REA company.

Most all franchises offer a basic service, and high fees/profits. You have to go to a small restaurant to get higher quality. Same with us.

#30

Sounds tempting, but I’m afraid of surgeons. :wink:

#31

But I wasn’t talking about Pilar to Post. Or anyone buying a franchise.

I said “and large multi inspector firms”

Not all large inspection companies are franchises.

So, again, my question was:

How does being a member of InterNACHI prevent consolidation by larger inspector firms if the large firms are also InterNACHI?

Even Buyers Protection Group, which is advertising they want to buy up inspections firms and consolidate them into a national company, claims InterNACHI membership.

#32

I agree. I love being a member.

#33

It is funny how you say that, because it is true. There is a Pillar-to-Post inspector in my area that has an add hiring an inspector. One of his requirements is for the inspector to belong to any inspector association, but does not have NACHI listed. I see that they don’t like NACHI. I thought about going the franchise way and even talked to a few. As I looked at all of what NACHI offered for a minimal yearly fee, I decided to keep my 11% and do it on my own.

#34

Because the advantages of scale that you get with being large aren’t relative advantages to InterNACHI. InterNACHI is way larger than the largest multi-inspection firm and so can provide many more www.nachi.org/benefits (competitive advantages). Yes, a company can get big by having its inspectors join InterNACHI, but it can’t unilaterally consolidate (get big and get rid of small competitors) as long as InterNACHI exists and is open to every inspector. It’s impossible.

The point isn’t can a multi-inspector have its inspectors join InterNACHI and take advantage of all InterNACHI offers. It can. And most do. And we help them grow and make more money. The point is that you and everyone else have access to those same advantages.

#35

Consolidation will never happen because the barrier to entry to become a home inspector is low.

If you already have a license and work for a multi-inspector firm, all you need to go out on your own is an insurance policy and a website. You can get both in an afternoon for $2,500.

Non-compete clauses are about as enforceable as anti-sodomy laws.

The barrier to entry to buy a fast food restaurant? $1,000,000 and great credit.

#36

Yep. Our Legal Department is creating a booklet titled “How to get out of your Pillar to Post contract.” We’re mailing it to every P2P inspector. Dan Steward goofed.

#37

You’re close, but not quite dead on. The barrier to making a hamburger is low too. I can make one right now for you. The reason consolidation will never happen in our industry isn’t because the barrier to entry is low (although I agree, it is)… it’s because the barrier to success is low, thanks to InterNACHI. If you join InterNACHI and use even 10% of what InterNACHI provides you… you are going to succeed.

#38

Ouch.

#39

I’m not a fan of P2P and their local inspectors are competitors of mine, but I do have friends (in other cities) that are P2P Inspectors. This action seems a bit devious Nick.

What do you have against them?

And how much are you paying the OP to post obvious BS? I say that because I find it hard to believe she’s that naive.

#40

It feels like ASHI all over again, doesn’t it? :stuck_out_tongue: