Working RE Home Inspector Edition/Fall 2012

Working RE Home Inspector Edition

Fall 2012

Examining Agent-Inspector Relationship Home Inspection: Staying Safe E&O InsurancePrices Drop Time to Shop MarketingTape Measures Measure Up Manufactured HomesOne that Almost Got Away In Search of Perfect Home Inspection Putting On Salesman Hat

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Working RE 6760 University Ave, #250 San Diego, CA 92115

Examining Agent-Inspector Relationship- 4

By Isaac Peck, Editor

Staying Safe Out There- 7

By Peter Hawley

E&O Insurance: Prices Drop, Time to Shop- 15

By David Brauner, Editor

Marketing: Tape Measures Measure Up- 21

By Isaac Peck, Associate Editor

Manufactured Homes: One that Almost Got Away- 22

By Russell Kirk

In Search of Perfect Home Inspection- 25

By Rick Bunzel, CRI, ACI

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David Brauner - dbrauner@workingre.com Editor Isaac Peck - isaac@orep.org Note: These stories first appeared in Working RE Email edition, which publishes twice a month. Click to OPT IN.

Working RE is published by OREP.orgSpecializing in low-cost E&O insurance for Inspectors Working RE’ Home Inspector’s E dition is published quarterly. The ads and specific mention of an y proprietary product contained within a re a serv ice to reade rs a nd do not impl y endorsement b y Working RE . N o claims, repres entations, or guarantees a re made or implied by their publication. The contents of this publication may not be reproduced either whole or in part without written consent.

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Working RE Home Inspector Edition/Fall 2012

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Examining Agent-Inspector Relationship

By Isaac Peck, Editor

The home inspector’s relationship with the real estate agent is a topic often discussed among home inspectors and agents. Some home inspectors tout strong relationships with real estate associations and agents as the best way to grow an inspection business. Others say the reliance of the home inspector on agent‐referrals is a key problem when it comes to keeping the home inspection profession honest, ethical, and professional.

Some home inspectors complain that on numerous occasions they’ve had realtors combatively ask them if they are “deal killers,” sometimes right in front of the buyer!

The fact is, a large percentage of home inspectors rely on agent referrals to bring in work and keep them in business. While this is not necessarily a negative, many inspectors argue that there is an inevitable conflict of interest inherent in such a relationship, as ambitious and unethical real estate agents select home inspectors who aren’t thorough and don’t find problems. Some home inspectors complain that on numerous occasions they’ve had realtors combatively ask them if they are “deal killers,” sometimes right in front of the buyer!

Those who follow the relationship between real estate appraisers and mortgage brokers, agents, and lenders may see some similarities between the way the appraiser is pressured into meeting “value” and some home inspectors are encouraged to “sign‐off” on a home after a quick hour inspection. Sean Wiens, a home inspector from Vancouver, Canada sees agent referrals as a threat to the integrity of the profession, saying that those home inspectors who are the most successful are the ones “who cater to the agents.” The result, according to Wiens, is that inspectors end up not looking out for the buyer’s best interest and as a result the standards of the profession are lowered.

Dennis Robitaille, Director of Independent Home Inspector’s of North America (IHINA), believes that the home inspector’s reliance on agent referrals creates a serious conflict of interest and this belief is what led him to found IHINA. According to

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Working RE Home Inspector Edition/Fall 2012

Robitaille, some agents have a list of two or three home inspectors who have been prescreened as not being deal killers. “The list, however, will be long enough to protect the agent from any referral liability should the buyer want to blame the agent for any inspection mistakes.” This results in no liability for the agent for the referral‐ the buyer "chooses" an inspector the agent prefers but the buyer's choice is limited to home inspectors who will not hurt the sale, Robitaille says.

On the other hand, there is a strong argument for why an ethical agent’s referral adds value to the buyer and benefits all involved. A seasoned real estate agent has years of experience and expertise in the local market and an agent who is honest and has integrity will save a buyer a lot of time, money and frustration by referring a competent and thorough home inspector. Lenn Harley, a real estate broker serving Maryland and Virginia, says that good agents have learned to recognize good inspectors and other service providers to homebuyers. “Our buyers rely on our experience for matters as important as a home inspection,” Harley says. According to Harley, there is a trend in the real estate industry for agents to avoid risk by not making referrals and not attending home inspections. But her position is that the agent referral actually adds value to the buyer. “When homebuyers ask me for a home inspector referral, I refer them to the most competent and thorough inspector I know,” says Harley.

Serving the Client Dick Greenberg, a real estate broker from Colorado, says, “We never hesitate to make recommendations, whether they are inspectors, lenders, handymen, carpet cleaners, etc.

Our reason is because what we care most about is the client's satisfaction. Our favorite inspector has ‘killed’ several deals for us, and we and our clients were grateful.” In other words, for the ethical agents and brokers out there, it’s a question of serving the clients and building strong relationships. “Our commission comes from our clients, not a particular deal, and it has never made sense to jeopardize a client relationship by recommending an inspector who would do less than serve his client's needs," says Greenburg.

As far as there being a conflict of interest when it comes to agents referring home inspectors, Greenburg says, “For that concern to be valid, you'd need at least two people to ignore their duty to their client ‐ the agent and the preferred inspector. While it’s certainly not an impossibility, those are the same agents who bend or break the law and code of ethics as a matter of routine. The answer is to clean up our act by getting rid of them, not by limiting the service we provide on the presumption that we're all like them,” says Greenburg. In other words, for the many honest and ethical real estate agents, brokers, and home inspectors— Working RE Home Inspector Edition/Fall 2012

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building strong relationships and referral arrangements is a way to help all involved. It provides the home inspector with business, the real estate agent/broker with a knowledgeable, reliable, and thorough home inspector to refer to home buyers and helps home buyers by providing them access to a dependable home inspector.

Of course, not all real estate agents/brokers are honest and ethical, so perhaps the best route a home inspector can take is to diversify. Work closely with and market to real estate agents/brokers and find the ones who want ethical work, while also building up other avenues of business through direct marketing to home buyers, building a presentable website and working to optimize it on search engines, engaging in online marketing, and other marketing techniques that directly target the home buyer. Building a diverse business is the best safeguard against an inspector becoming too reliant on agent‐referrals and it’s arguably more sustainable and profitable in the long run. WRE About the Author Isaac Peck is the Editor of Working RE Magazine Home Inspector Edition and Marketing Coordinator at OREP.org, a leading provider of E&O Insurance for appraisers, inspectors, and other real estate professionals in 49 states. He received his degree in Business Management at San Diego State University. He can be contacted at Isaac@orep.org or (888) 347‐5273.

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Working RE Home Inspector Edition/Fall 2012

Editor’s Note: Inspector Peter Hawley reminds us how important safety concerns are.

Staying Safe Out There

by Peter Hawley

A few years ago, in my hometown, I was surprised to learn that a home inspector friend of mine had died. It was shocking and surprising because he was a fairly young man and still in good health. When I asked what he passed away from, I was expecting an answer like a car accident or an unexpected and sudden health issue. Imagine my amazement when I was told he died on the job as a home inspector because of a failure to maintain routine safety measures.

A few years ago, in my hometown, I was surprised to learn that a home inspector friend of mine had died...on the job.

This particular incident motivated me to be more careful and to examine the practices and routines that I had settled into so comfortably. I learned that one of the reasons my friend died was very preventable. He had gone to a vacant home to do an inspection where the agent and client were not present. For most of us, this is an ideal situation but he forgot one simple rule: nobody knew where he was. Nobody knew what time he was going to be there. Nobody knew what time he was expected to be finished. Because no one knew where he was, when he injured himself, and I say injured, not killed himself, nobody was there to help.

My friend slipped and fell through a garage ceiling while inspecting the attic and crashed onto the concrete garage floor.

During the fall he struck his head and fell unconscious. He was still very much alive and probably would have survived if he had gotten help quickly. Unfortunately, no help was coming because no one knew he was injured. He lay on the floor of the garage for an estimated four to five hours until somebody finally came looking for him and discovered his lifeless body on the floor of the garage. This brings me to my most important safety point; always make sure somebody knows where you are and what time you will return.

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Better yet, have someone with you whenever possible. This can be your agent or client, the seller or simply your spouse waiting in the car for you. Make sure you answer your phone when being checked on. This is just one example of how a simple safety measure can save your life.

I know some people think that this is taking safety to an extreme but a death like this makes you realize that what is considered a mostly safe job can pose serious risks, and that to stay safe, certain procedures must be observed. We are always in an unfamiliar environment and sometimes that environment is hostile, particularly when the sellers learn you are not there for their benefit or if we are forced to enter a place where our safety is in question.

What is “Safe?”

I live and work in a state that provides licensing and guidelines for home inspectors (Nevada). This is a wonderful thing even though I cringe each time I have to renew my license. The guidelines very clearly state what is considered dangerous and that we are not required to put ourselves into dangerous situations. In addition to these guidelines, however, the state includes into the licensing codes the concept that the final decision as to whether something is dangerous or not is up to the inspector. This statement allows discretion by the inspector on site based on each individual situation. This concept is in the NAHI, ASHI and NACHI Standards of Practice and that of other organizations. I encourage all inspectors to keep this idea in the back of their minds when considering a potentially dangerous situation. The basic rule for safety is: never place yourself in any situation that will compromise your ability to continue working at the same level you are currently.

Hook and Ladder As home inspectors we are constantly on ladders: do you inspect your ladder on a regular basis? Most of us make sure the ladder functions correctly when we buy it but how many of us check to make sure all the parts are still where they need to be and working correctly? How many of us make sure the ladder is rated for what we do and is considered stable? When you are climbing the ladder, do you make sure it is on solid ground and angled properly to support your weight without slipping?

It’s Electric We are also inside electrical boxes with current that could easily kill or severely disable us.

We must recognize the fact that many homeowners think they are electricians and modify the main electrical panel and wiring with alarming regularity. Most of the time, these page 10 >> 8

Working RE Home Inspector Edition/Fall 2012

My favorite crawlspace story deals with my own unpreparedness. I entered a crawlspace and was at the far end from the opening when the battery in my flashlight died.

<< page 8 modifications are far from proper; add another unknown that we are forced to deal with. A simple check for electricity in the metal casing will prevent a shocking surprise. This check should be done on any metal disconnect or panel before you touch it.

Another idea may be as simple as the screwdriver you use: Is it rated for electrical work?

Yes, they are more expensive but I promise you they are well worth it. How about gloves?

We are all in such a hurry to finish that many of us don’t want the hassle of gloves. And every one of us has opened an electrical box while standing in a puddle of water from the previous night’s rain or sprinklers that just shut off. Having come from a family of electricians, I have seen many minor jobs have major consequences.

There will always be a small element of the unknown in what we do and where we are expected to go and inspect. We climb over, move through, check behind and look under many things we take for granted. In our own home, we know what to expect but we are not in our own home and we do not have the comfort of knowing what is in that dark, dank space. Remember the last time you opened a cabinet door and a rat/mouse/spider surprised you and you jumped back to avoid it? Gloves would have provided at least a small amount of protection if you had been attacked by that critter. In addition, if you had simply positioned yourself to be able to move quickly if necessary, by taking notice of any objects in your immediate vicinity, you could avoid the possibility of injuring yourself by striking something in the room if you are forced to move suddenly.

Crawlspaces I know little critters are a favorite of all of us who have to enter crawlspaces (not). I always save that task for last because I really don’t enjoy it and of all the places in a home, I think the crawlspace has the most potential for injury. There are so many situations that can occur in a crawlspace that you can be sure I am not going to be able to address them all. My favorite crawlspace story deals with my own unpreparedness. I entered a crawlspace and was at the far end from the opening when the battery in my flashlight died. I did not have a backup and had to crawl in pitch black darkness to the area where I thought the opening was. I was under that house for over an hour trying to get out. You can bet that now I carry a second light source at all times. In addition to the second light, proper attire is also essential: long‐sleeved shirt, long pants, boots and even some sort of head protection. This can be accomplished by purchasing jumpsuits for use during the 10

Working RE Home Inspector Edition/Fall 2012

crawlspace inspection.

Attic Now we can address the other end of the home, the attic. Most of the same things that apply to a crawlspace apply to an attic. And yes even some sort of head protection should be worn: remember all the nails that construction crews put in but do not remove when they miss the truss member when installing roofing material?

How about the roof? How casual have you become because it is “just another roof”? I guess I should consider myself lucky because I have a fear of heights and therefore am very careful on all roofs. Again, we are in unfamiliar territory, this area is exposed to all the elements of weather and rarely checked on. Walk softly and carefully, be aware where the truss or framing members are and place most of your weight directly on the framing member. If the roof is soft, proceed very carefully and don’t walk where you feel it may not be able to support twice your full weight.

Other considerations should be observed also. What is the pitch of the roof and is it safe for you to be on it? What is the weather? Is that aspect going to change the conditions enough to prevent me from doing my job safely? Can I obtain the same results from doing my inspections though binoculars or second story windows and other vantage points at the roof’s edge? If you get the same results, why endanger yourself and your livelihood?

One of my favorites is when I enter a home and the first thing I’m asked is to remove my shoes. I always politely decline informing them it is against company policy. I am sure you are asking why decline such an innocent and harmless request, since many of us do this in our own homes. Again, I must remind you that you are in unfamiliar territory. You do not know the condition of the floor or any objects you will be standing on. One inspector in my company stepped on a nail that was protruding from a floorboard and spent the rest of the day in a hospital emergency room going through the very unpleasant task of getting a tetanus shot. This is the reason it is now against company policy to remove shoes.

Always carry booties as a regular part of your toolbox. You stay safe and your client is not upset at your wearing dirty shoes in the home. This is the very definition of a “win/win” situation and good customer service.

Garage My last major area is the garage. This is such a distinct area of a home that building codes require different regulations than most other structures. We all have excess stuff in our garage that doesn’t belong in the house, like the half‐full gasoline can that we use to fill our lawnmowers. We all take gas for granted but fail to realize that not only is gasoline page 13 >> Working RE Home Inspector Edition/Fall 2012

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<< page 11 explosive but the fumes from gasoline are explosive also. In a former career, I saw the results of this firsthand when an entire garage was gutted (with two cars and two motorcycles inside) when a homeowner was using gasoline to clean automotive parts and decided he needed a cigarette. Even though he was on the other side of the garage near an open door, it still ignited. We never know what we will run into.

Safety “To Do” List Simply put, we need to be aware of our situation and act accordingly. I cannot emphasize strongly enough that we are in unfamiliar territory when we are inspecting: we must be willing to explore but must do so with the utmost care and safety. Safety is in the back of our minds but rarely at the top of our “to do” list. So I challenge you to make a goal to re‐ evaluate your mindset and thoughts at least once a month. Think about what has happened in the last month and make adjustments for any errors you may have made.

Make a pact with yourself to never make that mistake again. Do your own research into any incident you hear about within the home inspection industry no matter how minor.

Inspect and repair all your tools at least once a month.

Finally let me make a small list to be aware of for safety’s sake. This is far from comprehensive but still is important.

 Dress appropriately.  Inspect all equipment regularly and replace anything that is defective.  Make sure you have the proper tools to do your job right.  Be conscious of your surroundings.  Make sure someone knows where you are and for how long.  Never enter any situation that you consider dangerous.  Never allow anyone to coerce you to do something you are uncomfortable with.

Working RE Home Inspector Edition/Fall 2012

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In addition to all this, remember that this is your livelihood. Never do anything or go anywhere that will compromise your ability to provide for you and your family. If you follow that simple rule, you will have a long, prosperous and safe career in the home inspection industry.

Pete Hawley is author of the online course Home Inspection Safety, offered by Mckissock Education ($45/3 hrs. ASHI, NAHI, NACHI approved and by 15 states). The course is available at administrative costs to home inspectors who are insured with OREP.org (cost is $5.74‐ varies by state). For more on the course, click here. WRE

About the Author Author and inspector Peter Hawley is a graduate of the Professional Association of Building Inspectors (PABI) Training Institute with over 145 credited hours of residential inspection procedures and technical training. He is a Licensed General Inspector in Nevada and has 20 years’ experience in residential maintenance, remodel and repair, 18 years’ experience as a residential contractor and 15 years of hydraulic leak detection.

Hawley is a member of the National Association of Home Inspectors (NAHI) with a Certified Real Estate Inspector designation (CRI). He is a registered State of Nevada Radon Inspector with certificates from the National Radon Proficiency Program (NRPP) and National Environmental Health Association (NEHA). He is also a Certified Heat Exchanger Expert as qualified from Heat Exchanger Experts Inc.

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Working RE Home Inspector Edition/Fall 2012

E&O Insurance: Prices Drop, Time to Shop

By David Brauner, Senior Broker OREP

Instead of the now familiar direction to “shop ‘till you drop,” current insurance conditions suggest instead that inspectors should shop because they’ve dropped. We’re talking about rates for errors and omissions insurance of course. The market has softened (prices dropped) over the last few years and that means more choices than ever for you– broader coverages and lower rates.

If you are a single inspector and haven’t shopped for awhile, you will be surprised at the lower premiums now available. Minimum premiums for policies with very broad coverage including bodily injury property damage (or premises coverage/general liability), prior acts, coverage for referring parties, radon, pest, commercial and more, are back down to the $1,250 range! Multiple‐inspector firms also are benefiting from the new market‐especially with programs that don’t charge or charge minimally for additional inspectors and independent contractors.

Years ago it was hard for home inspectors to find inexpensive insurance‐ the choices were few. Today, the tables are turned. Here are a few tips to help you make an informed decision about these and other issues, such as Occurrence versus Claims Made, preserving prior acts and more.

Covering Multiple Inspectors If you pay “per inspector” to cover your multiple‐inspector firm you are probably paying more than you have to. This also is true if you pay extra for premises coverage/general liability, “corporate coverage,” pest, radon or commercial inspections. If you have risked not covering every inspector or contractor doing work for your firm because the cost was prohibitive, there are programs today that will cover all inspectors for one low premium, including independent contractors.

Simple Rules for Maintaining Prior Acts If you are reluctant to switch carriers because you are worried about losing coverage for past inspections, or if you pay more year after year for an Occurrence policy, believing that this is the only way to preserve prior coverage, or your current agent leaves the Working RE Home Inspector Edition/Fall 2012

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Start the process early so you can shop and don’t give in to the pressure to make a quick decision.

If you’re getting close, ask your agent about your grace period.

impression that you can’t switch programs at renewal time, know that most programs offer prior acts for free.

You can enjoy the lower rates of a Claims Made policy and switch programs and still preserve your prior acts.

Claims Made provides coverage for claims that are made and reported during the policy period. What does this mean? It means that claims are covered for as long as the policy is in force‐ one year, ten years or longer, as long as coverage is continuous (no break in coverage).

Here’s how to avoid a break in coverage and preserve prior acts:

• Don’t let your policy lapse: if you are renewing with your current carrier, renew on time (on or before expiration) to preserve your prior acts.

• If you switch carriers, the rules are the same: bind with the new carrier on or before expiration. (If switching carriers, make sure to get prior acts coverage from the new carrier‐ most provide it for free.)

• If you stop inspecting and no longer need or want insurance, purchase optional Extended Reporting or Tail Coverage to cover the inspections completed while insured.

Contact your current agent for pricing and terms.

Renewing If you're renewing your policy with the same company, make sure to renew on or before expiration. It’s that simple. OREP provides multiple reminders as your expiration draws near to make certain you know your policy is expiring and what is at stake, including by mail, email and phone. If money is tight, financing typically is available. It is always wise to follow up to make sure your new or renewal application has been received by mail, fax or email.

Switching Carriers To qualify for prior acts from the new carrier, there needs to be continuous coverage.

What does this mean? It means you must switch on or before your current policy expires so there is no break in coverage. Most companies have a question on the application for insurance that asks if you have current coverage. If you indicate you have insurance, you will be asked to provide proof of coverage (your Declarations Page). If you can’t find your page 18 >> 16

Working RE Home Inspector Edition/Fall 2012

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<< page 16 Declarations Page, ask your current agent to resend it. That’s what you pay us for. Always check the dates on this document to make sure coverage goes back as far as it should.

Don’t be Bullied Give yourself sufficient time to shop before expiration for the reasons explained above but if your insurance company pressures you for a renewal decision well in advance of your expiration date (or they imply you risk losing your prior acts coverage if you don’t renew in advance), they may be trying to limit your ability to shop. You can guess why.

Remember this: you don’t have to stay with your current company to preserve your prior acts. You can switch and preserve your prior acts as long as you switch coverage before it expires. With OREP, if you renew on the day of your expiration or even a few days after, you are typically not in danger of losing prior acts. Most companies have a grace period of at least a few days after expiration. Each company is different, so make sure to ask your agent how long your grace period is, in case you need it.

Start the process early so you can shop and don’t give in to the pressure to make a quick decision. If you’re getting close, ask your agent about your grace period.

The same goes for inspectors who work for a franchise company where the head office requires you to purchase your policy from a particular agency or limits your choice to a select few programs. If it’s not a true group policy written for the franchise, you should ask why they insist you buy it and see if their response passes the “smell test.” Without the freedom of choice, you may be paying more than you have to for less coverage. This is not in your best interests.

Extended Reporting or Tail Coverage If you choose to stop inspecting and to terminate or not renew your insurance, you can keep coverage for past inspections with optional Extending Reporting Period or Tail Coverage. Extended Reporting or Tail Coverage is offered by most Claims Made carriers for additional premium.

Tail coverage provides coverage for work completed during the policy period for a number of years into the future (after your policy terminates). What does this mean? If you have a Claims Made policy and decide to stop inspecting, you can purchase tail coverage for inspections completed during the policy period for as far back as you’ve been covered continuously, for a number of years forward after the policy expires.

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Working RE Home Inspector Edition/Fall 2012

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<< page 18 Peace of Mind There is peace of mind in knowing you’ve done the numbers, understand the issues and are making an informed decision. Due to changes in the insurance market, if you haven’t done the numbers lately, you owe it to yourself and your business to compare coverages and prices. This is especially true if you pay “per inspector” for your multiple inspector firm or if you pay extra for premises coverage/general liability, “corporate coverage,” pest, radon or commercial inspections. The insurance market has changed in the last few years. You have more choices, make your decision an informed one. WRE Disclaimer: This article is written from an insurance perspective and is meant to be used for informational purposes only. It is not the intent of this article to provide legal advice, or advice for any specific fact, situation or circumstance. Contact legal counsel for specific advice.

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Working RE Home Inspector Edition/Fall 2012

Marketing: Tape Measures Measure Up

by Isaac Peck, Editor

Home inspection is a niche, but still a very competitive profession where home inspectors have to stay on the lookout for effective ways to market their businesses without breaking the bank. Home inspectors take many different approaches to their marketing, but sometimes keeping it simple pays off.

Raymond Wand, a home inspector from Ontario, says that giving out 50‐page, 4”x5” scratch pads with his company logo has been effective for him, adding that, “It’s like handing out 50 business cards.” Still others say that fridge magnets work best for them.

Meanwhile, some home inspectors swear by the tape measure—saying that it’s useful, long‐lasting, and not likely to be thrown away.

Inspector Dan Harris, from Arizona, says he has experimented with a variety of approaches and found the one that works for him. “I've tried giving out coffee mugs, pens, note pads, chip clips, calculators and a few other trinkets, but the most effective tool that everyone seems to appreciate is tape measures,” says Harris. Harris says he can directly credit over 100 inspections in the past two years from simply handing out tape measures.

It turns out that giving out tape measures is cheaper than you might think. Shrewd home inspectors can buy tape measures for $1 each when buying in bulk, then have a small label produced with company information for about for 10 to 20 cents, for a total cost per tape measure of under $1.50. Dan Harris says he can find 16’ tape measures at the dollar store for $1 each, and he’s found a place that can make stick‐on company logos for .04 each, giving him a total cost of just over $1 each.

Welmoed Sisson, a home inspector in Maryland, has had similar success when it comes to using tape measures as an affordable marketing tool. Sisson says, “Tape measures are without a doubt what has worked best for us. We've had clients and agents call us after several years, because they kept the tape measure. I think there are a couple reasons why they're kept so long. First, they're useful, plain and simple. Second, they feel hefty, substantial and expensive, so people are more inclined to keep them, a pen is easy to toss in the trash.”

As small business owners in a competitive field, inspectors understand the importance of spreading the word about their businesses and finding affordable ways to grow their clientele. On that note, Dan Harris advises home inspectors to develop a targeted marketing strategy. Harris says that if you can focus your marketing dollars on promoting your own company, instead of a local home inspector association, and limit your expenses to $1 per “promotional product,” you are well on your way to developing a marketing strategy that maximizes your budget. WRE

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Editor: Wow! This might be every inspector’s nightmare.

Manufactured Homes: One that Almost Got Away

by Russell Kirk

I had my most satisfying inspection today. I always pull the public records prior to an inspection and this one showed a 979 square foot (SF) single family residence (SFR) built in 1972. The buyer's agent told us that it was a 1,500 SF SFR, confirmed by the listing agent's flyer as a 1,498 square foot SFR. When we got to the inspection, something just didn't look right. The stuccoed foundation was huge, about two feet tall; very unusual. The rear had cracks every four feet, again very unusual. It looked like a raised foundation at the right and rear but with a tall slab at the front and left. Weird. There was no access to the crawl space.

In looking at the cracks at the rear, I decided to take off one of the vent screens to see what I could see. We typically don't remove vent screens since we usually have access via a crawl space opening.

Well, low and behold. A manufactured home! The cracks at rear were where the skirt sections met. They were metal but had been stuccoed to match the rest of the house.

The buyer and buyer's agent were aghast, not to mention pretty angry. The reason? The house was selling for $475,000, definitely the price for a 1500 SF house in that neighborhood (San Diego, Calif.). The most expensive manufactured home in San Diego County that I could find, however, was $175,000 and that was for a 2300 SF, 2004 double‐wide, double‐long, double‐tall, double this, double that model! That’s a $300,000 difference. Whoa! Of course, now that I had opened the can of worms, the home would never appraise for $475,000.

page 24 >> 22

Working RE Home Inspector Edition/Fall 2012

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<< page 22 The interesting thing is that the current owners paid $235,000 in November 2000, and the owners before them paid $165,000 in June 1994, all normal prices for 1500 SF houses in this neighborhood at those time periods. Conclusion? No one ever had the home inspected before and no one had any idea that it was a manufactured home.

The current owners are within their five and half year discovery period, so I see a lengthy lawsuit, which may lead nowhere depending on where the 1994‐2000 owners currently reside and what they claim they did and did not know.

Liability Nightmare In this part of the country, if there's a lawsuit, everyone even remotely involved is sued.

Now where would I be if I had not taken off those vent screens and just disclaimed the crawl space because there was no access? Notwithstanding anything I might have said in my report about further evaluation by structural engineers after access is gained, etc., I can guarantee you that I would be part of a lawsuit down the road when someone found out that it was a manufactured home.

The $300,000 in potential damages is a significant amount of money, and even if I were found to be one‐eighth liable (seller, seller's agent, former seller, former seller's agent, home inspector, title company, throw someone else in for good measure), that would have been $37,500 minimum, with court costs not included. And if the former seller has moved to a different state and the former seller's agent dead or can’t be found, I could be one‐sixth liable ‐ $50,000 or more. And it could get worse, much worse. That’s why I carry E&O insurance. I suspect I'll be doing another inspection for them quite soon. WRE

Plans available to real estate professionals on a guaranteed issue basis. Kaiser Permanente offers eleven plans including the new Tax Advantaged Health Savings Account Plans.United Healthcare offers three HMO and four PPO plans. Allied National offers four Limited Benefit PPO Plans that offer highly affordable first dollar coverage including doctor office and emergency room visits and prescription drugs.

Plans available to California residents only through OREP (OREP membership not required).

Please visit OREP.org/Benefits or email info@orep.org with medical benefits in the subject along with your name and phone number in the body of the e-mail. A qualified agent will call to go over the options.

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Working RE Home Inspector Edition/Fall 2012

Editor’s Note: According to veteran inspector Rick Bunzel, business efficiencies used by the most successful corporate giants can also mean good business for inspectors.

In Search of Perfect Home Inspection

By Rick Bunzel, CRI, ACI

As I approach my 10th year in business I am still learning about homes and perfecting my trade. Our clients expect a perfect inspection that will catch 100 percent of the issues.

However, few are willing to spend the time or money such an exhaustive inspection would require.

Agents wouldn’t support it because a multi‐day inspection would inconvenience sellers and buyers and likely nix the deal. Like all inspectors, I don't like getting the phone call from an upset client about an issue they found in their newly purchased home that they feel I should have caught. Mike Holmes’s Show, “Holmes Inspection” doesn't help either, as his favorite line seems to be, "The inspector should have caught that." So the question remains, can we deliver a near‐perfect inspection in the few hours we spend in a home?

Companies like Boeing must have processes that produce 99.9 percent defect‐free airplanes or they wouldn't remain in business. McDonalds is another example‐ they have to create a menu of items that are consistent around the world. One might say that the inspection business is different because we are not producing a standardized product. But I disagree. Our inspection report is a product and we can take some of the techniques that companies like Boeing and McDonalds use to create a better product. Both companies thrive on certain core fundamentals: • Standardization: a Big Mac is a Big Mac and a Boeing 737 built in 1968 can use parts from one built in 2010.

• The highest levels of quality possible: planes can't fail and the food must be pure and taste the same regardless of location.

• A production process approach: different work cells combine to make the finished product.

• Quality processes throughout their systems: from suppliers to management oversight, checks are built into each process.

• Production systems which are reproducible and easy to teach to new employees.

• Lean production: steps are broken down and analyzed to get the most from each employee.

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Translation Please What can we learn from these companies that translates to the home inspection business? I looked at the process and broke down the components into the following: initial contact, information flow, scheduling, arrival at the property, physical inspection, creation of the report, delivery of the report, follow‐up and after inspection issues.

Initial Contact In many areas of the country, real estate agents give their clients the names of multiple inspectors, so frequently we get calls from clients shopping for a home inspector. My business partner/wife and I share the office duties so it’s important that we are consistent in what we say and quote to the client. We have built processes into our business to ensure that every client goes through the same process, from the time they first contact us through the follow‐up survey. We have a paper form that gets filled out and goes into our Office Management System. This step includes calling the agent to get access to the home and ensuring that the utilities will be turned on.

A confirmation is sent out with the time, date, location, cost and a copy of the inspection agreement for their review. We have learned that setting expectations is an important part of customer satisfaction. Most home buyers are bewildered by the home buying process. The more education we can provide upfront the better they will understand the information they receive down the line.

Information Flow and Scheduling It’s important that I receive information prior to arriving at the site, beginning with the initial contact from the agent. When the client is booking the inspection, we identify their concerns and issues. I usually will look over the schedule and inspection details the evening before. Since we have been performing inspections for some time in this area, I am familiar with the neighborhoods and their particular issues. We usually block out four hours for an inspection because you never know what you will find until you show up at a property. The last thing we want to do is rush through an inspection due to a scheduling crunch. Our information forms capture cell phone numbers for both the client and agent.

If we are running late we can call and let them know when we will arrive.

Inspections All inspectors have their own way of handling the physical inspection of a home. The key is standardization. Like McDonalds, you want a systematic approach that allows you to adequately view the property and identify issues. Like many inspectors, I try to get to the property before the client to do a “sizing up.” This allows me to do some pre‐planning on 26

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where to access the roof, the order of things to be inspected and to identify features, such as out buildings that weren't disclosed. I also begin cataloging issues that will need further examination, such as LP siding or hazards like overhead wires. If the client and agent have not arrived yet, I will start taking pictures of the exterior. Usually I shoot the front elevation and each side of the home and roof. Photo documentation is part of my standard process. In a small home inspection I will take close to 100 pictures and use about 25 in the report. Clients will frequently forget the condition of the home but if there is a disagreement on the condition they have a hard time arguing with a picture.

Master craftsmen spend hours perfecting their trade. As they learn, they build muscle memory. This muscle memory makes it easier to get the tasks right time after time. Most inspectors already have muscle memory. For example, when I first got my telescopic ladder I looked pretty awkward opening and closing it. I have now used it more than 1,000 times and can select the height, extend the ladder, get the right climbing angle and check it while I am talking to the client. I have done it so many times I have perfected the process. Most experts will agree that to master a process you have to perform it at least a 1,000 times. Practice your inspection process and be consistent. We can't control our inspection environment but we can master the inspection process so we can perform it regardless of the environment.

A critical step in my quality control process is loading information into my reporting system onsite. I have my forms setup to follow my physical inspection process. I will normally setup my laptop in the kitchen and enter data there. If it’s a large home or multi‐ building complex, I will inspect an area and then enter it into the computer. If it’s a smaller home, I will enter data at the end of the physical inspection. If I am missing information, such as the size of the furnace, I can go back to get the information.

Occasionally I will miss a concealed water heater or an electrical panel hiding behind a painting. My inspection software will remind me that I am missing a piece of information.

I also have several check boxes at the end that remind me to verify that the oven is off and the furnace and water heater temperatures are returned to original position.

The Report I will create most of my report on‐site but I don't complete it until I get back to my office.

I've tried it other ways but have found that I had to recall and update the report more often than I wanted to. Even though I would tell customers that this could happen, I felt like I was sending out reports with potential errors. For this reason I don't send out reports until I get back to the office. This allows me to digest the information from the inspection, do research if needed, enter the pictures and fine‐tune the wording. This Working RE Home Inspector Edition/Fall 2012

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allows me to digest the information from the inspection, do research if needed, enter the pictures and fine‐tune the wording. We have reduced the number of errors that go out in the reports to less than two percent. I use pictures as one of my quality controls. If I find a defect, I take one or more pictures of it. As I going through the report I am looking at the pictures and comparing it to the comments I have entered. Frequently, I will find a small item such as a broken sliding door latch that didn't make it in the initial report. During this pass I will ensure that I have all the issues documented and pictures entered. My last steps are spell checking, looking at a summary of issues and creating the PDF. The final quality control check is looking at the finished report & making sure it printed as I want it.

The Report I will create most of my report on‐site but I don't complete it until I get back to my office.

I've tried it other ways but have found that I had to recall and update the report more often than I wanted to. Even though I would tell customers that this could happen, I felt like I was sending out reports with potential errors. For this reason I don't send out reports until I get back to the office. This allows me to digest the information from the inspection, do research if needed, enter the pictures and fine‐tune the wording. We have reduced the number of errors that go out in the reports to less than two percent. I use pictures as one of my quality controls. If I find a defect, I take one or more pictures of it.

As I going through the report I am looking at the pictures and comparing it to the comments I have entered. Frequently, I will find a small item such as a broken sliding door latch that didn't make it in the initial report. During this pass I will ensure that I have all the issues documented and pictures entered. My last steps are spell checking, looking at a summary of issues and creating the PDF. The final quality control check is looking at the finished report and making sure it printed as I want it.

Setting Expectations Even the best, most thorough inspection can produce an unhappy client. If your customer is unhappy with your service, then you have failed at your job. In my experience, the most common reason is poorly set expectations. Most customers don't understand what a home inspection is and what it isn't. We all have contracts that stipulate the terms of the inspection but how many clients read the contract? For this reason, I encourage the client to attend the entire inspection. This is a business decision for each inspector and from informal polls I have taken, about 50 percent of inspectors encourage clients to attend the inspection while the rest prefer the clients show up at the end.

I do a pre‐inspection briefing when the client shows up as part of my process. The briefing page 30 >> 28

Working RE Home Inspector Edition/Fall 2012

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<< page 28 covers what I will be doing, checking to see if they reviewed the inspection agreement, safety (please don't follow me on to the roof) and finding out if they will be staying for the entire inspection. This briefing helps set the client's expectations and lets them see what I am seeing. If there is an area that is not accessible, I tell them and why it won't be part of the inspection. Occasionally I get clients (and their family) who are all over the place, pulling me in different directions. In this case I gently encourage them to hold questions until the end or have the buyer/client collect the questions and ask them when I am done.

This does extend the time it takes to inspect a home but the majority of our clients get more out of the inspection and feel more confident about their purchase after reading the report.

Follow up In most cases, we do our inspection, collect a check, deliver the report and never hear from our clients again. Many of us take the head in the sand approach: no news means we are doing okay. But how do we know that we are doing great and that our clients are bragging about how happy they are with our services? How many of us ever check back with our clients? I would wager that less than 10 percent of inspectors have some type of formal feedback system. Companies like Boeing and McDonald have established customer service metrics that are constantly measured. At this point I don't have a formal system, but I know I should. I do encourage clients to review me on Google, Yellow Bot, Bing and Judy's Book. I also poll the agents who refer me for feedback. I consider them a secondary client as many clients depend on the agent to recommend an inspector. In our state they are required to supply three names.

The quest for perfection should never end. Our markets are changing and we must change to continue to meet the expectations of our customers. We should never get lax and think that we are delivering a good inspection and that this is good enough. Can we live up to the standards that Mike Holmes talks about? Probably not because he goes far beyond ASHI Standards and the homes featured in his shows are setup to make good TV. However, Mike does give us something to strive for. WRE About the Author Rick Bunzel is the principle inspector with Pacific Crest Inspections and an ASHI Certified Inspector #249557. He holds a BA in Business Marketing. He is past Chair of the Marketing and Public Relations Committees for a national home inspection organization. Locally, he Chairs the North Puget Sound Board of Realtor’s Communications Committee and is a firefighter/ EMT with the Mt. Erie Fire Department in Anacortes, WA. 30

Working RE Home Inspector Edition/Fall 2012

Editor’s Note: Inspectors no longer have to pay more for the complete coverage they need. OREP’s new insurance program includes most coverages in the minimum premium ($1,250/$300,000 limit), including radon, pest and premises coverage.

Insurance ProgramComplete Coverage, Low Rates OREP (Organization of Real Estate Professionals) is proud to announce its updated insurance program that allows inspectors to have complete coverage and save money!

David Brauner Insurance Services/OREP has been servicing the insurance needs of home inspectors for over 10 years.

Program Highlights * Includes Errors and Omissions (E&O) and Bodily Injury/Property Damage (premises coverage), as well as most incidental coverages, such as termite, radon, and commercial coverage. * “A” Rated Carrier, Prior Acts, Additional Insured for Agents and other Referring Parties. * Convenient: Fast, Self‐Rating Application gets you quoted and back to work in minutes. * No Policy fee, no Taxes.

This new Home Inspector E&O program includes most coverages in the minimum premium, including Bodily Injury/Property Damage (BIPD) or Premises coverage for when you are onsite at the inspection.

“Home inspectors who are paying extra for ‘add on’ coverages, or worse, going without the full coverage they need to save money, don’t need to any longer. Broad coverage is included in the minimum premium, including E&O and premises coverage,” said David Brauner, Senior Broker at OREP. Brauner has been serving the insurance needs of home inspectors for over 20 years.

OREP’s new program also includes most incidental coverages, such as termite, radon, and commercial coverage.

The Minimum Insurance Premium is $1,250, which provides a Coverage Limit of $300,000 Aggregate/$100,000 each Occurrence for E&O/BIPD. Choice of coverage limits and deductibles are available. Find details at OREP.org (click home inspectors) or call toll free (888) 347‐5273. Info@orep.org.

OREP is a leading provider of insurance for real estate inspectors, appraisers, agents/brokers and mortgage field professionals. WRE

David Brauner Calif. Insurance License: #0C89873 Working RE Home Inspector Edition/Fall 2012

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Editor’s Note: Every weekend, there are myriad opportunities to increase business.

Inspector Amy McIntire shows you how.

Putting On Salesman Hat

By Amy McIntire

Our motto is that if you want business, you have to go out and create it. Which isn’t easy for home inspectors, since inspecting and selling are two different jobs and should be treated as such, although there are some similarities.

As a home inspector, you would never go to an inspection without all the tools, supplies and information need. The same is true of selling: you must have a plan and be prepared.

With a little preparation and planning, your sales hat will fit comfortably and even become enjoyable to wear.

Home inspectors don’t always react positively when I suggest open‐house prospecting to build relationships with realty agents. But any sales coach will tell you to step out of your comfort zone and try something new. From experience, I know open‐house prospecting can generate business if approached correctly. Remember, it is a sales call on a prospective referral source, and you must approach it as such or it can end up working against you. More than 50 percent of our current business comes from referrals from agents we met at open houses. Shouldn’t this be in your marketing plan, too?

Four things before going to Open House 1. Have a positive attitude and smile!

This sounds simple, but when you are thinking of what you want to say, you can forget to smile. So, stop and smile at yourself in the mirror before you get out of the car. Wear your smile whenever you’re wearing your salesman hat.

2. Planning who you want to see is critical to time management.

Look in the paper or on company websites for open houses. Pick an area and make a list of 10‐15 potential stops. For each, include the time of the open house, agent’s name, company name, open house address and town. Locate the addresses on a map, then plan where to go first, second, third, etc. On average, I see six‐eight agents each Sunday. I’m not speed prospecting, rather I’m developing relationships to get future referrals.

3. Plan what to take.

Almost everyone likes sweets and chocolate, so take along a treat with your business 32

Working RE Home Inspector Edition/Fall 2012

card, brochure, flyer or other marketing materials. Put it all in something that is easy to carry and access. We use a small wooden basket with handles that holds our chocolate‐ covered strawberries, business cards, brochures, newsletter and a pen for taking notes. A small toolbox also would be perfect for prospecting. The treat represents you, so make it something special. I make chocolate‐covered strawberries in the morning; package them in baggies and tie our business card on top with a ribbon. Find something that works for you that can become your signature treat. Agents will remember you by it.

4. Plan what to say.

This is extremely important! Break the sales call into five steps.

1) Greeting: Your greeting to the agent sets the tone for the conversation. Be upbeat and smile as you introduce yourself as a home inspector and add, “I came to see you!”

2) Quick company story: Write out a few sentences that you are comfortable with, memorize them to use when the agent asks about you. For example, “I have been an inspector for a few years now. I am a member of several professional organizations and am based out of Smithville and serve the surrounding counties. I’ve worked in the construction field all my life and have many years of hands‐on experience building and renovating homes. Becoming a home inspector was a natural fit for me!” (smile!)

3) Questions: This is your opportunity to find out information. A salesperson knows that the person asking the questions is in control and that people like talking about themselves. Sample questions include: • How long have you been in the real estate industry?

• Which office do you work out of?

• How do your clients choose a home inspector?

• Do you have a home inspector who you refer regularly?

• Does your office have a list of inspectors?

• Who would I contact to be added to the list?

• On what day does your office have meetings?

Be comfortable asking questions, be patient and listen to the answers. The more prospective referral sources talk, the more you learn about them.

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4) Company benefits, storytelling & countering objections: Every company has its own benefits. My partner, Terry, has a strong background in HVAC and construction, so we discuss how we are able to give our clients extra knowledge about the HVAC system in the home. Because there are two of us at the home inspection, we manage time and people well. You’ll want to tell a short story or two about your business to paint a visual picture and create a solid memory.

The biggest concern agents want to talk about is a home inspector being a “deal killer.”

We know this even if they don’t bring it up. Instead of ignoring concern, discuss it and get it out of the way. Say with a smile, “I can’t change what I find at a home inspection (bad roof, broken furnace), but what I can do is make sure that any concern is delivered in a professional and non‐threatening manner. I have a lot of experience working with people, and I know how to talk to them without scaring them.”

A second concern for the agents is how to nicely tell you they won’t use you. Tell them you know that. Say, “I heard it takes five‐seven times meeting a real estate agent before I get a referral.” (You have their attention now.) Continue with, “I’m hoping that it only takes three or four times meeting YOU before a referral.” (smile) Now let them talk. This is when they will tell you how they met the home inspectors they are working with now and how it works for them.

5) Wrap‐up and goodbye: Before you leave, you must get their business card or contact information. By this time, they should have all of your literature and the treat. If not, hand it to them and ask for their business card. Shake hands. Tell them it was nice meeting them and that you are sure you will see them in the future. (smile!)

Three rules for open houses Most open houses have few visitors so, for the most part, agents are glad to have someone to talk to when you walk in. Respecting agents at their open house is critical.

There are three rules to follow to make your trip worthwhile.

Rule #1: Never create the impression you are there to see the house.

I carry a basket with all my supplies. Most times, agents notice my basket and know I’m there for a different reason. If they do start their sales presentation about the house, I say, “It looks like a nice house, but we already have one. I’m here to see you!” Smiling, of course.

Rule #2: Know when to leave.

Leave on a high note. Get out while everyone is smiling and laughing. After you are gone, hopefully they will read your literature as they eat the chocolate. If the agent is involved 34

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in a deep discussion with a possible client, leave your information, get theirs and leave. If there are too many people at the open house, leave your information on the counter, get the agent’s business card and leave. If an agent isn’t there, be nice to whoever is there and leave. If the agent isn’t being friendly, be courteous as you leave. If you do not have a positive attitude about meeting new people, do not leave your home. Wait until next week.

Rule #3: Always get agent’s contact information and keep it organized.

Make a contact book, which will be a tool for your marketing plan. Tape the business cards to notebook paper and write a few notes about the meeting. Keep these pages organized by offices. This will help you remember who you meet and when.

Good luck in your prospecting adventures! WRE About the Author Amy McIntire is an owner in TK Home Inspection with her inspector partner, Terry Kleptach. Before home inspections, she was the director of sales training for a 12‐office, 125‐person sales force based out of Cleveland, Ohio. Since then, she has applied her sales knowledge and tactics to grow their home inspection business. In the Salesman Hat Series, Amy shares some of her knowledge and action steps to develop relationships to get agent and broker referrals and more home inspections. She can be reached for comment or questions at terry@tkhomeinspection.com.

Copyright © ASHI Reporter. Reprinted with permission. This article originally appeared in the May 2012 issue of the ASHI Reporter. To learn more about the American Society of Home Inspectors go to www.ashi.org and www.ashireporter.org

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Appraisers E&o Min. Prem. $501 (varies by state) inspectors E&o Min. Prem. $1,250 Real Estate Agents/Brokers Min. Prem. $429 (varies by state) OREP has a new policy servicing department to streamline insurance requests from our clients, including renewals. Simply email your policy-servicing request to info@orep.org to get the assistance you need, usually same day. Whether you’re an existing client or someone calling for the first time, you can reach us by phone anytime during business hours (8–5 M–F Pacific Time).

Business by the golden Rule Our mission at OREP is pretty simple: “Business by the Golden Rule.” It means we treat you the way we want to be treated: with honesty, courtesy and efficiency. This is David Brauner, Senior Broker and Principal of David Brauner Insurance Services/OREP.org. Call us to see what you’re missing if you’re missing great rates, great service and business by the Golden Rule. Yes, with OREP you can have all three. Call toll free today: (888) 347-5273 or visit OREP. org. Policy servicing: info@orep.org. OREP publishes Working RE magazine. WRE

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