I do quite a bit of work in the New York City suburbs and sometimes I’m doing inspections on 5,000 sq. ft. plus homes with sales price of a 2-6 million dollars. What should I be charging for these types of inspections? Would really love to hear from inspectors dealing with high end properties. I don’t want to undercharge and give the impression that my services are “cheap” and therefore inferior. It also feel “wrong” to be adding an extra $1,000 to my fee just because the home price is in the millions. But charing someone $700 for an inspection when they are spending 3 million seems “wrong” as well. I would love to hear how you prices these properties, thanks.
What do you charge now for a 5000 Sq. Ft. home that is not a multi-million dollar property?
A brand new 2,000 house is going to sell for more than than a 100 year old 2,000 sq ft house. Which one is more than likely going to take longer to inspect and report? Why would I charge more for the easier inspection?
I will start @ $1,000 dollar starting point for a 2.5 story home but… it depends on the home, type of construction, systems, amenities, bathrooms, bedrooms, pool, tennis court…etc
I wrote a spreadsheet that breaks down my services and allows me to adjust the fees based on a specific building.
To start with, what are your business expenses (not for the inspection, the cost to keep your doors open)? What is your expected profit margin? What is the worse and best case scenario to complete? Age of construction etc.
Go to the house, use google maps satellite. What and how are to going to inspect the building?
You should be able to break everything down to an hourly requirement. What have you determined to be your hourly rates by doing the above? This may differ from item to item. Add it all up…
Much of what it cost you to do a 950sf lake house is the same if it’s 8,000sf. Like getting there. Accounting, billing, contracts, communicating with your client/agents etc.
It only take me an extra hour to hour and a half to inspect a 5k/sf house over a 1,500sf house. It biggest change is the condition of the building. How much report writing does it take to write up a dump (or new construction) over a well kept building?
You will spend a lot more time writing reports on the big ones because these clients always want to know much more than a first time home buyer, however most inspectors don’t even consider report preparation as a billable item. How many posts do you see here about “How can I do the report faster” (on site and be gone)? The big money on big houses comes from writing reports. Yup! I spend 20% more time inspecting and 350% more time in writing the report.
Meet the clients expectations and you will keep getting referrals. Charging $1,000’s extra and presenting a crap canned narrative report talking about all the contractors that must follow you to “Investigate Further” will not make an impression.
Along with the report time, I consider the time I spend on site with the client after the inspection. Some executive clients may not have time to come and relies on the report, some may spend two hours discussing things that may not ever make it into the report. The ones than can’t come often that 2hrs on the phone.
I have been medically retired for 2.5 yrs from doing home inspections but I get about two calls a week from clients I worked for 10yrs ago, or their referrals. The job you do, the time you invest in your inspections is the marketing that pays off years down the road. I also get a lot of calls from past big clients just to get an opinion about something they are dealing with. My Inspection ends with “You can call me any time about any property for the rest of my life about any question you have, Free of charge”.
What a great response. Very insightful.
We upcharge significantly for bigger homes.
A 5000 square foot home usually isn’t just double the work of a 2500 square foot home, it’s often exponentially more complex.
Depending on the age and type of build:
You’re now talking 4-6 HVAC systems.
Either 2 or 3 water heaters, or one giant commercial water heater.
Electrical is going to have a giant main panel, and perhaps 4-8 sub-panels.
There might be 1 giant attic the size of the house, or 3 or 4 smaller attics.
Basement? Crawlspace? Pool?
Lots of variables.
And then there are opportunity costs.
how many regular houses can be done in the same time frame and what are you going to not be able to do in the same time?
$700-$1000 fee sounds like it’s nice for one house, because it sounds like so much more than $400 or $500.
But if you can do two homes or maybe three homes (assuming you’re still working on the report the next morning), plus (insert whatever anniccarly services you offer) on those two-3 homes, how much is that?
The biggest mistake I used to make and most other inspectors still make is not taking that into account. Too many times I did a big house, and then realized afterwards, I would have made much more if I had done 2 average homes, and assumed one had a pool and one asked for a sewer scope, then I did on this one big house.
Plus there is potential added liability if it’s a high end luxury home where the faucets cost more than an average inspection fee.
Don’t be afraid to upcharge. Most of the time, they’ll pay it.
A little off topic, but somewhat similar in quote structuring.
I had a potential client call me yesterday during an inspection. It was a referral from the broker of the buyer’s agent on the house I was inspecting at the time. The agent was there and in the same room as I took the call. The potential client asked about doing an inspection on a property located 1.5 hours from where I’m located. Told her that I would take a look at the listing and call her back with quote based on my schedule and property location.
Turns out the property was a 22 acre farm with a 3000 sq. ft. home with a large horse barn with tack rooms, bath & shower etc… listed for $750k plus. Just because the client’s agent was the broker and her other agent has referred me a many times, I thought I would give the potential client a “break” and quoted $550 for both the home and barn and could fit in this Saturday. I was selling it a little short, but also wanting to keep the referrals from this broker.
Potential client called this AM and I gave her my quote. Knowing that I was coming in from over an hour and half away, she asked how much of my quote included “drive time”. I told her over 3.5 hours round trip drive time was $100 and included in my quote.
She said she would get right back to me regarding scheduling. 6 hours later I received a text saying she found someone closer that could get to “ASAP”…
Moral of the story, don’t always assume the clients of higher priced properties will not shop for the lowest priced inspector. Price what you feel and stick to it.
Yes, but his question wasn’t for bigger homes, it was for high end or more expensive homes.
The same answer applies.
Don’t be afraid to upcharge for a job that is more work and/or liability.
Ask the agents involved if they give a break on their commission when they’re selling $2,000,000 house. Ask them how much do they charge. Why do you believe they deserve to get more than you? What did they do to deserve to get paid $40,000 commission check from 1 house? How many crawl spaces do you have to crawl and roofs to climb to make $40,000? Home Inspectors need to grow a pair and start charging like it’s 2021 and not 1985!
Well I think it’s a bit different to advise someone to charge more for a larger house (which is, of course, the proper way to do it) instead of advising to charge more for imported Italian marble instead of vinyl floors.
“Big” houses and “high end” houses are not the same beast.
Maybe in California, but in my area, it usually means 2 extra bedrooms and bathrooms, and a finished basement/mancave!
As Ian and others have said, charge the amount that reflects the amount of work involved. I find fault in your logic that more expensive premium homes should cost more than a similar sized average home.
I had done a few jobs for an investor for rental properties he bought and when he was purchasing a new home for himself it was a little over 11,000 sqft, but less than $1.5 million. Smaller houses in this neighborhood were selling for well over $2 million. That’s a very low cost per sqft so I checked out the listing online and concluded that there was probably a lot of deferred maintenance and/or other issues and this would be a long inspection. I quoted a price and despite knowing I’m the best, he found another inspector who quoted much less and he hired the other inspector. (For $400 less). He wanted me to match the price. I stood firm.
I’m fine with that and I feel sorry for the other inspector.
I would charge less to inspect a 5000 ft² modern house than an old neglected 1000 ft² shack in town. It is less work, and you are less likely to encounter dangerous conditions that you might associate with such neighborhoods.
Thank you all for your input. ryoung7, thank you for sharing your exact starting price. Hearing the $1,000 starting point really gave me the confidence to bump up my pricing on these higher end properties.
I would like to share my experience and thoughts on the topic for anyone else interested in this topic.
My regular pricing starts at either $500 or $600 (depending on the neighborhood) for a 2,000 sq. ft. home. from there I charge an extra $75 for every 500 sq.ft. Separate structures are extra. This all works well until I get into very expensive neighborhoods where the square footage stays the same, but the home prices are triple when compared to same size homes just 20 miles away. In the past I would blindly price homes solely on their square footage or based on how long the inspection would take me. I would in fact make it a point not to adjust my fees for the homes selling price. I now know I left a lot of money on the table for no good reason. Based on my old model I would charge around $1,000 for a $700,000 5,000 sq ft. home and the same $1,000 for a 5 million dollar home. Assuming that it takes me the same amount of time to inspect both homes, I figured this was the right thing to do. I now believe this is the wrong approach. As so much in this world is perception, what something costs is often a very big factor in the perceived value of that item or service. A $60 dollar steak and a $300 dollar steak are probably of equal quality, but most everyone will think the $300 dollar steak is much much better. But not charging a hefty premium for the million dollar properties, you are sending a message to the “rich” buyer that your services aren’t the very best. In most cases you are literally doing the person a favor by charging them a very high price as they now feel that they got the very best inspection money could buy (and they can buy it).
Another point to consider is this. How much someone gets paid per hour of their work depends a lot on how much money is floating around that activity. An investment banker makes millions simply because there are billions of dollars in the industry. A home inspector makes $500 for 2 hours of work vs. a handyman making $120 for the same two hours of work simply because a home inspector is involved in a transactions involving hundreds of thousands of dollars. There’s just more money involved. Based on this logic, there is way more money involved on a 3 million dollar home sale then a 40k mobile home sale. But we can, and should charge 3 or 4 times more per hour on the mansion, simply because the money is there. I don’t see anything wrong with that.
Weather or not a customer is the type to shop around and try to save an extra 10% of the price doesn’t really depend on type of property they are buying. It just comes down to personality. You can loose out a $400 inspection the same way as a $2,000 inspection.
In summary I think my pricing structure will be adjusted as follows. My starting price point for luxury homes will now start at $1,000 and go up by $100 for every 500 sq.ft. over 3,000 sq.ft. I think this will get me to a more reasonable price point while still maintaining some kind of formula where I don’t have to pull the numbers out of a hat every time.
Can I ask what your quote. It’s really helpful to have solid figures to compare against.
In case you didn’t know…
IMO the sale price of a house is irrelevant.
Our pricing is based upon square footage, age, and distance.
Listing or sale price is simply what the market will pay for said house.
You could have two identical houses in different zip codes, and one could cost twice as much (for a number of reasons which aren’t worth getting into), why would you charge more based upon sale price when everything else is identical?
That has to be Left Coast building practices and why their homes are so ridiculously expensive. My average for homes is 4600 Sq. Ft. enclosed with plenty at and above 5K Sq. Ft. enclosed. I have never seen 4 - 8 subpanels on a 5K Sq. Ft. home nor 4 - 6 HVAC units. Obviously most here have no basements but they’re storage places anyhow and typically not configured as habitable spaces unless remodeled. Even then I can’t see them requiring 4 - 8 subpanels.