Working RE Home Inspector - Issue 17

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Home Inspector Working RE

Fall 2021, Volume 17

INSPECTING A RED-HOT MARKET Customer Experience Management Understanding Well Pump Systems Insurance IQ

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Home Inspector Working RE

Published by

Fall 2021, Vol. 17

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From the Editor

Readers Respond

6

Inspecting a Red-Hot Market

by Ariane Herwig, Assistant Editor

10 12

Home Inspectors and Crazy Stories

by Ian Robertson, Inspector Toolbelt

Customer Experience Management

by Paul Zak, America’s Call Center

16

Setting Yourself Apart from Your Competitors

by Isaac Peck, Editor

22

On Again, Off Again: Understanding Well Pump Systems

by Tom Feiza, Mr. Fix-It

30 34 36

Inspecting Tandem Circuit Breakers

by Reuben Saltzman, Structure Tech

Don’t Walk Away from Running Water

by Isaac Peck, Editor

Insurance IQ: Defining Professional Services

by Isaac Peck, Editor

37

Professional Marketplace

38

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Mission Working RE Home Inspector is published to help home inspectors build their businesses, reduce their risk of liability and stay informed on important technology and industry issues.

Published by OREP Working RE is published by OREP, a leading provider of home inspector insurance nationwide. OREP has a low cost, broad coverage E&O and GL p olicy. Coverages available include radon, infrared, termite, pest/rodent, lead paint, mold, septic, and more.

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Working RE Inspector Fall 2021

Editor Isaac Peck: isaac@orep.org

Assistant Editor and Designer Ariane Herwig: ariane@orep.org

Working RE 6760 University Ave, #250 San Diego, CA 92115 (888) 347-5273 Fax: (619) 704-0567 www.workingre.com

Working RE Home Inspector is published tri-annually and mailed to home inspectors nationwide. The ads and specific mentions of any proprietar y products contained within are a service to readers and do not imply endorsement by Working RE. No claims, representations or guarantees are made or implied by their publication. The contents of this publication may not be reproduced either whole or in part without written consent.

From the Editor

Change is the “Constant”

by Isaac Peck, Editor

One of the “constants” that we’ve all experienced over the last 18 months is that there has been A LOT of change. From the initial anxiousness surrounding the COVID-19 pandemic in early 2020, to witnessing the devastating lockdowns of so many small business operators (including real estate professionals!), to watching the real estate market come roaring back with prices skyrocketing—everything has been changing rapidly.

For those of us who are meticulous “planners” who like to keep things “under control,” these unpredictable changes in our economic and social realities have made things more than a little uncomfortable.

However, as I think about the last 18 months and look forward to the months and years ahead, I’m struck by the blunt reality that change is the one “constant” in life and in business that we can count on. For better or worse.

Last week I took a ride with Lyft and the driver told me how he bought and operated a business for 20 years. In the early 2000s, his business specialized in CD-ROM printing technology.

As the CD-ROM business became obsolete, he had to pivot his business into mid-tier brand label printing, effectively shifting his entire business model over a couple of years. The story had a happy ending, I think, as he rebuilt his business, sold it, and retired in his early 50s—doing a little driving for Lyft on the side.

While we (hopefully) aren’t facing the type of rapid business reinvention that this gentleman grappled with, things continue to change in our industry. New ancillary services, new market conditions, new software, new products, new types of marketing, and even new types of “inspections”—these are all things that continue to evolve in the inspection profession.

As small business owners, we have to stay nimble and be willing to adjust, to learn new skills, and to change. In the last few months, I’ve talked to a number of home inspectors who are switching up their marketing, adding to their services, adjusting their pricing, and continually looking for ways to improve and fine-tune their businesses.

What I’ve learned is that the best approach to handle change is to expect it and embrace it. What changes can you make in your business to increase revenue, decrease costs, provide better service, and set your company up for success in the years to come? To your continued success! WRE 4

Working RE Inspector Fall Summer 20212021

Readers Respond Home Inspectors Don’t Have to Be Old White Guys Although timely in this political climate, your article should give you pause to reflect on the reality of the workforce, and the people attracted to this industry, not to mention the trades as a whole. I cut my teeth in the construction trades, having worked alongside men of color. I was a laborer, then a punch-out carpenter, an assistant superintendent, superintendent, and eventually owned a small home building and development company before becoming a home inspector. Although the people I worked with were varied (men, women, old, young, black, Asian), none of them seemed to want to move outside of their area of expertise. Many old white guys are home inspectors because very few of the other folks see home inspecting as a viable career. They aren’t being locked out as far as I know. It is the same with the trades. If you ask 10 0 young folks about taking up a trade, they have no desire to do that. Don’t believe me? Ask a master plumber or electrician, surveyor, or code official, and they will all tell you pretty much what I just did. My challenge to all of us is what are we doing to train and teach those that could have a viable career as a home inspector— race, creed, or gender aside. —Rich Emerson Great article. I have been a woman home inspector for 11 years and look at over 80 0 homes a year. —Jan Banks

Home Inspection Integrity Act Becomes Law in Wisconsin The Home Inspection Integrity Act is unnecessary legislation and does nothing to increase the quality of home inspections. The article states that previously anyone could call themselves a home inspector. That is not correct. Two exams had to be taken to become licensed. I don’t disagree with mandatory schooling to be licensed, but the article was not correct. The fact that inspectors need to list defects is not new. I have been using that in a summary for nearly 7,0 0 0 inspections. The problem is that the new law defines defects differently than the Wisconsin Offer To Purchase.

All this has done is cause the price of home inspections to increase due to extra regulations put on an already regulated industry. —Brian Paull WRE

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Working RE Inspector Fall 2021

5

Inspecting a Red-Hot Market

by Ariane Herwig, Assistant Editor

The

incredible home buying demand that real estate agents, appraisers, and home inspectors are witnessing (and working through) is nearly unprecedented. And the rapid home price appreciation over the last 18 months is one for the history books.

In other words, the U.S. real estate market is hot—red hot!

This real estate boom has been a welcome and well-deserved development for home inspectors who experienced a severe slowdown or a complete shutdown in the early months of the COVID-19 lockdowns in Spring 2020.

But this “boom” has not been without its challenges for home inspectors. Larger inspection firms that had downsized during the lockdowns were whipsawed as demand surged back in the fall of 2020. Additionally, in an effort to be more competitive, homebuyers are waiving their appraisal and financing contingencies—with some even forgoing the home inspection.

Here is a look at the challenges and opportunities facing inspectors in today’s current market.

Waiving the Inspection A recent article published by RedFin shows that 13.2 percent of successful buyer offers waived the home inspection contingency over the last six months. Anecdotal data from home inspectors confirms this. Inspectors are reporting that anywhere from 10 to 20 percent of buyers are waiving the inspection—with the results varying depending on the local market.

While a 10 percent decline in home inspections isn’t going to put any inspectors out of business, it has a negative effect on the bottom line and offsets a portion of the growth that inspectors would otherwise enjoy due to the hot real estate market.

Walk-Through Inspections As buyers rush to waive the home inspection contingency, the popularity of verbal or “walk-through” inspections has begun rising proportionally. In these scenarios, a homebuyer will hire a home inspector, usually at a reduced fee of $75–$150 per inspection, to simply “walk through” the property and spend Ariane Herwig is the Assistant Editor and Graphic Designer of Working RE magazine and the Marketing & Design Manager of OREP. She graduated with a Bachelor of Arts in Visual Arts with an emphasis in Graphic Design (magna cum laude) from University of Maryland Baltimore County. You may reach her at ariane@orep.org or (888) 347-5273.

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Working RE Inspector Fall 2021

30–60 minutes checking the major home systems per the buyer’s request. This necessarily limited inspection may be verbal or it may include a written component, depending on the inspector’s business practices and/or the buyer’s demands.

The potential problems in this scenario should be evident: no matter how good the walk-through is, a homebuyer is not getting a full picture of the house being purchased and its potential issues. And as for the home inspector, you are facing reduced revenues, while taking on a significant amount of liability for a paltry $75 to $150 per “inspection.”

Liability Issues Isaac Peck, President at OREP Insurance, a leading provider of home inspector E&O insurance nationwide, advises home inspectors to steer clear of walk-through inspections strictly from a liability standpoint. “We are advising our insureds to decline these types of assignments. Limited home inspections increase your risk and decrease your revenues. Many home inspectors think they can protect themselves with iron-clad disclaimers and liability limitations in their client Agreements, but that is not a 100% guarantee. The inspection industry has decades of legal precedents where liability limitations and restrictions have been challenged in court. It remains to be seen how these types of contracts will hold up in court,” reports Peck.

If you decide to do these types of assignments, it’s important to make sure your E&O insurance will cover you. Peck advises home inspectors to check with their E&O agent to confirm coverage. “The coverage for these kinds of inspections can vary between insurance policies and can depend on whether or not a written report is delivered. Some policies will only cover a home inspection if a written report is delivered, while other policies may allow coverage for verbal inspections. If an inspector is going to do this type of work, it is very important that they make sure they are covered. So they should ask their agent,” says Peck.

Additionally, in instances where no written report is delivered, the liability increases exponentially as it can quickly turn into a page 8 8

Working RE Inspector Fall 2021

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7page 6 “he said/she said” situation. The homebuyer can claim that the inspector never mentioned something or told them verbally that the issue was “not a big deal.”

Another potential pitfall home inspectors might fall into is defining the services performed as “NOT a Home Inspection.”

This is problematic, Peck says, because inspector E&O policies are written to insure a professional for their “Professional Services” and nearly all inspector’s policies provide coverage for, you guessed it, “Home Inspection Services.” (See Insurance IQ: Defining Professional Services, pg. 36) In other words, there could be a coverage issue if you are signing a contract that says the service you are providing is NOT a home inspection, while your E&O policy provides coverage specifically for “Home Inspection Services.” The result is that you might be inadvertently excluding those services from coverage.

“From what we’ve seen so far, this coverage question has not been raised or resolved yet, so proceed with caution. If you do choose to do these types of inspections, you can help yourself by calling them ‘Limited’ or ‘Restricted’ home inspections. If you are doing these types of assignments, you definitely want to run your client Agreement by your E&O agent,” advises Peck.

Walk and Talk Inspections Dave Klima, co-founder of InspectedHouses.com and President of Aardvark Home Inspectors Inc., says his firm tries to avoid “walk-through” inspections. “We haven’t been doing many Walk and Talks. We’ve done some major component inspections, but we still provide a written report. Instead of looking at every room, we focus on major systems and/or on areas where the client is particularly concerned. The client might tell us that they are more concerned with the roof, the attic, the foundation, HVAC, etc.,” says Klima.

From a business standpoint, Klima says that it just isn’t feasible to do a lot of walk-through or even limited major system inspections. “The lower revenues associated with these assignments don’t make sense for our business model. Whether it’s a major systems inspection or just a Walk and Talk, you still have to schedule an inspection slot, drive out there, etc. That’s less money that our inspectors make per inspection slot. We still have to document everything that we see. For our Indiana operations, if you get paid to inspect anything in a house, you have to put those inspection findings in writing,” says Klima.

Aardvark is a larger multi-inspector firm that operates in Michigan, Indiana, and Ohio, so Klima is careful to note that every market is different. “Our Fort Wayne, Indiana location has done a few Walk and Talk inspections but our main focus is really on providing full home inspections. Walk and Talks devalue the inspection process. I am concerned about the client. I want them to be 10 0% protected by getting a fullblown home inspection,” argues Klima.

Real estate agents are ultimately the ones who are “steering the ship” when it comes to waiving the home inspection process, but Klima says that not every agent is happy or comfortable 8

Working RE Inspector Fall 2021

with the situation. “What real estate agents don’t realize is that in the long run, waiving a home inspection could cost them money because when a client moves into a house and they find a bunch of problems, first and foremost, they are going to blame the agent. Even if they don’t sue that agent, they’re never going to use that agent again. But in a worst-case scenario, they are going to sue the listing agent, the buyer’s agent, and the seller,” reports Klima.

Always an Opportunity The best way to address this red-hot market, according to Klima, is to step up your marketing. “In a pre-COVID market, let’s estimate that normally 95 out of 10 0 homes were getting inspected. And today in my local market, maybe only 80 out of 10 0 homes are getting inspected. If my firm kept our same market share, we would naturally suffer that 10–15% drop, all other things being equal. So, we need to market harder than ever so we can get that increased market share. We need to get a bigger piece of the pie. And if the pie is growing due to increased transaction volume, that’s even better,” says Klima.

Aardvark is marketing straight to the general public about the importance of getting full home inspections. Klima says Aardvark makes Facebook posts, runs Google Ads, and then boosts some of those Facebook posts to the local area.

As part of its strategy to reach homebuyers directly, Aardvark is actively promoting the benefits of post-closing, pre-movein inspections. “We have been putting the word out on social media and in all our direct communications that we have with potential homebuyers. Our message is: ‘Don’t waive your inspection to make your offer more attractive, but if you’re absolutely going to waive the inspection, then inspect it after you close.’ People learn so much more about their house when they have a full-blown home inspection. So, if a homebuyer is in a situation where they have to waive the inspection to get the deal, it absolutely makes sense for them to get the home inspected before they move in,” reports Klima.

On its website, Aardvark promotes post-closing, pre-move-in inspections as a way for homebuyers to: 1. Make sure there are no health and safety hazards.

2. Document the condition of the home before moving in.

3. Learn about the home’s systems and how to maintain the home.

4. Get an upgraded / additional home warranty.

This is a great example of how home inspectors can turn a business challenge into an opportunity. Klima recently posted a video to his social media accounts where he interviews one of his buyer-clients who purchased a post-closing, pre-move-in inspection. The buyer explains that he and his wife waived the inspection in order to get the deal done, but still wanted to have the home inspected for safety and maintenance reasons, as well as general peace of mind. Aardvark is successfully using this approach to increase its volume and give homebuyers peace of mind before they move in.

Capturing Buyer Leads Lastly, Klima has been using his own service, InspectedHouses. com, to connect with buyers directly as well as to build his connections with real estate agents. InspectedHouses.com is an entire marketing suite that can also be used to capture buyer leads directly for both the agent and the home inspector. “We’ve built a system where we work with agents and create custom yard signs with a phone number that interested buyers can text for more information about the home. We do a custom sign (or signs) for each of the agents we work with. The sign has both our and the agent’s logo. The agent puts the signs in the yards of their listed homes—we don’t have to do anything. When potential buyers text the number on the sign, the agent gets the buyer lead and we do too. If they get just one lead per listing that turns into a sale, it’s an incredible benefit to them,” says Klima.

The result is that InspectedHouses.com brings a steady stream of homebuyer leads in the door for both Aardvark and for the agent/broker. “Being able to market directly to potential buyers in this way is absolutely key for us, plus being able to offer this to our agents is a great way to build relationships. We just brought on a new real estate agency that we’d been trying to win for years. We showed them the program—they really liked it and now they’re sending us all their buyer’s inspections. We place lead capture signs in the yards for houses that are for sale.

Not only do we get a steady stream of direct homebuyer leads, but the Aardvark logo is in that yard for 30–9 0 days at a time.

That’s good marketing for us—better than flyers sitting in real estate offices,” argues Klima.

Shifting Market Professionals with an interest in the real estate market are increasingly talking about if and how the market will shift.

Klima argues that it’s not a question of if, but when. In his local market, Klima is already seeing a rise in the number of homes on the MLS, homes staying on the market longer, and a shift back to a “normalized” market. At press time for this issue (early Fall 2021), similar sentiments are being reported in other local markets across the country. Hopefully, the result will be fewer home inspections that are waived and a retreat from the extreme seller’s market of the last 18 months.

Anticipating an eventual cool- down of the market and a decrease in sales volume, Klima says Aardvark has shifted its focus away from just the number of inspections, but on adding services and increasing the revenue per inspection. “Even with an aggressive marketing approach, we know that as the market shrinks, the number of inspections we do will shrink, so we’ve begun adding more services and adjusting our pricing. We just started doing well inspections as an added service. We also offer mold and radon testing. Our approach is to increase the revenue per inspection by adding additional services and adjusting pricing. This has ensured that Aardvark always has a record year, year after year, even if the number of inspections fluctuates,” reports Klima. WRE

Working RE Inspector Fall 2021

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Home Inspectors and Crazy Stories

by Ian Robertson, Inspector Toolbelt

I have been a home inspector for many years, and one thing

we accumulate a lot of are stories—and we would love to hear yours. Here is how it works: After reading this stor y, email info@inspectortoolbelt.com to share your own story!

Stories have to be true and anonymous: don’t add any information that will make others in the story identifiable (i.e. a seller’s name).

Be sure to add your website address, company name, and other things like that for a boost on Google for your website when we repost it at www.inspectortoolbelt.com.

After we review it, we will send you a notification that your story is posted. To get the ball rolling, here are a few of my own crazy home inspection experiences.

The Dog Days of…January?

I once pulled up to an inspection in the middle of January and everything was covered in ice. I heard dogs barking so I waited in my truck. No one was there and the dogs appeared to be just inside the house. So I walked over toward the door to ring the bell and look for a hose bib. Just then, the door opened, and out came two Dobermans snarling and growling at me. I pulled out a screwdriver (I don’t know…it seemed like the thing to do) and slowly made my way to my truck facing the dogs. Then a third one came out and jumped toward my head. I turned quickly but it clawed at my back and snipped at my head (fortunately I was wearing a thin, tear-proof coat that protected me). At that point I had no choice but to run…and then a fourth one came out and latched into my leg. I then dragged it to my truck and got it off of me and closed my door—and just sat there bleeding. The lady came out and seemed unphased and left her dogs attacking my truck trying to get to me—and left me bleeding. I called the police and an ambulance came. The lady wanted proof that I had actually been bitten; apparently because as I was laying in a pool of my own blood in her driveway—she took out a camera and starting yelling for me to take off my pants so she could take a picture…I still can’t feel parts of my left leg.

No Bones About It One time a client of mine hired me to inspect a building. He was foreign, but wouldn’t tell me where he was from. He had Ian Robertson is a veteran home inspector, owner of three inspection companies, owner of Full View Home Inspector Marketing, and one of the founders of Inspector Toolbelt. Inspector Toolbelt is simple administrative and scheduling software for home inspectors that makes running your inspection business easy and automated.

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a proxy sign all his documents and was very secretive. Well, as we inspected the house, we found bones…human bones (it was a 20 0+ year–old house). He knew a surprising amount about the bones though—like their names and he recognized them as human bones right away. He was about 70+ years old, and as we stood outside waiting for the police to check the remains, he thought that would be a good time to hit on me… so I left and I did not work for him again.

Just Awkward…

I was doing a pre-listing home inspection for a professional photographer. His home was absolutely beautiful and immaculate—and huge. As I came into one of his two-story living areas, he had a 20 foot by 9 foot enhanced photo of his wife… completely naked…where he and his family hang out. And just as I entered there, I also met his wife…and she wanted to discuss the inspection, next to the naked picture of herself!

Butt of the Joke There are a lot of naked people stories in the home inspection industry—too many to tell. But this one weirded me out just as much as the last experience. A woman loved to take nude photos of her husband apparently. So there were naked photos of this guy all over the seller’s house. As I was trying not to look at any of them, I went into a speech to my client about defects. I was being long-winded with it, so when my clients and the agents kept giggling, I thought it was them laughing at how long I was talking. But then I looked over and there was a big picture of the husband’s…well…a close-up of the middle of his butt…right there next to my face. The agent took a picture of my surprised face and the hole in question.

Down the Rabbit Hole Once I climbed into one of the longest crawlspaces I have ever been down. As I crawled through it, I reached over to look at something and then got shocked and thrown to the side. After I came to, I found a buried service wire…it hurt like crazy. At the same inspection, I also found that their well was missing… not their pressure tank, not other equipment—but their actual well (hole in the ground, pipe, etc.) was gone! And no one knew where it was.

Poo Rocket Another crawlspace story. I went into a crawlspace of this huge house that had been added on to a dozen times or more—and

my client decided to come in with me. It was the weirdest crawlspace I have ever been in. It was a labyrinth—and we even got a little turned around. As we were making our way back, we heard the septic guy leaving and saying the septic system looked good —but he left the water running. A few moments later, something that was blocking a pipe broke loose and started shooting poo water everywhere in the crawlspace and flooding it. We ended up “wading out” instead of crawling out. Yikes!

Saving My Bacon One time I was inspecting a home in a city and they apparently had a pet pig, but not a small one like you would expect in a city. This thing was a couple hundred pounds or more and came up to my waist. The pig got out of its pen and started chasing the agent around the house (the sellers told us he was not pleasant). I got the pig’s attention and it chased me right out the door and the agent escaped out the back door.

“The Roof is Fine” I went to inspect an empty home and the roof was reported to be composite tile and in great condition. I was able to get a better look and noticed that it was just old roofing that had been painted. I went into the home and my clients were in this house eating wings and drinking tequila. So, I mentioned the roof and they said that the inspection is just a formality, that the roof is fine, and there is nothing I could find that would make them think something is wrong with this house. So I go and turn the heating unit on and everything looks fine. I go to the attic and I couldn’t believe it. There were bags of water taped to the roof sheathing. It turns out that when there was a leak, the sellers taped plastic to the roof sheathing and they would just fill up with water. Some areas just had plastic bags. As I was looking at this—I smell smoke and find that the heating unit has caught on fire! I race to take care of it and stop it—and also find the smoke detectors weren’t working. So finally I go to my clients and say “your roof has bags of water hanging from it and your heating unit caught on fire—I think you should reconsider what you told me earlier.” They then put down their wings and booze and took it a bit more seriously.

“It’s Raining Men” I climbed into an attic and the listing agent insisted on going in after me. I asked him several times not to and stated it was unsafe. He insisted, and as he was telling me how he wants to protect his clients’ interest…he falls through the ceiling. He’s OK (he caught himself on the ceiling framing), but he paid to fix the ceiling…and he was obviously embarrassed.

A River Runs Through It I once called out a brand new $15,000 patio because it leaned toward the house. Everyone (including my client) got upset at me because they thought I was just trying to make trouble. I told them that in heavy rains all that water hitting the patio would roll back into their basement. They walked away and I continued my inspection. Like something from a movie—we had a freak rainstorm while we were in the basement and, of course, the basement began to flood. The window wells filled up with water, a river began to form in the basement, and we all got buckets trying to help. I still have a video of the frogs literally swimming in the water. Let’s just say, they believed me after that. WRE

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Importance of Customer Experience Management

by Paul Zak, President of America’s Call Center

You own a home inspection business. Congratulations! You

are a rare individual representing less than 10% of the U.S. working population who is taking the risk to own their own business. It is not easy being a business owner, but it can be an extremely rewarding experience for you and those you help with your business on a day-to-day basis.

You also chose a very competitive industry tied to the real estate market. Depending on where you live, it might only require a simple business license to start a home inspection business. Even in licensing states, the barriers to entry are relatively low when compared to other businesses. According to IBIS World, there are over 32,0 0 0 inspection businesses employing almost 50,0 0 0 inspectors. This includes sole proprietors, multi-inspector firms and franchises. The good news is that most home inspection transactions are at a local level. The not-so-good news is that, at a local level, you might be competing against both well-established inspection businesses as well as the newcomers hoping to score big by lowballing prices (which is not good for anyone in the industry).

Real Estate: Not Following Typical Cycles In addition to a competitive home inspection industry, we have a non-traditional real estate market, where inventory has been at record lows for a considerable amount of time. Add a pandemic on top of the seasonal market cycle and many regions are seeing an even lower inventory—new housing starts are well above median home prices and a shortage of low-income and affordable housing. This can make it very difficult to predict what is next for the housing market! Despite all of that, 2021 was a record year for many businesses while others had to shut down. While there is still expected to be a lot of volatility in the market, 2021 is projected to see existing home sales up seven percent and single-family home housing starts up nine percent (https://w w w.realtor.com/ research/2021-national-housing-forecast/). IBIS World is forecasting that 2021 will end with an over eight percent increase in home inspections over 2020.

Paul has been President of America’s Call Center since 2003. As a respected leader, national speaker, and true innovator, Paul continues to set a standard for excellence in the inspection industry. He holds a B.S. in Chemical Engineering from University of Rochester as well as a Masters of Business Administration (MBA) from University of Colorado Denver.

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What’s going to happen in 2022? Nobody has a crystal ball, but Freddie Mac is predicting that while home price increases will moderate or slow in 2022, home purchase mortgage originations will increase from $1.8 trillion (2021) to $1.9 trillion, with the number of home sales transactions remaining relatively flat at 6.9 million. If that prediction holds true, it means 2022 should see a similar number of home inspection transactions as 2021.

Competitive Landscape 2022 will see a potentially flat market, coupled with new inspection businesses starting in most regions along with some chur n with your agent/customer base. These factors could have a significant impact on your bottom line if not anticipated.

If you have an established business plan and are hitting all your business goals, great! If not, there are ways to improve.

There are several aspects of your business you should evaluate to see if they are at the level you would expect: • Branding – Do you have a personal brand or a business brand? Is the messaging clear, and concise? Do people know your company and what it stands for?

• Business Development and Marketing – Are you doing regular agent and customer outreach? Are you engaged online?

• Lead and Sales Management – Are you educating clients, booking and upselling your services at the highest possi ble level?

• Inspections – Are there opportunities to increase effi ciencies with your existing systems?

• Customer Experience Management – What are the expe riences for the agents and clients who engage your com pany? Are you considering the experience from before they reach out to you to well past the inspection report and summary?

The rest of this article is going to focus on one aspect of your business that can have a tremendous impact: Customer Experience Management.

Importance of Customer Experience Management (CXM) You may have seen some of the following: • 80% of customers say the experience a company pro vides is just as important as its products or services – McKinsey & Company.

• 70% of buying experiences are based on how the customer FEELS they are being treated – McKinsey & Company.

• 67% of customers say they would definitely be willing to PAY MORE for a great customer experience – McKinsey & Company.

• 51% of customers will never do business again with a company after just one negative experience – Forrester Research.

• 33% of Americans say they will consider switching companies after just a SINGLE INSTANCE of poor ser vice – American Express 2018 Customer Service Study.

How you treat your customer, from the moment they first contact you and throughout the entire experience, is paramount in not only retaining your agents and clients but is critical to growing your business. In today’s world, it is what separates you from the other inspectors around you. Assuming you already have a solid marketing plan in place, it can be argued that CXM is now one of the most important business growth tools a business owner can deploy. Controlling and managing the customer experience from the very first call (when they are making the decision to use your services) and beyond will make for a happy client, which will translate into a happy agent, which will turn into more referrals, increased positive reviews and more!

What is Customer Experience Management (CXM)?

CXM has been defined as: The discipline of understanding customers and deploying strategic plans that enable cross functional efforts and customer-centric culture to improve satisfaction, loyalty and advocacy. (Gartner.com) Stated more simply…

•

•

Customer Experience (CX) – The perception of your customer of their interactions with your company.

Management (M) – The process of identifying how well (or not) your company is meeting the customer expectations with each customer interaction and putting plans in place to maintain areas that are currently positive and improve areas that are not.

Perception is a key word here. You’ve heard the adage “Perception is Reality” and that is ver y tr ue in this industr y. You may believe your customers have the best customer experience, but you really don’t know unless you ask and get honest feedback. And that perception is across all aspects of your business. The customer is building a perception of your business and your brand from the moment they hear about you—whether from an agent, a website search, or that first call. Does that first impression set the stage for the rest of their experience?

For example: •

•

•

Do your agents say, “You need to give XYZ Inspections a call, they will take great care of you!”?

Does your website provide them with a great experience, or overwhelm them with clutter and details?

When their call is answered after a few rings, does a friendly voice greet them, giving the time to answer all their questions about one of the biggest purchase decisions they may be making in their lives?

And it goes on from there. Are you focused on delighting the customer at every step of the process? Are your marketing materials friendly and engaging? Are you handling leads, offering your services and booking inspections in a helpful, easy manner? Is handling special requests a non-issue? After the inspection, how would you describe the reaction of your customer? How are you addressing questions or concerns they may have? What are you doing post-inspection to make sure the agent and client received the best possible experience?

How to develop a CXM Strategy Here is a four-step process to help you develop a CXM strategy.

1.

2.

3.

4.

Understand Your Customer Create a Customer Journey Map Develop an Emotional Connection Capture Customer Feedback

Understand Your Customer There are several ways to better understand your customers.

One of the best is to consider the different types of customers you have experienced, so you know how to market to them. Typical profiles include the first-time homebuyer, the down-sizer, the up-sizer, the investor, etc. Write them down, then create “personas” for them. A persona is a fictional representation of the customer based on what you know about them. A first-time homebuyer might be “Melinda Millennial, who saved up enough money for a down payment, has a steady job and two dogs, and is nervous about home ownership.” Once you capture some of the key characteristics you can tailor your marketing accordingly.

Create a Customer Journey Map Here is where you want to capture: • • • • •

The Buying Process User Actions Emotions Pain Points Solutions

There are multiple templates on the web that you can select and tailor to your needs, the important thing is to capture all the different areas where the customer interacts with your “brand,” how they move from one experience to another (initial contact, booking, delivered inspection, post-inspection page 148 Working RE Inspector Fall 2021 13

7page 13 follow-up, etc.) and what they experience at each step. This may feel like a lot of work that you inherently “know,” but the exercise is well worth the effort. You’ll probably be surprised at the new insights it will bring to your business and brand.

Develop an Emotional Connection This can be challenging, especially during a pandemic. Still, at the most basic level, when a client or agent is interacting with you, your business and your brand, you want them to feel: This person/brand/company is honest, has integrity, and I can trust that they will do their best for me throughout the entire process.

If they are not feeling a connection, develop an approach that will get you there. Brands that gain that reputation will be the ones experiencing the growth.

Capture Customer Feedback Research from Bain & Company shows that 80% of companies believe they are providing great customer service. Only eight percent of their customers agree with them! That’s a big gap. How do you capture customer feedback?

• • • • • • • • • •

Send a follow up email Initiate surveys via text/SMS Create physical survey forms Conduct customer interviews Monitor social media channels Offer incentives for feedback Host social media contests Use feedback monitoring sites Use a reputation management service Reach out to agents who have stopped using you

TRAINING INSTITUTE

Bottom line, if you are not asking for customer feedback on a regular basis you probably don’t have a good idea as to what they are really thinking.

Conclusion Customer Experience Management will require both thought and effort, but once you have a system in place the benefits will far outweigh any costs. And you are not alone—everyone associated with your brand, including your inspectors, office staff and partners, has a role to play and can help with the ongoing efforts. In the end, if you have a brand that is perceived to be delighting its customers, you will see more business, more revenue and more satisfied agents and clients. WRE

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Working RE Inspector Fall 2021 15

Setting Yourself Apart from Your Competitors

by Isaac Peck, Editor

Chances

are you are a competent, careful, and well-trained home inspector. Your clients know they can count on you to deliver a quality, professional home inspection on one of the biggest purchases of their lives, right?

From a sales perspective though, what sets you apart from other home inspectors who are competing with you for every deal?

In a market where you are competing with other experienced and conscientious home inspectors, being a well-trained, competent, and professional home inspector is the baseline. It’s a must to even get you in the door. But what is it that sets you apart and puts you over and above the competition?

Are you going to compete on price? The lower your prices, the more inspections you have to do to make the same amount of money. Besides, being the low-priced leader in your market is not the best way to position yourself as the best, most competent inspector in your area.

The best part is that you can offer this 120-Day warranty for as low as $12.50 per warranty ($12.75 to non-OREP Members).

You can build this into your inspection fee, or even include it in your “Gold” or “Premium” inspection packages—costing you nothing!

To recap, the CP™ 120-Day Warranty includes coverage for: •

• •

All major mechanical systems (HVAC, water heater, furnace, range, and more!)

Mold, Sewer, and Water Line coverage Framework, Foundation and Roof coverage (up to $2,000 towards deductible)

Are you a member of a Professional Association such as the American Society of Home Inspectors (ASHI)? That’s good, but any legitimate competitor is going to also be a member of his or her local or national association, with extensive training and certifications—you name it.

Angie’s List Super Service Award

Your Competitive Advantage

Additionally, the 120-Day Warranty Program includes the following benefits and enhancements that set it apart from other warranty products:

One way to set yourself apart from competitors is to offer something that the majority of home inspectors do not offer: a 120day warranty.

Sometimes you only get one conversation with a potential client or one click to your website to close the deal. So, offering your clients a warranty that covers most of the home’s major mechanical systems, including the HVAC, furnace, thermostat, water heater, dishwasher, range, and more—is a win-win strategy for both you and your client.

In addition to coverage for all major mechanical systems, OREP’s 120-Day Warranty program through Complete Protection (CP™) also includes $1,000 of coverage for any Mold, Sewer or Water Line issue. The 120-Day Warranty also covers Framework, Foundation and Roof issues, up to $2,000 towards any deductibles paid towards homeowners insurance claims.

So not only are you a competent, experienced inspector, but you also offer a 120-Day Warranty that puts your client’s mind at ease and adds even more value to the service you provide.

16 Working RE Inspector Fall 2021

The 120-Day Warranty program is backed by a warranty company that has been serving home inspectors in the United States and Canada since 2006. It is only one of two home warranty companies in North America to receive Angie’s List Super Service Award.

•

•

•

• •

NO age restriction on appliances or heating & cooling systems—other programs don’t protect anything older than 11 years old.

NO limit on mechanical repairs—other programs limit repairs to just $500.

Claims are handled over the phone—no submission of itemized claims for review before receiving service.

Customer can call customer service 24×7.

No exclusions for lack of maintenance, rust or pre-existing conditions.

• No deductible or copay—service calls are not covered under some other programs.

In short, a warranty “backs up” the quality of your service for clients and gives them peace of mind about their very important purchase. Your client gets a valuable warranty that helps cover the costs of any unfortunate system breakdowns after page 188

Working RE Inspector Fall 2021 17

7page 16 they move in, and you get a unique selling proposition (USP) that you can use to stand out from your competitors. Who would choose an inspection without a warranty when they could get the peace of mind for free?

Fewer Headaches for You But it’s not just about giving the client a better experience or giving yourself a competitive advantage. Using 120-Day Warranties also makes for fewer headaches and less claims for you.

You read that right—offering 120-Day Warranties means you can now avoid the worst part of home inspecting—trying to satisfy unhappy clients.

There are no statistics on this, but probably 80% of client complaints about their home inspections are small issues usually covered under a home warranty. Imagine when your clients have a problem with something after they’ve moved in, they call the home warranty professionals to resolve it instead of calling you. Ah… These professionals handle these issues all day long, quickly and efficiently. Are you smiling yet? You don’t get into any verbal “discussions” over what you are or are not responsible for. You don’t go back to the property numerous times; you don’t take out your checkbook. You don’t repair anything yourself and you don’t feel badly either, because if the issue is legitimate, it will be repaired/ resolved professionally by the warranty company.

Additionally, a warranty can be the first line of defense before a problem is referred to an E&O carrier—solving the problem

HOME INSPECTION INFORMATION AT THE TOUCH OF A BUTTON

before it becomes one. No more losing sleep or valuable work/ family time trying to resolve small, time-consuming complaints that plague every inspector from time to time. Issues covered under the home warranty are resolved directly by the pros at the warranty company—bypassing you completely.

And the process is simple for all involved. You receive straightforward marketing materials for your website and to provide to your client, including the warranty itself. To issue the warranty, you simply register it online with your client’s information. Once you register the warranty with the client’s name, it is activated for them and good to go. That’s it. If there’s a problem, they call the warranty company, not you.

Conclusion Offering a low-cost, reliable home warranty will help you grow your business by offering potential clients a service your competition does not. The peace of mind a home warranty offers your clients makes your business the easy choice. Now you can spend your time home inspecting and marketing, not resolving complaints. Yeah!

So differentiate yourself from the competition and remove nuisance problems from your plate by adding a home warranty to your inspections. Visit OREP.org/warranty and enjoy a special offer: Buy 10 Warranties and Get 10 Warranties FREE. You will also enjoy free enrollment in InspectorAdvisor.com at checkout. InspectorAdvisor.com is the place home inspectors get their tough inspection questions answered fast! For more about the comprehensive OREP E&O program, visit OREP.org or call OREP at (888) 347–5273 . WRE Both NHIE manuals are now available as e-books: Mechanical Systems and NHIE Content Manual Structural Systems and Business Manual.

The new NHIE e-books contain the same great content as the hard copies and have features that allow for an immersive experience, such as highlighting, creating notes and flashcards, a read-aloud feature, and more.

These manuals are designed to help you prepare for the exam and include helpful insights into the types of questions on the exam and techniques for success.

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18 Working RE Inspector Fall 2021

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Working RE Inspector Fall 2021 19

On Again, Off Again: Understanding Well Pump Systems The Science Behind Your Inspection

by Tom Feiza, Mr. Fix-It, Inc. HowTo OperateYourHome.com

Private wells and well pump systems are beyond the scope of

many home inspectors, but we all should understand the basic science behind submersible pumps, well pressure tanks, controls, and typical private well systems. Inspectors should know how to recognize a short-cycle pumping problem often called a “water logged” tank.

Typical Submersible Pump System Under normal conditions, a private well system utilizes a submersible centrifugal pump immersed in water near the bottom of the well casing (Figure 1). The pump lifts and pushes water through a pipe in the well casing and then through an underground pipe into a storage/pressure tank in the home. The pump is hung from the vertical pipe and the pitless adapter on the side of the casing. The pump can be “pulled” from the casing on the pipe and disconnected from the adapter. Today the pipes are often plastic.

During an inspection you may see the well casing outside and it should be at least 12 inches above the soil to prevent contamination. The cap on the casing should also be a gasketed/sealed cap as shown (Photo 1). On the side of the casing, you can see the electrical conduit for the 24 0V electrical to the pump. The pressure/storage tank, pressure controls, pump control, gauge, and sampling valve will be located inside the home.

Figure 1: Well Pump (Submersible) and Pressure Tank

Photo 1: Private Well Casing

Some of these systems are located in exterior pits or sheds but that is not common. The tank and piping must be protected from freezing conditions. There are also shallow well systems with “jet” pumps that sit on top of the casing— again not a common system.

Typical Pressure Tank and Well System The storage tank or pressure tank limits the cycling of the pump by storing water and maintaining a cushion of air over stored water or air over a rubber bladder containing water (Photo 2).

The picture shows a typical, modern, blue, pressure tank in a basement. The small gray box on the side of the tank is the pressure switch/control that monitors the pressure in the tank and switches the red relay box on the wall providing electrical current to the pump. Modern tanks are also made of fiberglass.

Photo 2: Modern Pressure Tank

There are shut- off valves and a sampling valve. On the left side of the tank, the pipe from the well casing enters the basement. In this case, there is a casing visible—often there page 248

22 Working RE Inspector Fall 2021

7page 22 is just a copper or plastic pipe through the wall. The electrical wiring also feeds through the casing on the wall. The bond from the main electrical panel is connected on both sides of the tank because there is a rubber (non-conducting) vibration isolator in the pipe to the well.

Outside, well systems typically have a six-inch steel casing placed in a hole drilled down to the water table. Inside this casing is the small four-inch diameter pump and motor (Figure 2). The pump has a 24 0V volt motor directly connected to a series of impellers. On a call for water (low pressure in the tank), the motor spins the impellers to create sufficient pressure to push water up into the storage tank, compressing the air in the tank. The pump and tank design are matched to the quantity of water desired and the depth of the well.

Storage Tank / Pressure Tank Types There are three basic types of well pressure/storage tanks as shown in the illustration (Figure 3).

Conventional Tank: This older style tank is an air over water tank and normally galvanized steel. Some also include a system on the pump that adds a little air every time the pump starts—those have an air release for excessive air (See Figure 5, pg. 26). When there is too much air, the float drops and releases air. With an air volume control, you will often see a rusty/damp area on the side of the tank below the air release. It will look like the tank periodically leaks.

Figure 2: Well Pump - Submersible

This type of tank is used today when there are contaminates in the water that cause that rotten egg smell. They reduce the smell in the water by allowing water to be in contact with air in the tank.

Floating Disk Tank: This is a galvanized steel tank with a floating disk to limit the loss of air into the water. When there is a direct air/water interface, air is lost into the water. With this tank, the air/water contact is limited by the floating disc.

Sealed Diaphragm Tank: This is normally a blue painted steel tank (See Photo 2, pg. 22). This type includes a complete separation of the air/water with a rubber bladder. However, the rubber bladder can fail and allow this type of tank to lose the air cushion.

Water Use Triggers System: When someone in the household draws water, air expands in the tank, pushing water out into the system. This reduces air pressure in the tank (See Figure 4, pg. 26). As pressure in the tank approaches 4 0 psi, the pump switches on, refilling water in the tank and restoring the air pressure. When the air is compressed to about 60 psi, the pump turns off. This operation allows the home’s water flow to remain almost constant, as the 20 psi pressure change is rarely noticeable.

The pump is controlled by that gray pressure switch located on the pressure tank. Systems typically run between 40 and 60 psi 24 Working RE Inspector Fall 2021

Figure 3: Well Pressure Tanks

page 268

7page 24

Figure 4: Modern Well Storage Tank - Water in Expandable Bladder

but can be set to a higher or lower pressure. Often, pressure is set with a simple spring and screw adjustment inside the pressure switch housing. This also means the pump does not run every time water is used. The pump will cycle on after a quantity of water—perhaps three gallons, is used. This limits the start-stop cycle of the pump.

Loss of Air Cushion Causes Problems: Problems occur when the system loses its air cushion (See Figure 6, pg. 28). In systems with no bladder, air is simply lost through contact with the water, with the air cushion disappearing over a period of several months. Some systems have a floating disk that slows the loss of air. Air loss can also occur with rubber bladder systems when the bladder fails.

When there’s little air in the tank, the system kicks in repeatedly whenever someone draws as little as a quart or even cup of water. The pressure switch clicks on- off- on- off and the pump turns on and off. With the pressure fluctuating so quickly, noticeable changes occur in flow and pressure. This “short-cycling” will eventually damage the pump.

Other Private Well Systems: Some shallow well systems have a “jet” pump that sits on top of the shallow well casing. These are often found in areas around lakes. Some older systems have a deep well jet pump that has two pipes in the water that inject water to create pressure. These systems also rely on a pressure tank to even the water pressure and flow—and limit cycling the pump.

In recent years, sophisticated systems have become available, providing a variable-speed pump to vary the flow/volume of water; these eliminate the pressure tank or use a very small

Figure 5: Well Tank with Air Volume Control

pressure tank. They depend on a complicated control and pump system.

What Home Inspectors Should Know If you run water during a home inspection and notice quick variations in pressure/flow or you can hear the pump quickly cycling on-off-on-off, you should note this as a potential issue to be evaluated by a specialist. I like to run water in a fixture near the pressure tank and listen for the well cycling. In this case, you are not doing a private well inspection but simply pointing out obvious issues that need further evaluation. page 288

26 Working RE Inspector Fall 2021

7page 26 Whenever there is a private well system, you should recommend further evaluation by a specialist and water testing for possible contamination.

Also know local municipal health departments often require routine testing. Health departments also require abandoned wells to be properly closed and sealed to prevent contaminates from entering the water table. Normally private wells must be fully operational and tested and you should note the caution in your report for further evaluation. If you find a well system that is not being used, that needs to be reported for further evaluation. Well casing in pits and basements is often not allowed without special pit drainage systems. WRE Tom Feiza has been a professional home inspector since 1992 and has a degree in engineering. Through HowToOperateYourHome.com, he provides high-quality marketing materials, books for homeowners, and illustrations that help professional home inspectors educate their customers. Copyright © 2021 by Tom Feiza, Mr. Fix-It, Inc. Reproduced with permission.

Figure 6: Well Pressure Tank Problems

Visit HowToOperateYourHome.com (or htoyh.com) for more information about building science, books, articles, marketing, and illustrations for home inspectors. E-mail Tom (Tom@htoyh.com) with questions and comments, or phone (262) 303-4884.

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Working RE Inspector Fall 2021 29

Inspecting Tandem Circuit Breakers

by Rueben Saltzman, Structure Tech

Today I’ll set the record straight on tandem circuit breakers. I’ll

explain what they are, when they can be used, and how a home inspector can figure all of this out. This is an updated version of an article I wrote for the ASHI Reporter back in 2011.

First, a quick definition: A tandem circuit breaker is a double circuit breaker that takes up the space of a single circuit breaker on a panelboard. People also refer to them as duplex, slimline, twin, half-height, half-inch, double, and wafer breakers, depending on local customs. Oh, and cheater breakers too. While a twopole circuit breaker gets connected to two different poles at a panelboard, and has a common trip or a handle tie for simultaneous disconnecting of two poles, a tandem breaker does not.

Photo 1: Tandem circuit breaker

Photo 1 shows a 60-amp two-pole circuit breaker at the top, then a 15-amp tandem circuit breaker (highlighted), then a 20-amp tandem circuit breaker (highlighted), then a 20-amp single-pole circuit breaker at the bottom.

Photo 2 shows an older style tandem breaker found in Square D panelboards.

Because tandem circuit breakers allow for two circuits to be installed on a panelboard in a one circuit breaker space, they’re typically used after a panelboard has been filled to capacity with standard circuit breakers. Because of this, they’re often referred to as “cheaters.”

Despite the misnomer, this is not cheating. It’s perfectly fine to use tandem circuit breakers on any panelboard that’s designed for tandem circuit breakers, provided they’re installed in the proper locations.

How does a home inspector determine whether tandem circuit breakers are allowed on the panelboard they’re inspecting?

There are a number of ways to do so.

CLASS CTL PANELBOARDS Panelboards must follow UL Standard 67, which requires all lighting and appliance panelboards to be Class CTL (Circuit Total Limiting). To help determine if tandem breakers are allowed, first consider the age of a panel.

Reuben Saltzman is a second-generation home inspector with a passion for his work, and is the owner and president of Structure Tech. Visit his blog online at: https://www.structuretech.com/blog/.

30 Working RE Inspector Fall 2021

Photo 2: Tandem breaker on Square D panelboard

Pre–1965: Old panels that predate the CTL standard didn’t have a hard and fast rule for the number of circuit breakers allowed.

Sometimes the panel has clear labeling, but not usually on these old panels (See Photo 3). In these cases, it’s possible that tandem circuit breakers are allowed in every space in the panel. These breakers will be labeled “For replacement use only. Not for CTL assemblies.”

1965 to 2008: Here’s an old formula for determining how many circuits are allowed in Class CTL panelboards made during this time period. This formula is helpful to use when you’re inspecting older electric panels without clear labeling inside the panel.

Take the amperage of the panelboard, multiply by the number of poles, and divide by 10. It sounds complicated, but it’s not— let’s use a 100-amp panelboard as an example: 100 Amp x 2 Poles = 200 200 / 10 = 20

As a home inspector, this is helpful because if I look at a 10 0 amp panel with 20 spaces, I immediately know that the panel doesn’t allow tandem breakers. I don’t have to spend my time studying panel diagrams in this case.

Photo 3: Non-CTL Tandem Circuit Breaker

Photo 4: Notched bus stabs for tandem circuit breakers

2008 to today: For the newer panels, you simply go with what the manufacturer tells you, and the labeling is usually clear. Previous editions of the National Electric Code (NEC) limited the maximum number of circuits in a lighting and appliance panelboard to 42. The 20 08 version of the NEC removed the “lighting & appliance” panelboard designation, however, NEC 408.54 says: “A panelboard shall be provided with physical means to prevent the installation of more overcurrent devices than that number for which the panelboard was designed, rated, and listed.” Manufacturers still list the maximum number of circuit breakers allowed and must provide a rejection feature to help prevent the use of tandem circuit breakers where not allowed.

REJECTION FEATURES Class CTL panelboards have different methods of preventing class CTL tandem circuit breakers from being used in locations where they’re not allowed. This is referred to as a “rejection feature.” In Photo 4, the highlighted bus stabs are notched to allow the use of tandem circuit breakers; the bus stabs which don’t have this notch won’t allow tandem breakers.

Class CTL tandem circuit breakers have a different shape than standard single-pole circuit breakers, to help prevent them from being installed where they don’t belong (See Photo 5).

Tandem circuit breakers are manufactured this way in an effort to prevent people from using them in an improper manner, but this doesn’t stop everyone. Here you can see how someone broke the bottoms of the circuit breakers to make them fit where they didn’t belong (See Photos 6 and 7). This is probably where the term “cheater” comes from.

Photo 5: Tandem breaker (left); Standard breaker (right)

Photos 6 (left) and 7 (right): Broken tandem breakers

Based on this formula, the maximum number of circuits allowed in a 10 0-amp, 120/24 0-volt panelboard is 20. A 150-amp panel would allow a maximum of 30 circuit poles, and a 200-amp panel would allow a maximum of 4 0 circuit poles. For panelboards not manufactured as “lighting & appliance” panelboards, there is no limit to the number of circuit breakers allowed.

As I mentioned above, panelboards manufactured before the adoption of the Class CTL standard allow non-Class CTL tandem circuit breakers to be installed. Non-Class CTL tandem circuit breakers do not have the “rejection” feature that Class CTL breakers have. As clearly indicated by the label on the side of the circuit breaker (Photo 3), these circuit breakers are not allowed in Class CTL panel boards.

The difficulty for us home inspectors is that we usually can’t see the marking after the breaker is installed. The only way to see this, usually, is to remove the breaker. And home inspectors shouldn’t be pulling circuit breakers during home inspections.

Does the Panelboard Allow Tandems?

Now that I’ve talked about the general rules for tandem circuit breakers, I’ll discuss the ways that home inspectors or electrical inspectors can determine when tandem circuit breakers are allowed in various panelboards. page 328 Working RE Inspector Fall 2021 31

7page 31 Model of Panelboard The model or part number of the electric panelboard will usually indicate whether or not the electric panelboard is designed to accept tandem breakers and how many can be used. Here are a few examples:

8

9

G30 4 0BL120 0 = 30 spaces, 40 total circuits allowed.

Up to 10 tandem circuit breakers can be used.

G3030BL1150 = 30 spaces, 30 total circuits allowed.

Tandem circuit breakers are not allowed.

BR1220B10 0 = 12 spaces, 20 total circuits allowed.

Up to 8 tandem circuit breakers can be used.

Photo 8: Allows tandem breakers (left) Photo 9: Panelboard allowing no tandem breakers (right)

BR1212B10 0 = 12 spaces, 12 total circuits allowed.

Tandem circuit breakers are not allowed.

HOMC20U100C = 20 spaces, 20 total circuits allowed.

Tandem circuit breakers are not allowed.

I think it’s easy enough to see the pattern.

A DIAGRAM INSIDE THE PANELBOARD The wiring diagram inside the panelboard is a determine if tandem breakers are allowed and, where they’re allowed. Here you can see that spaces allow only full-size breakers, while the slots allow tandem breakers (Photo 8).

great way to if so, exactly the top four bottom eight

Photo 10: Tandem breakers allowed in panelboard

This panelboard doesn’t allow any tandem breakers (Photo 9).

Here’s another panelboard diagram—this panelboard allows the use of tandem breakers in four locations (Photo 10). Photo 11 shows a panelboard that allows tandem breakers in the bottom ten spaces only (11–20 and 31–4 0).

Another easy thing to look for is a label stating the maximum number of circuits allowed. Here you can see that only 20 circuits are allowed at the panelboard (Photo 12). This panelboard has 20 full-size spaces, so tandem circuit breakers aren’t allowed.

What’s the Concern with Tandem Circuit Breakers?

When tandem circuit breakers are used in locations where they’re not allowed, they could make an improper physical connection to the bus bar in the panelboard, which can create a fire hazard. Tandem circuit breakers also increase the total load on the bus bars in a panelboard; this is where home inspectors need to use common sense.

When a home inspector finds tandem circuit breakers used in improper locations, they’ll often recommend repair by an electrician. If the bus bars of the panelboard have been damaged or altered to allow for the installation of tandem circuit breakers, the proper repair is to have the panelboard replaced. There is no way for a home inspector to determine if the bus bars have been damaged without actually removing the circuit breakers, which is something home inspectors shouldn’t be doing. WRE 32 Working RE Inspector Fall 2021

Photo 11: Tandem breakers allowed in bottom ten spaces

Photo 12: Maximum number of circuits (poles) allowed

Information for this article was provided, in part, by Alan Manche of Schneider Electric, Stephen Ploszay of Siemens Industry, Inc., and Joseph Fello of Eaton Corporation. Also, a special thanks to Retired ASHI Member Douglas Hansen.

Don’t Walk Away from Running Water

by Isaac Peck, Editor

The title says it all, doesn’t it?

All joking aside, accidental home flooding happens more often than you would think. Home inspectors, who are otherwise careful, well-trained, and conscientious, do inadvertently flood the bathroom, kitchen or laundry room. The result is a costly cleanup and repair, not to mention a public relations nightmare as the inspector then has to explain what happened to the homeowner, all real estate agents involved and their client. It’s not pretty and can cost you business and future referrals, not to mention the costly repair and clean-up costs if you’re not insured.

Here are a few scenarios of how this happens.

Shower, Bathtub, Sink After washing machine floods, the next most common scenario involves flooding the bathroom.

In a video titled “Home Inspection Fail Files: Bathtub Floor,” posted to his Structure Tech Home Inspections YouTube channel, Rueben Saltzman, CEO of Structure Tech tells the story of how this happened to him seven years ago.

First, you might be asking: why fill up the bathtub at all though?

Neither ASHI or InterNACHI Standards of Practice (SOP) require the home inspector to fill up or test shower pans and bathtubs.

For example, the ASHI SOP states: “The inspector is not required to fill shower pans and fixtures to test for leaks.”

Even though not required by most SOPs, Saltzman says he still thinks it’s a good idea to test bathtub overflows. “We start our home inspection by filling up the bathtub and I think home inspectors ought to check those. I never used to inspect bathtub overflows. I once had a client call up two months after my inspection saying that the first time they used the bathtub it over flowed like crazy, the over flow drain didn’t work, and it flooded the ceiling. ‘Why didn’t you check the bathtub?’ I explained to my client that we didn’t do that as part of our SOP. But since then I think it’s a really good idea to check bathtub overflows to make sure they don’t leak and make sure that the client is protected,” argues Saltzman.

Isaac Peck is the Editor of Working RE magazine and the President of OREP, a leading provider of E&O insurance for appraisers, inspectors and other real estate professionals in 50 states. He received his master’s degree in accounting at San Diego State University. Reach Isaac at isaac@orep.org or call (888) 347-5273. CA License #4116465.

34 Working RE Inspector Fall 2021

Back to Saltzman’s story: he explains that he was training another home inspector at the time and the bathtub in the master bathroom was a “gigantic” two-person bathtub. “We got the entire second floor inspected and this tub was still only half full. So instead of just sitting around doing nothing, we said we’ll continue on with the first floor and come back in five or 10 minutes to see how it’s doing. Fast-forward 20 or 30 minutes and I see water coming out of a place in the ceiling while I was in the basement,” says Saltzman. The realization hit him like a ton of bricks. “All of a sudden it clicked that I never shut that tub off. And I felt my face turn beet red instantly and I ran upstairs.

My other inspector was already there using all the towels at his disposal to clean up one of the biggest messes you’ve ever seen. That tub overflowed and it really made a huge mess. That made me question whether I was in the right line of business.

It was such a stupid mistake and I don’t know how anybody could do something like that. I don’t think I slept that night,” says Saltzman.

Saltzman explains that this event happened seven years ago— he just now feels comfortable talking about it. “I’m over it now, it’s only seven years later,” he jokes. But even still, at the time, he had over 10 years of home inspection experience under his belt. Saltzman runs a ver y successful home inspection firm in MN, and has served as the ASHI Heartland Chapter President as well as on the Board of Directors for ASHI National. Suffice it to say that if this can happen to Saltzman, it can happen to you.

“I’m telling this story as a precaution to other home inspectors out there. I still test bathtubs because I think it’s the right thing to do. And I still encourage you to test bathtub overflows even though you’re not required to. My advice to home inspectors is

(1) Don’t leave the bathroom, (2) if you do absolutely have to leave the bathroom, set a timer or get yourself a water alarm.

You can stick the alarm right near the overflow, so that whenever the water gets close to the overflow your alarm goes off,” advises Saltzman.

Here at OREP, we would advise you to stick to Saltzman’s first recommendation as much as possible: don’t walk away from running water. Just don’t do it.

Laundry Equipment Despite what the title suggests, it’s not just running a faucet or shower that can cause a problem. How about the washing machine? We’ve seen cases where a home inspector runs the washing machine to “test” it, but the drain line isn’t connected to the wall drain. The home inspector starts the washing machine and then leaves the room. “I’ll come back in 30 minutes and check how it’s going,” the inspector might think.

Then 30 minutes later, the washing machine has drained gallons and gallons of water all over home and the result is damaged flooring, water-logged baseboards and drywall, and sometimes extensive water damage that requires a professional restoration contractor to repair.

Like testing bathtub overflows, testing a washing machine is not required by ASHI or InterNACHI SOPs. If you do decide to go the extra mile and operate the washing machine or other home systems that involve draining water, you need to make sure the drain hoses are connected and stay very present and in close proximity during the “test.”

Liability and Risk Management Here at OREP, we have seen enough cases like this to know that it does happen, even to experienced, well-trained inspectors.

Sometimes the inspector becomes impatient waiting for the bathtub to fill. We’ve have seen cases where the home inspector receives a call while testing the bathtub or shower, and then steps out of the room to take the call.

In some cases, a flooded bathroom can turn into a flooded master closet, flooded master bedroom, etc. The damages for cleanup and repair can be extensive as flooring, drywall, baseboards, and even ceilings may need to be repaired or replaced.

On the high end, we have seen damages exceed $20,000 for a claim like this. In extreme cases, in addition to the cost of repairs, the homeowner (seller) might also demand money for the costs of delays in the home sale, carr ying costs of the home while it is being repaired, and even the cost of alternative living arrangements due to mold concerns and “health issues.”

OREP’s primary program employs a team of experienced claims adjusters and attorneys who specialize in home inspector liability, and we do our best to defend our insureds. However, as you might imagine, it’s hard to get you out of a claim where you are personally responsible for flooding someone else’s home. So be careful and stay safe out there! Visit OREP.org for comprehensive home inspector E&O insurance and expert risk management—serving inspectors for over 19 years. WRE

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Working RE Inspector Fall 2021 35

Insurance IQ: Defining Professional Services

by Isaac Peck, Editor

Have you ever wondered what your home inspector E&O policy actually covers?

OREP E&O insurance agents are frequently asked: “Am I covered for infrared thermography?” Or “Am I covered for radon testing?” Or “Am I covered if I perform an inspection for pests/termites?” If you’re covered through OREP and you’re a professional home inspector performing “professional services” as a home inspector, the answer to the above coverage questions is most likely yes.

OREP policies are tailored specifically for home inspectors, providing coverage for “Professional Services” that you might provide as a home inspector. Defining coverage in this way is commonplace for most (if not all) professional liability policies, also known as errors and omissions insurance (E&O).

It follows then that “professionals” should purchase professional liability (E&O) insurance specific to the services they provide. The good news for OREP home inspectors is that you have broad coverage for a variety of services and assignments that you might pursue. Most policies in the marketplace are broad, but always ask your agent if you have any questions—whether you are with OREP or not.

Here is an example of how “Professional Services” is defined in OREP’s primary home inspection policy: “Professional home inspection services” means only the non-invasive visual examination of the ‘readily accessible’ installed systems and components of a building, as identified and agreed to in writing by the client and “insured” prior to the inspection process, performed for others for a fee, and for which a written home inspection report is generated.”

You can generally begin with the premise that most services you provide in your capacity as a home inspector of real estate are covered, unless it is specifically excluded in the policy. If you’re thinking, well then what’s excluded is pretty important: you’re right! When you get your policy, you should review the Exclusions section first—right after you make sure your name is spelled correctly!

For example, with the OREP flagship or primary program, there is no specific exclusion for termite/ WDI, pool or spa inspections, carbon monoxide testing, lead paint inspections, radon testing, drone inspections, EIFS/stucco inspections, and more.

36 Working RE Inspector Fall 2021

Mold NOT Excluded One important difference in OREP’s policy is that the primary program does not exclude mold! You read that right, there is no mold exclusion in OREP’s policy; this can make a big difference if you are currently insured in a program that excludes mold. Mold and water damage claims are quite common with home inspectors. Please note that this is distinct from mold testing, which requires additional premium and training. An example might be missing a water leak, which causes mold damage and something the policy should respond to. This is different from testing for mold and making a mistake.

In OREP’s policy, sub-limits apply to some coverage items, which means the maximum the insurance company will pay towards a specific type of claim may be capped at $10 0,0 0 0 or $250,0 0 0, even if your policy limits are $50 0,0 0 0, for example. (Ask your OREP agent for details.)

So what are some common exclusions? OREP’s policy (and most policies, for that matter) excludes asbestos claims, any operations that you perform under a different professional license (general contractor, appraiser, agent/ broker, etc.), and any transactions where you also conduct repairs or construction on the same property that you inspect. And so on.

To summarize, your inspector E&O policy (even if you’re not with OREP) will likely start with a broad definition of “Professional Services” and then go on to list very specific exclusions to those professional services. You want a policy that affords broad coverage for a variety of services you might perform in your capacity as a professional home inspector, and that does not specifically exclude what you want covered.

Takeaways 1. Look for an E&O policy with a broad definition of Professional Services.

2. Read your policy—pay attention to what is excluded.

3. Ask your agent about coverage and exclusions if you have questions.

Check out OREP for broad coverage, competitive pricing and efficient, professional service. OREP has been serving home inspectors with their insurance and risk management needs for over 19 years. We specialize in home inspector coverage issues and provide free pre-claims assistance for our inspector insureds. Got questions about your policy’s coverage or how best to avoid claims? Give us a call at (888) 347–5273 or visit OREP.org to learn more. WRE

Part of the OREP Professional Support Network

Professional Marketplace EXPANDED HOURS 8-8 EST (5-5 PST) (888) 347-5273 LIVE CHAT at OREP.org E&O/GL Insurance Broad Coverage, Peace of Mind Broad coverage should never be optional, according to Isaac Peck, Senior Insurance Broker at OREP. “If you want to do the best for yourself, your family and your business, be sure to choose a professional insurance policy that will protect you adequately should the unexpected happen,” Peck says. “A broad policy covers you for the threats that you can anticipate as well as the unexpected ones that you don’t see coming. A broad policy covers all the bases and keeps you safe.” The OREP E&O insurance program includes Errors and Omissions, General Liability/Off-Premises Coverage, Radon, Termite/ WDI/ WDO, Lead Paint, Pool & Spa, EIFS/Stucco, Indoor Air Quality Testing, Green Building Inspections, and Infrared Thermography. Prior Acts, multiple inspectors, commercial, additional insured for agents/referring parties and much more are included. Mold and septic are available. Please ask your OREP agent for details. All insureds/ members enjoy free claims assistance, risk management and automatic membership in the OREP Professional Support Network ($95 value), which includes free, on-demand inspection support, savings on professional contracts, discounted state-approved education and training, Working RE magazine, discounts on office supplies, technology and more. Call toll-free (8 8 8) 347–5273 or visit OREP.org. OREP—Organization of Real Estate Professionals Insurance Services, LLC. California License #0K99465.

Save on Office Supplies, Telecom and More Corporate savings is a little-known but significant cost-saving benefit of being an OREP insured/member.

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California OREP Insureds/Members—Group Medical $10,000 Life Included OREP insureds/members in California enjoy group access to several medical plans, including certain Kaiser Permanente and Blue Anthem plans. The group plans provide benefits not available to individuals and at no extra cost. Those who purchase their medical coverage through the OREP group plan also enjoy a $10,000 life insurance policy included at no extra cost. The policy, written through Mutual of Omaha, is guaranteed-issued without any exclusion for medical conditions and pays double in the event of accidental death and dismemberment (AD&D).

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The Evolution of the Home Inspection Industry

by Aaron Dunn, NRCIA

Most

people in the market to purchase a new home trust that a professional home inspector will perform a thorough evaluation of their potential new property. In fact, the majority of people are so used to the idea of home inspections that they seldom think twice about where the concept came from in the first place.

The truth is that home inspections in their current form are actually quite new to the real estate industry. Our modern understanding of the home inspection process has only been around for half a century at best. Before that, home buyers were very literally left on their own.

So how did the home inspection process get its foundation in our modern world? And when it comes to more specific situations like roofing issues, what systems are in place to protect today’s home inspectors from negligence and liability cases?

How Professional Home Inspections Began If you wanted to buy a home at any time period from the beginning of private property up until the past hundred years or so, you had little choice but to inspect the property yourself before paying the seller. Without a professional inspector, unless you were welltrained or experienced enough to notice minor details like faulty appliances or a damaged roof, you were simply out of luck.

Later, when your appliances stopped working properly or the roof leaked at the very first rain, it was nobody’s fault but your own.

In fact, the Romans had a term for it: Caveat Emptor, or “Let the Buyer Beware.”

This system stayed in place all the way up to the early 20 th century, when buyers’ rights began to slowly take shape in the legal systems of civilized countries worldwide. Soon, professionals known as “home inspectors” began lending their services to real estate agents, buyers, sellers, and others involved in the sale of residential properties. But this popular new system was not developed fully until several important court cases helped to define the industry as we know it today.

Lingsch v. Savage In 1962, a real estate broker sold a property “As Is” to a group of buyers. The property was in a state of disrepair, so much so that proper officials had placed the structure under condemnation. The buyers sued the real estate broker, saying they were led to believe the property was in “legal tenantable and properly repaired condition, as required by law.” This led to Lingsch v. Savage, a court case Aaron Dunn is a content specialist with more than seven years in the industry. He primarily works as a copywriter for professional service firms. He earned a Bachelor of Science in political science and contributes regularly to online publications. Aaron has worked for NRCIA since May 2021.

38 Working RE Inspector Fall 2021

that determined that an “As Is” sale does not relieve real estate agents from their “duty” to have a full inspection performed on a property.

Easton v. Strassburger In 1984, a case called Easton v. Strassburger set precedent for all states to look to in litigating disclosure cases related to home inspections. The reason the case was brought forth was simple: a homeowner sued her real estate broker when massive earth slides on her property destroyed part of her driveway and damaged the foundation of her home. The decision in the case cemented the Case Law that real estate brokers are responsible for investigating and disclosing any defects they discover in a property they list for sale—also known as Civil Code 2079.

After Easton v. Strassburger, the home inspection profession began to resemble its modern-day form—however, there were too few practices standardized to establish what each home inspection should include. Associations like the American Society of Home Inspectors (ASHI) were created to publish standards of practice, but they were neither widely known nor strictly adhered to by real estate brokers. Instead, those brokers would use contractors or engineers for specific purposes, which eventually led to a far more decisive case in how home inspectors could legally operate: Wilson v. Century 21 GWR. Wilson v. Century 21 GWR After the Wilson family purchased a home in 1987, they discovered some severe foundation problems and sued the seller’s real estate brokerage for fraud. However, the defendants from Century 21 GWR argued that they had indeed used professionals to perform inspections and therefore should not be held responsible for the results of those inspections. The appellate judge ruled that real estate agents using professionals to conduct inspections for disclosure must ensure that the information they produce meets the requirements of Civil Code 2079, thus relieving sellers as well as selling agents of further duty with respect to those items of information. However, they were still liable for any items not inspected or disclosed by themselves or a professional, which led to Civil Code 1102.4 and the expanded use of home inspectors.

The New Norm These days, home inspections are performed in the vast majority of residential property sales. If you are a home inspector, you are most likely a very busy professional—an integral part of the real estate process.

However, the case of Wilson v. Century 21 GWR created a serious legal burden for home inspectors, as they can now be held liable for errors and omissions in their inspections. Instead of Caveat Emptor, we now have Caveat Inspector: “You Inspect It, You Own It.”

It’s critical for home inspectors to remember that they are generalists. In other words, it’s their responsibility to “Refer and Defer” when they suspect there may be an issue with a property’s foundation, structure, roof, electrical, plumbing, or otherwise.

to provide reports, Watrous noticed that many inspectors neglected to bring ladders to inspect two-story buildings and instead referred out to inspectors in more appropriate trades to complete inspections.

Civil Code 1102.4 states clearly that “…the expert shall not be responsible for any items of information or parts thereof, other than those expressly set forth in the statement.” This means that home inspectors must be extremely careful about every word they write in a report and defer always to the experts when it comes to specific aspects of the inspection. In other words, if they see a structure that could collapse in the future, but is standing strong at the time of inspection, they only need to say that it is currently standing in their report. If they see a roof that could possibly leak within a certain period of time, they only have to report that it is not currently leaking.

As the years went by, homebuyers began to complain about the roofing contractors they were referred to by their inspectors.

Rather than a detailed inspection report, buyers would simply receive an estimate written on the back of a business card or letterhead. They felt that the roofing contractors were merely trying to sell them on future services instead of educating them on the true health of their roofs.

From Home Inspectors to Roof Inspectors In the late 1970 s and early 1980 s, there were very few home inspectors in the United States. When real estate agents and homebuyers wanted a thorough inspection, they would reach out to general contractors. One of those contractors was Les Watrous, who specialized in roofs and roofing structures.

Watrous quickly realized that the inspection process was nowhere near as thorough as it should have been, and often led to liability lawsuits for the inspectors involved. As home inspection associations formed and sent out their inspectors

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Noticing this trend, Watrous decided to create a company that focused solely on providing roof inspections. In 1993, he formed Cert-A-Roof to meet buyers’ growing need for high-quality, detailed roof inspections. His goal was to set aside free estimates and instead work to educate buyers, sellers, and agents on the conditions of their roofs. His customers wanted assurance that their roofs were in proper shape, so he created a roof certification to provide the stamp of approval buyers so desperately wanted. This certification was designed to not only protect the buyers but also sellers and real estate agents who wanted certainty that the roof in question would be leak-free for a minimum of 2 years. The detailed report Watrous issued his customers acted as an unbiased evaluation page 408

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Working RE Inspector Fall 2021 39

7page 39 of their roof system, enlightening the property owner as to exactly what was wrong with it and how to fix it. Then, when the time came to shop around for contractors, they could refer to their report with confidence and avoid being upsold.

Providing the LeakFREE® certification as part of the roof inspection process gave further credibility to Cert-A-Roof. As he performed his inspections, Watrous would examine the interior of the house, the attic when accessible, the exterior perimeter of the house, and finally the rooftop itself. If he noticed spots that were leaking or were likely to leak in the future, he took pictures and created detailed inspection reports so that buyers, sellers, and agents could fully understand what was wrong. The idea behind this practice was to create a report that had total transparency so that nobody could question its validity. Watrous found that in many instances, contractors would perform simple patch work when, in reality, a complete roof replacement was necessary. With their report in hand, his customers could avoid being undersold by contractors who would only perform a fraction of the work required to ensure the roof was in the best possible condition.

Ultimately, by creating the LeakFREE® certification, Watrous established a new industry altogether.

The Establishment of the NRCIA In 1995, Watrous noticed that reports from other contractors in his industry were still lacking in detail, professionalism, and quality.

Thus, he took out a trademark for the National Roof Certification Association and sought to create an industry standard for roofing inspections similar to the standards for professionalism set by home inspection associations.

In the year 2000, Watrous changed the name of his association to the National Roof Certification and Inspection Association (NRCIA) so as to avoid confusion with the National Roofing Contractors Association. In 2001, Watrous developed an inspection reporting software that set the standard for what a roof inspection should look like. As the industry leader in roof inspections and certifications, the NRCIA has played a major role in the evolution of the home inspection industry. The purpose of the NRCIA is to establish and maintain a standard of excellence for the roof inspection process that did not previously exist. When customers deal with an NRCIA-certified member, they always know what to expect: detail, professionalism, and quality. Members are able to used web-based inspection reporting software from their desktop PCs or mobile devices and issue LeakFREE® certifications as part of the proprietary system provided under NRCIA membership.

Today, more and more buyers, mortgage underwriters, and homeowners insurance companies are requesting roof inspections that come with LeakFREE® certifications because they want assurance that roofs are not going to leak. When home inspectors refer out through the NRCIA, they are able to dramatically lower their risk for negligence lawsuits because they are referring to a professional association guaranteed to issue genuine, comprehensive inspection reports. Plus, roofing inspectors associated with the NRCIA are trained to be both transaction—and inspector-sensitive. This means that home inspectors will find peace of mind that the roofing system on the property they are responsible for inspecting will be in responsible, trustworthy hands.

40 Working RE Inspector Fall 2021

NRCIA certified roof inspectors perform in-depth inspections, examining interior walls, ceilings, attics, attached garages, perimeters, and rooftops for visual evidence of leaks and provide thoroughly written inspection reports. Then, they determine whether or not the roof in question has a likelihood of leaking within a given period of time, establishing a LeakFREE® certification for two to five years, depending on the state of the roof.

As we move further into the 21st century, we may see even more developments in the home inspection industry. For now, we can all breathe easy knowing that trustworthy, talented professionals are available to ensure that properties everywhere are fully inspected for their safety and their value. And with associations like the NRCIA on their side, home inspectors can feel confident that every aspect of their inspections is thorough and professional—especially when it comes to the roof. However, if a home inspector does see a roofing red flag, they have the option of recommending a LeakFREE® roof certification for their customers’ properties. WRE

Tip for Home Inspectors To learn more about how NRCIA’s new affiliate membership can protect you and your business and enhance your service, please visit www.nrcia.org.

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