Home Inspection

A web log for homeowners, prospective homeowners and home sellers in the subject of Home Inspections, presented by I. G. "Zack" Lilienfeld, PE, Licensed New Jersey Home Inspector and Consulting Engineer

5/27/2008

How Much Do You Charge?

I did a lot of thinking before I decided to create this post. It seems that in this difficult real estate market, I am getting an unusual number of calls from home inspection prospects who ask me this as their lead-in question: "How much do you charge"? I wanted to address this because buyers really need to ask themselves, "Do I want value for my inspection dollar, or simply a low cost inspection?"

Certainly, everyone needs to know how much a service they are considering will cost. However, when it is Question #1 to the home inspector, this most often means that this is the most important question to a prospective home buyer. It also means that the individual is likely price shopping for the lowest cost home inspector.

In my area, most homes go for over $250,000, and the going rate for a home inspection by a qualified professional is $350 to $450 for a typical 3 bedroom home. This means that for an average $400 inspection, the buyer would be paying 0.18% of the price of their home for a professional home inspection. That's 0.18, just under 1/5 of 1%. Lets put that $400 into perspective:

  • Cost to replace one natural gas-fired water heater, $700
  • Cost of above, if adjacent HVAC unit is blocking water heater in closet, $2,300
  • Cost to replace one toilet, $450
  • Cost to upgrade antiquated and substandard electric service entrance and panel, $1,500
  • Cost to replace garbage disposal, $350
  • Cost to install new asphalt shingle roof $3,500
  • Cost to replace outdoor A/C unit $1,200
  • Cost to replace five floor joists in crawl space damaged by wood-destroying insects, $750
  • Cost of above, plus replacing 8 feet of damaged sill plate, $1,800
  • Cost to properly abandon underground oil tank left in after natural gas conversion, $1,200
  • Cost of above, if tank was found have leaked oil and requiring environmental clean-up, $10,000+

What gives me pause is that the same people who would not bat an eye when paying their auto mechanic $70 an hour to fix their car at the local gas station have a hard time paying a professional inspector about the same amount per hour to carefully look at their soon-to-be-new $250,000 home and prepare a professional report (something that takes me about six hours total, not counting drive time). And, the mechanic just fixes the car.....the home inspector ususally saves the buyer hundreds and sometimes thousands of dollars that the buyer would have otherwise had to pay out themselves upon discovering the problem after moving in.

I try to determine if my prospect is looking for value, because if they are looking for cheap, I will save myself a lot of time by giving them the name of another local home inspector who charges $180 for a 45 minute inspection. This guy would be good deal if the goal is to get through the home inspection with the most money left in your pocket. I routinely hear from my clients that they want someone who is thorough, because the "last guy" missed so much. These clients appreciate that I take three hours or more, checking every accessible switch, outlet and window, rather than just "a representative sample" as required by the NJ Statutes. Also, the time I take to explain what I found, provide guidance on which items are the most importante and/or most expensive to repair, and provide a report with photos that takes all of the guesswork out of the process. A crawlspace inspection can take up to 30 minutes alone, and I walk nearly every roof when its safe and won't cause damage. I could produce an on-the-spot report like some of my peers, however spot judgements require snap decisions.

Some issues require careful consideration of things like the home's age. I often call to a manufacturer to see if a particular installation was performed as they specify, or contacting the municipality to see about permits for renovation work that I see that appeard slip-shod or incomplete. Inspectors who speed through an inspection, no matter how experienced, risk missing defects or incorrectly calling something a defect that is not really a defect. These inspection mistakes jeopardize real estate deals, especially in this market with buyers who can afford to be fickle, and are often skittish about whether they are getting a "deal" or not. And sellers who balk at fixing things that are clearly not defects.

Of one thing I am certain: My experience over the last four years is that the likelyhood of me identifying defects with a repair cost less than my inspection fee is about one in 100. On average, I find about $1,500 worth of material defects that were not known to the sellers (or the buyers for that matter). About 10% of the time, I find defects that would cost in excess of $6,000 to fix. This does not mean these deals failed; most sellers will correct defects relating to safety, because they either want to "do right", don't want to lose the deal, and realize they can't ignore what they now know when the next buyer comes along (its called disclosure).

I am not averse to turn down business to prospective clients who are looking for the lowest cost inspector. As an experienced professional, I know the value of my work. I do not claim to be the "best"; because my experience is that people who believe they have no equal are often delusional. However, I know that at the end of the day, I believe that people deserve their money's worth from the home they are buying, and from their inspection service.

8 Comments:

Anonymous ShantyMinister said...

Zack, interesting blog.. am an architect, and it amazes me people put more time and research into buying a tv than a house or inspecting a property. I have a FLickr Photo group on Home COnstruction/Inspection nightmares: Existing conditions that are not good and/or dangerous. Please consider posting PHOTOS to the group.
Membership in FLickr is free to all and YAhoo/ SBC/AT&T DSL subscribers.
http://www.flickr.com/groups/homeinspectionnightmares

Thanks,
shantyworld.com

8:47 PM  
Anonymous Anonymous said...

This says it all: http://www.nachi.org/picasso.htm

6:21 PM  
Anonymous Open Door said...

This comment has been removed by a blog administrator.

3:17 AM  
Blogger Robert L said...

I am often amazed that a potential client will choose another home inspector because they are $25.00 cheaper, but they also have no general constuction experience, been inspecting homes for less than 2 years and have numerous complaints posted about their services.

There is one inspector in the Houston, Texas area that charges $200.00 per inspection, performs 3-4 inspections a day and will decline to inspect a home if he cannot complete the inspection in 1 hour.

Amazing - it makes me wonder.

Robert

http://www.atexinspects.com

12:45 AM  
Anonymous New York Mold Inspection said...

This comment has been removed by a blog administrator.

1:12 PM  
Anonymous Anonymous said...

You're only there for about 2-3 hours, the home could have been there 50-90 yrs. Don't over sell yourselves. Home inspectors miss as much (in repair costs) or more as what they find. When the market is weak, prices must adjust to satisfy what people are willing to pay or you (inspectors) don't get to take your car to a mechanic and pay $70/hr to replace a thermostat.

8:38 AM  
Anonymous Jeff Barnwell said...

Informative post. To the anonymous posting - yes an inspector is on site for only 2-3 hours but I've yet to have an inspection that didnt turn up useful information. One of my buyers was under contract in Buford last month on a home with LP siding. At first glance it appeared to be in good shape but the home inspection showed the first 6' had been replaced with the top portion ready to fall off. Seller paid to finish up what he tried to hide. www.JeffBarnwell.net

10:35 PM  
Anonymous Brampton Real Estate said...

I've always recommended only reputable and well trained inspectors for all my clients. Buyers who are trying to save a few hundred bucks on an unqualified inspector don't realize that it could cost them thousands down the road.

I love this article - thanks for posting some examples of costs as well. It's something I will definitely pass onto my buyers to read.

3:19 PM  

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