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The cost of a home inspection

By
Home Inspector with Trace Inspections, LLC TN #17

I have been involved in the real estate business since 1991, first as a broker and then in 1995 I opened my home inspection business.  Pricing was very simple when I owned my real estate firm, 6% was the common fee for listing with 3% going to the selling and the listing company.  It's not so simple with home inspections!

Our pricing is all over the board.  I just can't for the life of me understand why some folks want to give their service away (I know it is the same in real estate).  In  my area you can get an inspection on the same price, style and size home anywhere from $195 to $325.  With an average in the $300 area.  Very few inspectors know their cost of doing business and this is also one of the reasons that we have such a high failure rate in our profession.  Sad but true!

What can one do!

I have been tossing the idea of changing my fee structure.  Right now it is based on the square footage of the home, and how much time I think it will take me to complete the job.   Real estate agents charge a percent of the sale for their commission, so they automatically receive a pay fee increase when the housing prices rise.  While the inspectors who have a set fee are kind of stuck.  

What do Y'all think about a % pricing for home inspections, based on the sale price of the home.  Say something like 1/10th of 1% for homes over $400,000.  So with this type pricing this house would cost $400 for a home inspection.  On homes under that pricing I guess you could have a base price with a % or just go by square footage.

Comments, thoughts, etc!!!

Comments (17)

Theresa Cavanaugh
Global Realty Marketing - Appleton, WI

Interesting concept...but your work doesn't change per cost of home.  What I mean is you could have a home with 2700 sq feet with an asking price of $90,000 (Due to the neighborhood and condition of the house).  Then on the flip side you could have a 2700 sq ft house with an asking price of $350,000 (due to being brand new and a different neighborhood).  In both scenarios you have the same square footage, but you may have to do quite a bit more testing on the 1st home over the second.

From my perspective...I have recently watched two inspectors (they both charged my clients $300), the first one not only seemed extremely knowledgeable, but carried a laptop and printer.  When he was done, everything was printed and easily read.  The second used the handwriting and paper method (nothing wrong with this method, IF everyone can read your writing) he gave more stories than explanations and we had to stand around and wait for him to fill out all the pages.  His inspection also lasted 1 1/2 hours longer than the first inspectors.

I think that your inspections should be priced on what it takes you to do business plus a profit for you to live on.  What that would be only you would know.  I do like the flat rate pricing, it makes it easier for me to say to my clients/customers "here are three inspectors that I have used and here is their pricing.  Please call all three and see which of them meets your criteria and have the availability to meet your needs".

Just my humble opinion.

Mar 16, 2007 08:12 AM
Ethan Pruett
BrioRealty - Olympia, WA
I definetley think you should be compensated fairly however a percent structure would never work. Also as pointed out above you probably do more work on lower price homes.
Mar 16, 2007 08:14 AM
Barry Adair
ADAIR INSPECTION - Dallas, TX
TREC#4563

I'm in the same profession and here's my spin.

No two houses or properties are exactly the same therefore all of my Professional Inspections are site specific and individualized prices are based upon:

  • Age of Property 
  • Foundation Type (Slab, Pier and Beam, Other)
  • Size (Square Footage)
  • Number of Structures
  • Numbers of Systems Inspected (Multiple WH or HVAC...)
  • Location
  • Optional Amenities (Gas, Pool, Spa, Irrigation, OSSF, Security...)
  • Selling Price
  • EIFS or Stucco Wall Cladding

Considering the entry door of the average home is over $500.00 in materials and labor why would I want to stick a key into it, open the door, take on the total liability for the house and all of the contents within for a few hundred dollars?

Once Inspectors can get this point across to their peers and the Realtors the public at large will follow!

Agents or purchasers who price shop for the cheapest inspectors that take the least time do a great disservice to their clients and themselves, in the long run.

I can usually find 10 times my fees, if not more, in items needing repair and this is based on brand new construction.

I'll ask one simple question to everyone. If you or a family member required surgery would you want the cheapest guy in town?

I am a house surgeon and examine and dissect thousands of components to make sure they are installed and operate as intended. I do this to protect, educate, and arm consumers with the current facts about their potential investment.

They as well as you deserve nothing less and should value these services accordingly.

Regards,  

BARRY ADAIR Owner-Professional Inspector-Moisture Analyst
TREC # 4563
EDI: EIFS-MA TX # 39
Level I Infrared Thermography
NACHI # 04080595
NTTAREI: Advanced Inspector
PaRR # 14195
TAREI: Advanced Inspector
TDI # 1130204761
Lake Cities Association of REALTORS®  

ADAIR INSPECTION
office: (972) 487-5634
mobile:(214) 328-8331
e-mail: adairinspex@adairinspection.com
website: http://www.adairinspection.com/  

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life is the random lottery of events followed by numerous narrow escapes

Mar 17, 2007 02:57 AM
Jim Luttrall
Mr. Inspector.net - Allen, TX

While the percentage of price does have some merit, it does have some limitation as described in an earlier post.  Time is another, but most folks want a solid price up front.  I have settled on the Price per square foot and charging extra for any additional features such as pools.  Sometimes I come out better than expected on a clean home with few defects and sometimes I feel like I'm working for minimum wage due to problems and the condition of the home.  But it all averages out in the long run and I favor simplicity and plain spoken up front pricing.

Jim

Mar 17, 2007 10:09 AM
John McKenna
InfraredClass.com - Dallas, TX

How ever you figure it... Home Inspectors get the lowest pay ratio and the biggest liability of anyone in the Real Estate industry food chain.  They are liable for everything they look at!!!  Oh my... we need a pay raise.

By John McKenna

AMERICAN HOME INSPECTION

Mar 17, 2007 12:01 PM
Scott Patterson, ACI
Trace Inspections, LLC - Spring Hill, TN
Home Inspector, Middle TN

The price for a smaller home could be compensated by using a base price.  I really think that this could work and possible catch on just like the 6% real estate commission did across the country.

As for the smaller homes or lower priced homes, this would fall under a base price.  The base price would be whatever the inspector feels is sufficient for the size and price home.

1/10 of 1%  I like that!  Keep in mind that it is very seldom that I inspect homes under $300,000 with most in the $500k to $800k range.

Mar 17, 2007 12:12 PM
Todd Clark - Retired
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

As a Realtor, I like knowing by just looking at the square footage of a home and if it has a crawl space taht I can tell my client the price of the inspection of 3 different inspectors without having to call the inspector. Doing it one way for more expensive homes would make it a little confusing.

Todd

Mar 19, 2007 06:47 PM
No name No name
Whitby, ON

Barry.

I like the surgeon analogy.  Plan on using that the next time someone asks me my price.

After reading the 21 things a Home Inspector should know, Yes we are under paid...  A percentage would be nice, but I can't see it happening.

 

Bernard Loken, CAPM

Whitby, Ontario

Mar 21, 2007 02:55 PM
Steven Turetsky
Comprehensive Building Inspections & Consultants - Staten Island, NY
Building Moisture Analyst

I prefer base price dependant upon square footage. Of course with various add ons... age, type of construction, EIFS, multiple kitchens, bath, mechanicals, pools, etc, etc.

I do believe that HI's should get paid more. When you consider the time spent inspecting, writing reports, dedicated schooling, etc. and compare it to other trades or owners of companies, time dedicated and thier "pay", it doesn't seem right.

In my life, regardless of what I have done, I have never strived to be the cheapest. I have always strived to be the best.

Mar 21, 2007 03:14 PM
Bob Elliott
Elliott Home Inspection - Chicago, IL
Chicago Property Inspection
Personally I feel you take the good with the bad and keep your rate structure based on sq footage allowing variation for anything that would cause extra time.As far as someone under pricing goes,these guys will not last long.One of the reasons I got in this was a cheap inspection with a discount coupon guy who came in with his laptop did the report on site using canned comments that did not even describe the home he was looking at.What a joke.Then and there my decision was made.
Mar 24, 2007 05:12 AM
Mike (Inspector Mike) Parks
Inspector Mike - Circleville, OH
Inspector Mike

Lets just do 1%.

If we are the "deal killers" maybe for 1% we could be the "deal makers". LOL.

And for 2% we could offer a warranty for one year.

Seriously the only way to make more money is to have the crediblity that other professions have. Licensing US wide.

We all know as inspectors that we are held to a high standard without the financial rewards for that liablity.

Licensing,licensing,licensing.

Mar 24, 2007 01:03 PM
John Cilladi
Keller Williams Real Estate - Exton, PA
REALTOR, EcoBroker, e-PRO

One of the inspection agencies that I recommend always asks the number of bedrooms and the number of baths. I always assumed that their price structure was based on these features.

But, that being said, the agency that I am most likely to recommend costs more. I like them because they are very efficient and thorough. When they show up they are always well prepared. Before they leave they have provide both my client and me with a summary of the inspection, my client receives a full inspection report, and a CD is prepared with about 200 pictures AND a video of the roof and other hard-to-access areas. What great service; what great value! Later that same day I receive a full report via email along with the termite and radon reports. 

Thus I conclude: Your reputation will win the day. Charge a little more, but do a great job and you will have my business. 

Mar 24, 2007 01:13 PM
Craig Smith
Re/Max Achievers - Frederick, MD
Frederick MD Real Estate

I believe pricing on sq. footage is the fairest way. Also whether the home is a condo, townhome, single family should be taken into consideration.

Mar 24, 2007 02:07 PM
Scott Patterson, ACI
Trace Inspections, LLC - Spring Hill, TN
Home Inspector, Middle TN

All good comments. 

I'm just trying figure a way that home inspectors can be compensated in the markets that have rising real estate values.  Inspectors have a hard enough time raising their rates $10 to $25 and this does not keep up with the rising cost of doing business.  When I entered the profession back in 1995, the average fee for an inspection on a 2000 sf home was around $300 to $325.  It is about the same today.   The home selling prices have not remained the same, they have gone up in almost every part of the country.  Homes that sold for $75,000 twelve years ago are selling for $300,000 now in many areas.

Real Estate agents receive a pay raise every time the value of the housing market goes up, I'm just trying to think of a method that the home inspection profession can participate in this as well.  It's a sticky wicket as my grandfather use to say.

Mar 25, 2007 07:17 AM
Anonymous
terry knudsdn
just be happy with what you do,or just quit  !! you could allways be a doctor or realstate, try to find something  that make you happy ,that mean you dont work at all ,money not  ever thing .!!life is short dont stress, be happy with what you make!!!!
Mar 26, 2007 01:53 PM
#15
Jacques Mountain
Dream Home Inspections/203K Consultant - Fayetteville, GA
Inspector/203K Consultant

I still believe that the Square foot method works the best!

Sep 05, 2008 12:05 AM
Jacques Mountain
Dream Home Inspections/203K Consultant - Fayetteville, GA
Inspector/203K Consultant

Scott, on the warranty inspection is this a complete inspection with report? or a modified inspection?

Sep 08, 2008 12:49 AM