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Ontario Soon to Require Mandatory Energy Audits


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Stuart Laidlaw, Staff Reporter - TheStar.com

Convincing people to leave high-paying jobs in the construction industry to instead wander through older homes looking for possible retrofits was a tough sell during the boom years.

Not any more.

In fact, home energy auditors bracing for an eight-fold increase in business in coming years, thanks to new rules requiring that all houses being sold get such an inspection, are recruiting some of those hurt by the economic downturn.

"I am very excited about this. We have a real opportunity to create some green-collar jobs, if I can call them that," says Vladan Veljovic, president of Greensaver, one of Ontario's oldest energy auditing firms.

To read more at The Star.com, click here.

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I think the idea has merit, but they sure have left a bunch of holes in it. The auditor will help with the grants and tax incentives? For who, the buyer or the seller? How is the buyer going to benefit from the seller getting an audit and/or incentives? How much is that going to slow down an already down market? Having done the paperwork required for CDBG projects, I would charge at least as much for the administration work as I would for the inspection, there is no way I would lug all that gear around for $150 and even less of a chance that I'd mess with all that red tape for that kind of coin. Those are two very different skillsets and the auditor is only getting compensated for one of them at those rates. Then there is the conlfict of interest problems associated with auditors/inspectors recommending repairs or upgrades and then assisting with the funding. Kinda sounds like the sleazy broker games that got us into this mess in the first place. The only thing they got right is that when all the experienced construction folk start doing audits, the quality of construction will go down, the number of defects will rise, there will be more issues for the inspectors to find, and the system will be self perpetuating.

It would make a lot more sense to require a home inspection for government backed loans, and then expand on that after the bugs have been worked out and there are enough sales to support the inspectors out there. Add meaningful tax incentives for the buyers to make energy efficient improvements, and you might actually improve the market conditions and reduce energy consumption.

Tom

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there is no way I would lug all that gear around for $150 and even less of a chance that I'd mess with all that red tape for that kind of coin. Those are two very different skillsets and the auditor is only getting compensated for one of them at those rates. Then there is the conlfict of interest problems associated with auditors/inspectors recommending repairs or upgrades and then assisting with the funding.

The energy guys get $300, the gov't refunds $150 back to the client. The conflict of interest problems are real, as we learned last week with the UFFI issue here.

-Brad

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The energy guys get $300, the gov't refunds $150 back to the client. The conflict of interest problems are real, as we learned last week with the UFFI issue here.

-Brad

I understand the refund. My point was that the funding assistance is at least as involved as the audit/inspection. The article is setting up an expectation that the auditor is going to do all this work for a very low fee. The consumer expectations are not being set by the auditor, and as professionals we see the reality that money is going to be diverted from the funding sources. The whole thing is broken.

The consumer protection that is forced on the inspection industry is delibertely trampled on in the auditing industry. If I am prevented from working on a property I inspect, how might I perform an audit and sell the upgrades without violating my COE?

Tom

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If I am prevented from working on a property I inspect, how might I perform an audit and sell the upgrades without violating my COE?

Tom

Depends on how you are regulated and whether the folks that have regulated you consider an energy audit "working" on a home that you've inspected. We've put in place rules here that will prevent someone from working on a home for a year after they inspect it but these rules won't prohibit someone from performing additional "inspections" on a home. The audit is essentially an energy "inspection," if the rules allow an inspector to do an audit but prohibit the inspector from doing the work that's recommended under the audit there really isn't any conflict.

Our rules here prevent an inspector from doing anything other than inspections for at least a year after the inspection. However, a fellow could do an audit and it would not be a conflict of interest if the homeowner ignored those recommendations for months and then decided a year later to hire the same guy to do the work necessary to tighten up the house.

Under this new law, the audits are done by sellers, not buyers, so it should create an additional revenue stream for home inspectors that want to get into the business of audits. I think that if lots of home inspection companies were to begin doing audits as an extra service that this might be a way to encourage more seller's inspections.

However, there's also a downside to that: I also think that making the audit mandatory and seeing large numbers of home inspectors doing them has the potential to decimate the ranks of experienced/qualified inspectors, because it will eventually lead to the market being led by low ballers that will roll the audit into a home inspection and will charge the same price as an ordinary home inspection for the combined service as a way to get a leg up on their competition.

Once audits become mainstream and the reel tours start telling their clients that a home inspection is going to include an energy audit, folks aren't going to want to pay extra for an audit and that means that sensible businessmen aren't really going to want to get involved with them because it means they have to do more work for less profit in order to compete. It's great for the consumer but in this business, where profit margins aren't really that high anyway, it could be devastating.

The audit is a very specialized inspection and shouldn't be rolled into the normal inspection without adding substantial extra cost to the inspection. I think we all recognize that but it's going to be next-to-impossible to prevent low-ballers from coming in and doing a twofer for the same price as a sensible businessperson would charge for just a home inspection.

The government subsidy is fine - it's certain to encourage some folks to get energy audits that normally wouldn't have considered it, but making it mandatory? Are there going to be specific rules that state what the minimum amount of work and reporting is required? If so, will that amount of on-site work and admin work make it impossible for even a low-baller to survive by doing a twofer at a regular home inspection price or is this going to breed more hurried inspections and sloppiness?

Hell, we've had a situation here since 1991 when the pest guys pushed through a law that made all home inspectors pest inspectors by default. People here are now so used to getting a pest inspection thrown in with their regular inspection, for a price that's equivalent to what folks pay for a regular inspection in other states, that they bristle at the idea that inspectors think consumer should pay extra for a pest inspection. It's the reel tours that perpetuate it mostly - what a wonderful world it would be if reel tours could be prohibited from giving any advice at all about home inspectors other than to recommend their clients hire an inspector.

A new law is about to kick in here that will separate home inspections from pest inspections once again. We could finally get the two services separated once again; but we won't, because many inspectors here are going to perpetuate this system by keeping their pest licenses and continuing to charge a single fee for the combined inspection that is still only going to be equivalent to what inspectors are getting in other states for the home inspection alone. They'll market themselves that way to the reel tours and the reel tours will turn around and continue to tell their clients that they should expect to pay about $300 for an inspection and that it will include a pest inspection.

That's going to keep overall fees here very low compared to where they should be. So, now we have the green movement talking about energy audits as a part of the home inspection and I can see where this could easily become one more situation where before too long the low ballers and the reel tours will have folks here convinced that they can expect even more services without paying additional fees.

I think it's a question of education, and commitment. We need to begin educating all inspectors about how low-balling drives the overall price of their services into the toilet, even while the price of other services goes up, and how charging extra for extra services will result in a market where they are making more money for doing less work. Then we need inspectors to commit to the idea of doing more thorough inspections that will ultimately help to reduce their liability and make it easier to raise their prices in the future when it's necessary.

ONE TEAM - ONE FIGHT!!!

Mike

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In NJ, there's a bill that will "require licensed home inspectors to report energy analysis for each home inspected for buyers in contemplation of purchase". http://www.njleg.state.nj.us/2008/Bills ... 630_I1.HTM

I suggest reasonable improvements for every building inspected without an analysis or offering a "rating".

What happens if a home has a perceived negative analysis? Will they make demands for the seller to correct? Can they bail out of the purchase? Will historic buildings be stigmatized?

I'm confident the big money Realtor boards will help this bill die.

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