Starting a home inspection business is no different from starting any new business. As an entrepreneur, you have to draw up a business plan for your home inspection business. You need to research and comply with government regulations specific to the industry and the state or country you reside in. Depending on the market, the average struggling period for a new home inspection business is 12 to 24 months.
Let me be the first to say that it owning your a home inspection business is a rewarding experience, but it does require dedication and hard work. The hours you commit to your business may well exceed those of a typical job, so be prepared. Time management can make or break a business.
Is it the right time to start a home inspection business in the current economic climate? Yes!
The Bureau of Labor Statistics (BLS) estimates that the home inspection industry will grow by 10% by 2026. With a growing economy that is increasing the size of the middle class, homes in the suburbs are in demand, and the 10% prediction is plausible. Like the automotive industry, the return of real estate industries to the US pushes the need for urban homes.
Here’s some pointers for beginning your own home inspection business:
- Always be punctual.You may think you are your own boss because you own the business. Still, when you commit to a business-related arrangement, you become a service provider, so being punctual is part of the service you will be rated on. An unhappy client will vent their frustration out on you, which may lead to unnecessary legal action or a negative review of your business.
- Be presentable. Dress professionally and make sure your hair is well kept. I know the job requires you to crawl in dusty places and climb roofs but try and keep your fingernails clean; wear gloves when you work. You need to make and maintain a good impression.
- Have everything you need with you, including a small notebook and a pen with a spare if you need it.
- You should invest in a second vehicle for your private use. The business vehicle should only be used for business purposes. Remember, keep your business and personal life separate. This will allow you to record business fuel usage and miles traveled accurately.
- Ethical conduct. Always be truthful and record the facts as you uncover them. A seller may ask you not to mention a problem you discovered with the home in return for a little something in your pocket. If you accept a bribe, then close your business before it gets closed for you. Stick to good ethics and run a professional business.
- Have a policy for non-specified tests. If you come across a problem that requires a test not included in the inspection agreement, you need to inform the client and note it on your inspection form that the client must sign. If they declined to do that test, their signature would prevent possible future legal actions against your company if problems arise from the test not being done.
- Don’t hesitate to get a second opinion. Suppose you are in doubt about the severity of a situation or problem. In that case, it is best to get a second opinion. It may lower your profit for the job, but it could save you in the long run. Besides, you will learn through experience. Here’s some of my favorite favorite home inspection forums to get opinions from fellow inspectors.
- Avoid rushing into jobs. Never rush inspections. Always do a thorough inspection and record everything as you go along.
- Do not overbook. Only book the number of inspections you can complete in a day. Do not overbook yourself. Work over the weekend if you must, but be wary of shipping your bookings out to other inspectors. They will not necessarily have the values or expertise that you do.
- Put time aside every week to network with the people and companies who provide you with clientele. Try and keep this time slot a standard marketing feature in your diary.
- Keep a list of clients you have done inspections for and contact them occasionally, maybe to wish them well on an upcoming public holiday, send some gifts. By doing this, they may show their appreciation by recommending friends to use your services. Every small bit of marketing counts.
- Keep your tools and equipment neat. I can’t stress how important it is to keep your tools and equipment clean, but above all, you must make sure everything functions correctly. Tools that need calibration must be checked every morning before you leave for your first inspection.
- Focus on healthy client relationship. This is also an essential feature in your business. Speak to your clients and give them an idea of what the inspection entails. Keep them informed and answer questions they may have. If you promise to deliver the report at a specific time, you need to keep to your word. Here again, this is marketing at work.
Your prior knowledge and experience of home inspection requirements will give you the necessary foundation to confidently set up your venture. The step-by-step guide I have put together below will help you get your business up and running. However, please note that this is a general guide.
This guide is designed to reduce your stress levels and help you address challenges you may face along the way. I’ll round off our time together will some handy tips from professionals in the home inspection business.
How to Start a Home Inspection Business
Here are a few crucial points to consider in your startup home inspection business. Some points are necessary to prepare your business for your first working day, while others successfully run your business. It would be best to remind yourself that an estimated 50% to 60% of all new home inspector businesses will fail in the first few years for reasons I will cover in this article. This failure rate is mostly because new business owners do not follow sound advice and do not adopt a professional business approach.
- The Home Inspection Business Plan
- Business Name
- Business Registration
- Tax
- Certification and Legal Compliance
- Start-up Capital
- Monthly Operational Costs
- Market Related Service Costing
- Identifying Target Market and Marketing Mix
- Business Branding
As an entrepreneur, you will need to begin by drawing up a business plan for your home inspection business. First things first, you need to research the market you want to operate in so the information from your research can be used as a basis for your business plan.
I suggest you use a template specific to the home inspection industry and make necessary changes to reflect the values derived from your research.
let’s dive in and discuss more about each and every elements of a full-proof home inspection business plan.
Business Name
It is all in the name! To register your business, it must have a name, and the name you select is essential to your business identity. Clients will relate you to your business name. An unsuitable or difficult to pronounce name may end up costing you a lot of business.
It would be best if you were pragmatic when selecting a business name. Get creative but make sure your business name cannot be linked to adverse events. It should be catchy so that people will remember it.
The name can be anything but should indicate the type of business you do.
Your company name is critical and should not reflect your beginning status as a one-person business, so don’t use a name like “Joe’s Home Inspection Services.” Choose a name that will grow with your business, no matter how small your business starts or how big you plan to become.
Make a list of other services you may want to include in your business later and use this to help you decide on your business name. The word “inspection or inspectors” should feature prominently in the name you choose on. You’ll see why in a minute.
Business Registration
Registering your business is another vital part of your well-being concerning legal compliance and asset security. The home inspection industry is prone to lawsuits against inspectors for not detailing faults or damages caused during the inspection. For this reason, it is not wise to register as a sole proprietorship as your assets have no protection, and you could stand to lose everything you own.
Registering as an LLC (Limited Liability Company) will protect your personal assets. An LLC is viewed as a separate entity; therefore, personal and company finances and assets must be separated. Each must have its own bank accounts.
An LLC has a further benefit. Should you wish to incorporate other home-related services in your business or to include commercial property inspections as a diverse service, you can do it all under your existing LLC.
Expanding your business is a straightforward process of creating a DBA (Doing Business As) under your LLC name. By working through a DBA linked to your LLC, you can maintain your business name, your business identity and include several different business opportunities.
Tax
Businesses in the United States are required to register for an EIN number (Employer Identification Number). Your EIN is your business tax identification number, and without it, you will not be able to open a business bank account or employ staff.
Different states have different tax codes that may influence deductibles and how much tax should be paid. It is best to familiarize yourself with the tax laws and requirements in your state or country.
Certification and Legal Compliance
As a home inspector, you need to acquire the necessary knowledge, skills, and experience to perform the job. This will include writing and passing exams that will certify you as a legal and legitimate home inspector.
Of all inspection reports compiled, 86% of inspectors found faults that needed to be repaired before the sale could be approved, proving how important certified training is in this industry.
Each state has its requirements; therefore, it is best to contact your local regulatory authority to ensure compliance.
Certification and legal compliance are mandatory requirements. Most states require the home inspector to be licensed, competent in his duties, and comply with all territory laws and regulations.
This ensures that home inspectors will ethically conduct themselves, making safety and fairness a priority in the relationship between buyers and sellers in the real estate market.
Start-up Capital
Every business needs capital to cover the initial costs of starting that company. They must be able to operate for a few months until the business can sustain itself.
For a home inspector business, an essential list of investments and expenses are provided below, which presents an overview of some of the costs to consider:
- Training courses and registration costs with the appropriate institutions.
- Business registration costs.
- Business vehicle and vehicle insurance.
- Vehicle fuel and maintenance costs.
- Home inspector tools.
- Communication devices like cell phones, computers, website design, activation, and monthly expenses.
- Office supplies.
- Company branding and marketing material.
- Liability insurance (critical).
- Legal representation in the event of legal action against the business.
- Health insurance.
- Branded work apparel.
Monthly Operational Costs
I urge you to have a decent bookkeeping system in place to keep track of the business finances and general operations. You should always be aware of the cost of doing business.
Operational costs also referred to as “overheads” in the industry, vary from month to month. However, there are standard or fixed costs that recur monthly irrespective of your business turnovers like liability insurance fees and property/office rental if you do not work from home.
Even if you work from home, you must calculate the business area you use in your home and list it as an expense. Here are some monthly business costs to pay attention to:
- Rental- be sure to note the expiry date of the agreement and possible future increases.
- Vehicle fuel.
- Vehicle insurance.
- General vehicle maintenance and repairs.
- Office supplies and telephone costs.
- Marketing costs.
- Tool repair and replacement costs.
- Miscellaneous expenses like replacing a lost cell phone or purchasing additional work apparel.
Market Related Service Costing
What are home inspectors being paid on average in the marketplace? What should you charge for your service? This is a vital part of your business that will ultimately determine your success.
The Florida Association of Building Inspectors conducted a poll in 2019 and discovered that 67% of inspectors did not know each inspection cost. If you do not know your numbers and what costs are associated with inspections, your business will fail.
I made this mistake, but it didn’t take me long to realize that I had to deduct more than my fuel from the inspection fee to see the profit. With this, I found fools gold. What I did was exaggerate my profit. When the time comes to pay taxes, purchase business supplies, or repair your vehicle, you soon realize how important bookkeeping is. My profit per inspection turned out to be substantially less but still good enough to build my business.
It is wise to slot into the current market pricing, somewhere in the middle. Only when you have developed an excellent reputation can you gradually increase your pricing or expand your business.
On average, a home inspection costs between $275 and $400 and is subject to the home’s size and where it is situated. This rate applies to a standard home inspection. There are several tests that a client may request that will significantly increase the quotation and final billing.
Housing density in an area increases the demand for inspection services. This will motivate higher rates being charged in such areas.
The US Department of Housing and Urban Development indicates that the average cost of an inspection is between $300 and $500, depending on the home’s location and size.
Now that we have an idea of what to charge per inspection, we should look at how many inspections can be completed in a day by one inspector.
The average is two inspections per day. Here again, this will vary depending on the size, condition, and location of the property. In most cases, a house inspection will take between 4 and 6 hours to complete, so if you have an early start, you will be able to fit two inspections into a working day.
Target Market and Marketing
Your target market indicates who you want as clients. This would single out home buyers as they are usually responsible for requesting and paying for your service. 72% of Americans say that a home inspection is necessary when buying a home.
Due to the many faults a home may have that are not immediately visible, it is not surprising that such a high percentage would insist on a thorough home inspection. After all, for many, it is the single biggest investment of their lives.
Homebuyers saved an average of $14,000 on their home’s purchase price by investing in a home inspection. I think the savings versus the inspection cost is a fair trade for the buyer, don’t you agree?
Actual home buyers rate higher than the general population concerning home inspections. An estimated 88% of buyers have had inspections done. Of this number, 83% confirmed that the bank insisted on a home inspection. From these statistics, you can see why home inspections are an essential part of buying a home and why networking with financial institutions is another valuable business source.
The tone and manner you speak to estate agents, bank personnel, home buyers, and sellers are great marketing tools and should be used to its full potential. Each has a vested interest in the transaction. The banks and estate agents are more focused on money.
Although concerned about money, both the buyer and seller are emotionally bound in the transaction for different reasons. Speaking in a concerned, understanding, and professional way will do wonders to market your business.
Estate agents secure properties to sell and attract potential buyers. As such, agents can have a significant impact on the success of your business.
To understand how important real estate agents are for your business, recent statistics reveal that 58% of inspection business stems from estate agents. An interesting observation is that 14% of inspection jobs come from recommendations from past clients.
Hosting regular marketing presentations at real estate offices will allow you to network with the agent and build working relationships with the agents you think will generate business for you. It would be best if you also committed yourself to keep to appointment times with agents and to deliver an excellent service to your mutual client, the buyer.
Banks are an essential part of your business generating capacity and may offer you leads to people who have applied for and secured home loans. Every avenue that can create new business should be utilized.
Treating home buyers with consideration and assuring them of your qualifications and expertise helps them to build trust in you. Give them an overview of what the home inspection entails and note any concerns they might have. Word of mouth advertising is said to be the most effective way to generate business. Most leads will develop into an actual business.
I recall the early days in my business, and I can now laugh at some of the things I did that almost cost me my business but luckily, I was still able to claw my way back. One such incident was me as a young cocky business owner with an abundance of inspections that kept me very busy. I had built up a great working relationship with two estate agents who were top performers in their agency. They supplied me with all the work I could handle.
I thought that I did not need to market my services, seeing as I could hardly cope with the workload my agent “marketing team” was dishing out to me. Then on one fine day, both agents let me know they were moving to another state to start their own business.
My inspections dried up. I had to get back to basics, starting all over again. One such lesson was enough for me, and from that time, I have always put time aside to market and promote my business. Please don’t follow my example, instead follow my recovery plan because that has kept me in place to this day. Marketing is the lifeblood of the home inspection business.
Business Branding
Every business that wants to portray professionalism needs to consider brand recognition as part of its business image strongly. Here are a few ways to brand your business:
- Corporate colors.
- Logo.
- Brand printed work apparel.
- Business cards.
- Letterheads.
- Email header.
- Advertising boards and or flags at inspection sites.
- Branded wrap on company vehicles.
- Branded giveaways.
Corporate colors and your company logo are the foundation of your business image. Once you decide what colors to use for your business, you should stick to them, much like your company logo. Business branding gives your business a unique identity that sets you apart from your competitors.
A logo is a graphically created image that will mean little to people who may not be familiar with your company. Still, as they repeatedly see it, they will begin associating it with your business. Corporate colors also identify your business, so, in essence, you are creating a unique presentation of your business.
Branding company vehicles, work apparel, and having advertising boards and flags on inspection sites is active marketing. Your business is being advertised while you are busy doing business.
Business cards, stationery, and giveaways serve the same purpose but on a more personal level. Successful business branding markets your business visually and reaches more potential clients while portraying your business as a professional entity.
It may seem like an impossible task to navigate the different processes to establish your home inspection business as a profitable entity. Still, it is as simple as taking one step at a time. Go through systematically what is required of you, taking each requirement, and fully completing it before moving to the next. You will feel more confident as the process progresses.
Training and attending courses to better qualify yourself should always be a priority in your business. Your credentials will not go unnoticed in the industry.
Develop a disciplined business and maintain a high standard of ethics. Always work to improve your discipline and professionalism. Use your time wisely and carry out each inspection to the best of your ability. If you adopt these values and work hard, you will realize the success you dream about.
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