Jump to content
Sign in to follow this  
stevenj

New with a few business financial questions!

Recommended Posts

I am beginning my journey to become a licensed home inspector . Prior to jumping in, I had a few questions related to income and outgoing expenses. In my area, I have had three home inspections from three different companies. All were $300.00- $350.00 for the service.  None of which gave  an hourly rate on how they based the pricing structure. 

 How long do you spend ,on average, on your report writing? How long do you spend in an actual home of approximately 1200 sq ft?

Share this post


Link to post
Share on other sites

Home inspectors are pretty much left to their own devices in regard to how they market, charge, inspect and write.  Even in states where they're regulated, they still do whatever they'd like.  The only standard they're held to is usually just a Standard of Practice and those don't reign them in very much.

Some print the report onsite, as soon as they finish the inspection.  Others, like me, spend more time writing than inspecting.  Not that I have to but that I want the best for my clients.

Yesterday's house was just over 1,000 SF.  Took 2 hours to inspect, taking time to talk to client.  Very good house.  Shortest report I've ever done, 8 pages, sopping wet.  Average is 12.  Must have taken 4 hours.  I plan to ask client for permission to use it in a class I'll teach Monday so if you want to see it, let me know.

Edited by Marc

Share this post


Link to post
Share on other sites

 

2 hours ago, stevenj said:

I am beginning my journey to become a licensed home inspector . Prior to jumping in, I had a few questions related to income and outgoing expenses. In my area, I have had three home inspections from three different companies. All were $300.00- $350.00 for the service.  None of which gave  an hourly rate on how they based the pricing structure. 

 How long do you spend ,on average, on your report writing? How long do you spend in an actual home of approximately 1200 sq ft?

First, it's a mistake to link your pricing to your time. Home inspection isn't a trade, so don't think like a tradesman. Charge what the market will bear. The vast majority of home inspectors don't charge enough. 

Here's last week: 

Monday: 2,506 sf, circa 2015. 6 hrs on site. 1-1/2 hr report writing. $1,020. 

Tuesday: 1,954 sf, circa 1998. 3 hr, 45m on site. 2 hr report writing. $845

Wednesday:  2,018 sf, circa 2016. 5 hr on site. 45m report writing. $615

Thursday: 2,040 sf, circa 1949. 4 hr, 30m on site. 2 hr report writing. $795

Friday: 2,233 sf, circa 1975. 5 hr on site. 2 hr report writing. $795

 

 

Share this post


Link to post
Share on other sites

I appreciate the responses and advice.  I plan to pay close attention and ask many questions during my 30hr field training requirement. I am in the early stages of preparing a business plan, determining pricing structures and available markets for this service.

Do you guys focus more on marketing to realtors in the beginning? It appears that 1-2 inspections per day is the maximum possible after reading the time listed above. Do you recommend any inexpensive software for report writing?

Share this post


Link to post
Share on other sites

I'm domiciled nearby, near Lafayette.  If you don't solicit agents, you won't survive as an HI.  That goes for all of Louisiana.

I don't solicit.  I put my license on inactive status a month ago, after 16 years as HI, as a first step in leaving the profession, but changed my mind when a bunch of inspection requests came in, enough to fund another year of insurance.

The only requests I get anymore are 95% prior clients or referrals from prior clients.  After 16 years, the agents all know me and won't refer me.  Buyers love my reports, agents despise them.

The agent is conflicted in recommending the best inspector, as their stake in the buyer's purchase agreement is the commission, not the house.  Not all states are this bad, but Louisiana is.

Share this post


Link to post
Share on other sites
51 minutes ago, stevenj said:

I appreciate the responses and advice.  I plan to pay close attention and ask many questions during my 30hr field training requirement. I am in the early stages of preparing a business plan, determining pricing structures and available markets for this service.

Do you guys focus more on marketing to realtors in the beginning? It appears that 1-2 inspections per day is the maximum possible after reading the time listed above. Do you recommend any inexpensive software for report writing?

Well, you're preparing a business plan. That's more than what most people do who fall into this profession. 

I scaled back to 1 inspection per day a little over a year ago, as a concession to age and just not wanting to work as much. But I did up to 2 a day for a few decades. In the very early days I'd sometimes do 3 in a day, but those were crappy inspections. It's probably possible to do 3 or more in a day if you provide a bare-bones service. I don't recommend it, though. 

Marketing to realtors can be frustrating, particularly in the beginning because realtors have their own ideas about how an inspector should explain things. The short story is that many (not all) realtors want you to find all of the important problems with a house, but then present the problems in such a way that they don't interfere with the sale of the house. They want an inspector who can say, with a straight face: this is a problem, but it's not a problem. 

Eventually, what happens is that realtors who like the way that you do things will like you, and you will like them, and they'll refer you. The ones who don't like you won't refer you, but that's ok because you won't like them either. After enough time, this sifting process leaves you with a pleasant book of business. Just don't try to change who you are to conform with an unlikeable realtor's perception of what you should be. 

In considering software, cost should not be a consideration. With any software, the overall cost over the lifetime of the product is insignificant. I won't discuss any particular software product because I really don't like any of them. 

 

Share this post


Link to post
Share on other sites

Realtors around here want an inspector to be a tail wagging, puppy dog enthusiast who is a booster for a deal.  I tend to be a skeptic and see myself as the buyer advocate.  When I find problems I raise hell about them and encourage the buyer to lower their offer.  Other than former customers my referrals come from closing attorneys that know my work. 

Edited by Jim Baird

Share this post


Link to post
Share on other sites
15 hours ago, Jim Katen said:

Well, you're preparing a business plan. That's more than what most people do who fall into this profession. 

I scaled back to 1 inspection per day a little over a year ago, as a concession to age and just not wanting to work as much. But I did up to 2 a day for a few decades. In the very early days I'd sometimes do 3 in a day, but those were crappy inspections. It's probably possible to do 3 or more in a day if you provide a bare-bones service. I don't recommend it, though. 

Marketing to realtors can be frustrating, particularly in the beginning because realtors have their own ideas about how an inspector should explain things. The short story is that many (not all) realtors want you to find all of the important problems with a house, but then present the problems in such a way that they don't interfere with the sale of the house. They want an inspector who can say, with a straight face: this is a problem, but it's not a problem. 

Eventually, what happens is that realtors who like the way that you do things will like you, and you will like them, and they'll refer you. The ones who don't like you won't refer you, but that's ok because you won't like them either. After enough time, this sifting process leaves you with a pleasant book of business. Just don't try to change who you are to conform with an unlikeable realtor's perception of what you should be. 

In considering software, cost should not be a consideration. With any software, the overall cost over the lifetime of the product is insignificant. I won't discuss any particular software product because I really don't like any of them. 

 

That's a better way to explain it, probably the best I've seen.  I'll use it when I teach the first time home buyer's class tomorrow. I guess bitterness has been getting the best of me the last couple of years.  I couldn't reason well.

Share this post


Link to post
Share on other sites

I am a non confrontational person, That being said, I am very particular in doing things the correct way, my way or the highway kind of thing, when I know I am correct based on facts.  I can see where interfering with a sale will cause issue. Not to sugar coat the repairs needed, but leaving out my personal opinion by all means and only report the facts.

 I have fully renovated 3 homes, I'm  a hobbyist wood and metal worker. Seeing a home "to far gone" means something completely different to me. I do realize that most buyers don't think the same way. I guess I will have to learn the balance on how to approach something from both sides.

 Any advertising tips for how you started soliciting to realtors? Any bulk mail outs or search engine advertising? What worked best?

Share this post


Link to post
Share on other sites

Steven,

Glad to see your doing a business plan. The mortality rate of home inspectors is high. 90% don't make it through the first year. Of the remaining 10% half don't make it to the end of their 2nd year. I am sure that if Marc polled his past students he would see similar numbers from his classes. HI is easy to get into but hard to make a living at.  Doing inspections are actually a small percentage of your day. Accounting, business development, Social media, establishing relationships with realtors and actually talking to clients all burn up hours in the day.

Regarding marketing - go online and educate yourself on Google Adwords. I also do Facebook and Bing. Set a budget and stick to it. My best tip is to create a goodie bag with information about your company , a powerbar, fruit, bottle of water and your business cards. On the weekend I would drive around to the open houses and give our the goodie bag. If no one except the realtor was at the house I would have a 5 minute chat with them. After 5 minutes I would depart. I might followup with an email later in the week.

Flyers are trash can fodder so I don't do those and haven't for years. We do notepads and pens and hit our realtors several times a  year with trinkets that are designed to hang around for a bit.

 

//Rick

 

Share this post


Link to post
Share on other sites
 
 
1
8 hours ago, R Bunzel said:

The mortality rate of home inspectors is high. 90% don't make it through the first year. Of the remaining 10% half don't make it to the end of their 2nd year. I am sure that if Marc polled his past students he would see similar numbers from his classes. HI is easy to get into but hard to make a living at.  

I did some serious research into this way back in the '90s and found that the numbers were even worse than yours. I tracked them over a 2 year period and found that after 24 months, only 1 in 17 was still in business. That was before licensing in Oregon, when you could just fall into home inspections with little or no commitment. I suspect that the numbers are a little bit better now because it takes more time, money, and education to get started. 

8 hours ago, R Bunzel said:

Doing inspections are actually a small percentage of your day. Accounting, business development, Social media, establishing relationships with realtors and actually talking to clients all burn up hours in the day.

And that's the problem. Most people who get into this think of it as a job, not a business. 

Share this post


Link to post
Share on other sites

I would plan on spending a significant amount of time on your reports early on. Jim has a wealth of experience and his reports will undoubtedly be faster than yours as a newer inspector. If you are going to use any of the popular reporting programs, it takes time to organize photos and even longer to caption them if you go that route. It is also quite an investment to create and organize narratives and develop your template. Additionally, when you run into installations and materials that you are unfamiliar with, time will be spent researching those. I often find myself on tangents when reading installation manuals and looking into code requirements. If you want to be thorough, you cannot be fast. That's my opinion.

Share this post


Link to post
Share on other sites

Hi Steven,

If you want to enjoy what you do, and want to be at it for a long time, don't feed at the realtor trough. Most agents have only their own interest at heart; and, if your inspection doesn't fit what they want, they'll fight you every step of the way and try to remake you into what they want. With a different agent on every home, with different likes and dislikes, that can cause you a whole lot of stress that you don't need. Or, they can simply toss your card, nod and smile at your and accept whatever swag you want to try and bribe them with and still forget you. (Below, I'll tell you how to get started with agents - no, it won't be hypocritical - anything but. You'll see.).

Figure out how you're going to do your inspections; and then, from day one, do them that way no matter what. As Jim remarked above, some agents will like you and some won't, so if you are consistent and thorough and concentrate on good customer service skills with your real customers - the buyers (Most of the time). Agents that are truly concerned about their clients and who want a good inspection will remember you - the rest can go sit on a salt block for all I care.

The biggest reason folks feed at the realtor trough is that they believe that there is no other cost-effective way to market directly to the consumer. It's BS. I know because I started in '96 and quit marketing to agents 9 months into this business. If one can't succeed in this gig without marketing to agents, how did I manage to keep at it for 23 years when 80% of all new inspectors leave the business after only two years?  Flyers? Newspaper ads? Radio? Television? Yellow Pages? Constantly visiting agent offices and dropping off gifts? Spending 16 to 20 hours a week going to brokers opens? Nah, none of that -  I literally spent about $20 bucks a year on marketing - what it cost to have a thousand business cards printed up by Vistaprint, and I haven't crossed the threshold of a real estate office (except to talk to my agent about my own home buying) since about 1998. You have to think outside of the box that most home inspection trainers, real estate agents and established inspectors will try to keep you in.

Before you start officially, do some inspections on the homes of your friends - as many as you can. Find out where you are comfortable and where you need to do some more studying. Establish a comfortable rhythm and then stick to it. Decide on a report format and use each of those practice inspections to get comfortable with whatever method you are using to write your reports. When you are ready to start, go by realtor offices in your area and strike up a friendly relationship with the receptionists. Your object will be to find one that will be willing to provide you a copy of the schedule of the brokers' open houses. It took me about ten offices, where I casually left little gifts with the receptionists along with my card before I found one who was willing to provide me a bootleg copy of the weekly schedule of brokers opens. For the next few months, I dropped in on her every Monday morning, chatted with her for about five minutes and left her a little box of candy. Like clockwork, when the schedule for the brokers opens came out, she'd fax the thing over to me. (After I got up and running, I didn't need her lists anymore, so I stopped visiting and didn't have to drop off any more poggey bait for her).

On brokers open days, go by and visit as many as you can. Don't hang out and try to suckup like so many do - that is only going to give them the opportunity to interrogate you to find out what you are all about. For most, that means determining whether you are malleable and not a deal killer. Don't give them that chance. Just stop in, say hi, introduce yourself, tell 'em that you know they have their own preferred group of inspectors they like to work with, but that you are betting that, once they've worked with you just one time, they're either going to add you to that list or bump someone else. Then look at your watch, tell 'em you have to go because you've got an inspection to get to, and get the hell out of there. Most of them will act like you've got a hole in your head. Don't try to convince them, just be matter of fact and, as you're going out the door, say something like, "Seriously, it'll only take one time and I know you're going to want to have me on that list. Don't think so? I dare you to refer to one of your clients one time. You'll see."

It's like tossing chum into the water for sharks - they get curious and want to investigate. Figure that most are going to wait until you are out of sight and then they'll toss your card - but a few will keep it. How fast one or more of them actually take you up on the dare depends on how many you manage to bait. For me, I got my first bite using that technique later in the same week. She was what I call a realtorzoid - a manipulative b***h that didn't care anymore about her clients than she did about a bug on a windshield. I arrived on-site, did my thing with the client and contract and got started. All during the inspection, she kept trying to catch my eye and kept sending me body English clues that she wanted me to pick up on - I ignored all of them. As the length of the inspection went past the length she expected me to be there, she started getting fidgety and kept looking at her watch. She even tried pointing at her wristwatch while standing behind the client where I could see her while I was talking to the client. I ignored her. At the end of the inspection, I could tell by the look in her eyes that I'd never hear from her again, but I didn't care - I had gotten a job and got paid and I knew that I'd hear from the client again and the client's friends and relatives.

So, what did I do there? I did a bait and switch on her. When I stopped into her open house and dared her to refer me, I left her with the impression that I'd be her guy, and, to verify it, she took the dare and referred me the one time that I needed her to. It put a fee in my pocket, food on my table and I was able to identify a 'zoid and knew what to expect on the off chance that she'd call me again one day (See did, years later - to inspect a home for a client who was a powerful local litigation attorney. In that case she wanted thorough and careful.). You continue doing this for as long as you need to in order to stay afloat long enough to get on the list of agents that don't expect you to feed at their trough. You are mining - mining for honest non-manipulative agents that have their client's interests at heart and will most-probably refer you in the future. Are you making enemies? Sure - but you don't need them as friends. Afraid they'll run back to their offices and drop a dime on you and nobody from that office will ever want to refer anyone to you ever? So what? If they are that kind of office you don't need their BS anyway - best you learn it early. Besides, I found that even in those offices with the most manipulative agents there were always one or two who, hearing the other agent bellyache, had jotted down my name and called me later on. A few even told me about how upset the other agent had been with me and told me it was because of that they'd referred me to their clients. That's the kind of referral you want - not one that you got because you were sucking up, feeding at their trough and putting up with their b**ls**t.

Now, while you are doing the bait and switch, build the foundation for your business. Everyone today is on social media. Get yourself a FB page and learn to use it to your best advantage. If you aren't familiar with it, take a night course at your local community college on FB marketing and web placement. There are other similar platforms. I haven't bothered to use them 'cuz I don't need to. You can explore them too.

Go to Google and search "The largest employers in (list your area) and take down that list. Then, starting with the one that employs the most people, find out if they have some kind of intranet forum (similar to this one) where they talk to each other. It used to be that only really large employers like Microsoft, Google, G.E., G.M., Ford, etc. had those, but these days just about every moderately-sized employer has them. It can even be a private, company-only group on FB as well as a dedicated back room on their company website.

Figure out where you are going to price your work. Don't make the mistake of low-balling. If you start off as a bottom feeder, you'll always be a bottom feeder, and, most of the time you'll end up doing the kinds of inspections home inspectors hate. Find out who the ten top HI companies are in your area, find out what they charge, calculate the average price for an inspection and then add $50. Then, as people begin calling you to talk about scheduling an appointment get to know a little bit about them so that you'll know what kind of a customer you'll have and will be prepared on the day of the inspection to either deal with someone who hasn't the faintest idea how a home is built or how they work or you'll be dealing with someone who is good with his or her hands and once worked construction. While you are finding that out, find out where they work.

If the person works for one of those large employers that has an internal forum of some sort when it comes time to discuss pricing, give them the quote but then ask if they want to save $50. They'll never say no. Explain that, after you've completed your inspection, if they like the thoroughness of the inspection, and if, after receiving the written report, they like the completeness of the report, they'd be willing to tell their fellow employees at such-and-such-company about your little company, you'd be willing to take $50 off the price of the inspection. I've never had one say they were not willing to do that. I've had a few ask, "Well, what if I don't like the inspection or the report - will I have to pay the extra $50?" I just smiled and told them I was sure that wasn't going to be the case, but, if they did not like my work they did not have to post anything and the price reduction still went.

It starts off slow but then it speeds up. Before you know it, if you are consistent and you are diligent about having those folks tell their fellow workers about you by putting the name of your company on that internal message board where they can always come back and find it again, you'll be getting calls from folks who called you because they know they'll not only get an awesome inspection, but because they'll know that all they'll have to do is share some info about you on social media and they'll get $50 off the price of the inspection. 

In 2008 - 2009, when over 15,000 agents a month were losing their shirts and getting out of real estate, a whole lot of inspectors who feed at the trough went along with them. Without those agents, they had no idea what to do and they lost their shirts. I know one guy who had several investment properties - he had to sell one at a loss in order to keep his head above water. At the same time, because I'd concentrated on the largest employers in my area, when other homeowners began losing their homes many of those employees were in a position to purchase those bank-owned properties at fire sale prices and they called me up - sometimes to inspect two or three jobs in a row as they searched for investment properties. Instead of worrying about where the next job was coming because of the recession, I was referring jobs to other inspectors because I was booked and couldn't handle the additional work.

It's a business where you have to play the long game and you have to do it like a pro. If you start off begging for work and selling your time at lowball prices, that's where you'll always be - going hat in hand to the agents and doing POS homes. Concentrate on the solid employers with well-paid employees who have staying power and accept referrals from honest agents instead of from 'zoids and you'll still be around years from now.

ONE TEAM - ONE FIGHT!!!

Mike

  • Like 1

Share this post


Link to post
Share on other sites
On ‎5‎/‎14‎/‎2019 at 1:58 PM, CNewhouse said:

I would plan on spending a significant amount of time on your reports early on. Jim has a wealth of experience and his reports will undoubtedly be faster than yours as a newer inspector. If you are going to use any of the popular reporting programs, it takes time to organize photos and even longer to caption them if you go that route. It is also quite an investment to create and organize narratives and develop your template. Additionally, when you run into installations and materials that you are unfamiliar with, time will be spent researching those. I often find myself on tangents when reading installation manuals and looking into code requirements. If you want to be thorough, you cannot be fast. That's my opinion.

1

Good philosophy. I have a single response I use a lot - either when the client wants to know how long I'm going to be there or the agent starts getting antsy. 
"I'll be done when I feel there are no more unanswered questions in my mind about this house. I only have two speeds - slow and careful."

Share this post


Link to post
Share on other sites
7 hours ago, hausdok said:

Good philosophy. I have a single response I use a lot - either when the client wants to know how long I'm going to be there or the agent starts getting antsy. 
"I'll be done when I feel there are no more unanswered questions in my mind about this house. I only have two speeds - slow and careful."

I like the previous one - 'Slow and slower.  Which one do you want?'

Edited by Marc

Share this post


Link to post
Share on other sites

Hey Mike, nice to see a short concise response from you!  
In fact it was pretty easy to read.  Early next year Chad is having a symposium that would be a great venue for continuing this discussion. 

 

  • Like 1

Share this post


Link to post
Share on other sites
18 hours ago, Les said:

Hey Mike, nice to see a short concise response from you!  
In fact it was pretty easy to read.  Early next year Chad is having a symposium that would be a great venue for continuing this discussion. 

 

Hi Les,

You know me well enough to know that short and concise isn't my thing.

Besides, I could put a little out, respond over and over again, and, by the time the thread dies I would have said just as much as I said in one post.

ONE TEAM - ONE FIGHT!!!

Mike

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

×
×
  • Create New...