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Mission
From the Editor
Readers Respond
Buyer Beware: Can Legislation Fix Inspection Waivers? by Tony Jones, Senior Editor
Wrongful Death Claim Overthrown Due to Contract Clause by Kendra Budd, Editor
Use Direct-to-Consumer Marketing to Supplant Lost Broker Referrals by Kendra Budd, Editor
Succeeding as a Solo Home Inspector: It’s About More Than Volume by Preston Kincaid, Kincaid Services
Avoiding a Conundrum When Including an Addendum by Greg Nelms, Nelms Inspections
Avoiding Pitfalls: Common Mistakes Home Inspectors Must Dodge by Kristine Gerber, Inspector Toolbelt
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Insurance IQ: Working With Subcontractors by Isaac Peck, President at OREP.org
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The Challenges of Sealed Attic Access Panels by Reuben Saltzman, Struture Tech
Mulling the Magic (Er, Science) of Evaporation by Greg Johns
Professional Marketplace
Working RE Home Inspector magazine is published tri-annually to help home inspectors build their businesses, reduce their liability and risk, and stay informed on important technology and industry issues.
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Working RE Home Inspector is published by OREP Insurance Services, LLC, a leading provider of home inspector insurance nationwide. OREP has a low cost, broad coverage E&O and General Liability policy that includes coverage for radon, infrared, termite, pest/rodent, lead paint, mold, drone, and more. Visit OREP.org/inspectors for more information or to get a quote in only four minutes!
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by Tony Jones, Senior Editor
The national housing market has slogged along for the last two years, accompanied by a confluence of conditions that first triggered and then prolonged a murky, slow marketplace that has favored sellers and dragged home inspectors along on an uncomfortable ride. But if you look out at the horizon and squint a little, it appears that the fog just might be lifting.
In June, inventory of unsold existing homes grew 3.1 percent from May and was up about 23 percent from a year ago, according to a July housing report from the National Association of Realtors (NAR). In fact, June’s home supply inventory was at its highest level in more than four years, according to Lawrence Yun, NAR’s chief economist.
Though sales prices have continued to increase nationally, supply growth and the looming likelihood that the Federal Reserve will cut rates in September has created some optimism among forecasters that things are beginning to thaw. According to Freddie Mac, average rates on 30-year, fixed-rate mortgages have dipped below 7 percent to 6.73 percent as of Aug. 5. There is also speculation that more impactful, downward movement on mortgage rates could occur late this year or early in 2025, which would likely result in an uptick in home sales volume.
“We’re seeing a slow shift from a seller’s market to a buyer’s market,” Yun said in the NAR report. “Homes are sitting on the market a bit longer, and sellers are receiving fewer offers. More buyers are insisting on home inspections and appraisals, and inventory is definitively rising on a national basis.”
Conventional theory suggests that home inspectors often fare better during buyer’s markets because homebuyers are better able to leverage their position in negotiations and are less likely to waive a home inspection contingency. The longer a home sits on the market, the warier buyers tend to be that an issue with the house may have kept it from selling.
Big picture, these could be positive indicators that this slow cycle could finally be turning more favorably toward home inspectors, even if it requires a bit more patience.
In the meantime, a new law in Massachusetts now guarantees homebuyers the right to a home inspection and bars sellers from having advanced knowledge of a contingency waiver or using it as a selection tool when evaluating offers. There’s a similar bill under consideration in New York that could also stop the wave of waived inspections occurring there. These measures may ultimately serve as a blueprint for other states to follow suit. We do a deep dive into what the bills may mean in our cover story on pg. 6. WRE
I hear the phrase someone “does not have standing” in this case. In your example, would this not hold true if the husband threatened suit because he did not sign the pre-inspection agreement? —Bruce Bealor
Bruce, that would definitely be an argument we made to the court if the husband persisted. —Geoff Binney
Used older (50, 75 , 100-y ear) homes have had many people living in them (and modifying them). In a sense, we put together the story of the home for our clients the best we can, to help them to understand the homes past and how it will affect its future. This takes time. Often, the older the home, the more time it takes. New build inspections don’t usually take as much time. However, I am constantly writing up new comments for new builds because, especially with production home builders, the sub-contractors have to work fast and the quality of work is sometimes lacking. These problems are often, but not always, cosmetic, like the time I found a huge belly in the sewer drain line in the crawlspace. Cory Dion Gant
I’m in total agreement that anything that goes into the report should never be open ended. I report on everything I see regardless if I think it might be insignificant or not. What might seem like nothing to one person may be a pet peeve to someone else. One thing I have learned the hard way through experience is to add two simple words to all my recommendations: BEFORE CLOSING! I lost a $15,000.00 settlement due to failure of not having these two little words in play. I hope this is helpful to some of you out there.
Scott B. Moore
Thanks for this information! It will help many people understand the importance of updating the electrical wiring in their older homes to avoid risks. Conrad Posthuma WRE
by Tony Jones, Senior Editor
The waiving of the home inspection has long been selectively used in real estate purchase transactions, but the popularity of buyers purchasing their homes without any home inspection contingency went into overdrive during the COVID-19 pandemic. As home sales soared, home inspectors rode the wave of transaction volume—but still lost out on a massive segment of business due to inspection waivers.
Here’s some data to put it in perspective. The National Association of Home Builders reports that new and existing home sales in 2020 and 2021 totaled 6.45 million and 6.9 million transactions, respectively.
Meanwhile, alongside this transaction boom, buyers are believed to have waived their home inspection contingencies on 19 percent to 30 percent of all purchase transactions during those years, based on surveys published by the National Association of Realtors (NAR). If we assume that an average of 24 percent of home inspections were waived on these transactions and an average inspection fee of $450, it translates to a staggering $700 million and $750 million in lost home inspection revenue in those respective years.
Here’s what that means for the individual home inspector. If we consider that there are roughly 25,000 home inspection firms in the United States today, this represents an annual loss of revenue per firm of $30,000. For smaller operators, that number could equate to a third or more of their annual income.
What many home inspectors may not realize is that inspection contingencies are continuing to get waived en masse, even today. In 2024, depending on the month, anywhere from 19 percent to 25 percent of buyers are still waiving their inspection contingency, according to the first six Realtors Confidence Index Surveys published by NAR this year.
Those figures help support the contention made by many home inspectors that waiving the inspection contingency has been adopted as common practice, particularly in instances that have multiple buyers vying for the same property. In those cases, buyers often find themselves in bidding wars feeling obligated or coerced to dispense of their primary pre-purchase opportunity to learn what may be wrong with the property they’re about to buy.
Thankfully, the estimates of lost revenue above may be overstated because some buyers do decide to hire home inspectors for post-sale inspections. While that’s good news for home inspectors, it has sometimes revealed disastrous results for buyers, with local and national news outlets sharing stories of homebuyers who unwittingly purchased homes that required six-figure repairs (and regret waiving their initial inspections).
This raises the question: Can anything be done to protect homebuyers and curtail the competitive pressures that continue to drive many buyers to waive their home inspection on what is oftentimes the biggest investment of their lives? Should anything be done?
Some home inspectors think so. In Massachusetts and New York, two state home inspector associations decided to do something about it. Both successfully managed to get bills introduced into their state legislatures that would guarantee buyers the right to a home inspection. Neither bill makes a home inspection mandatory, but both guarantee the option.
In August, Massachusetts home inspectors scored a major victory when key provisions of their bill were signed into law as part of the Affordable Homes Act. Specifically, this new consumer protection makes it illegal for sellers or real estate agents to condition the acceptance of an offer to purchase a home based on a buyer’s “agreement to waive, limit, restrict or otherwise forego” their right to an inspection. It also makes it illegal to accept an offer based on direct or indirect advanced knowledge that the prospective buyer intends to waive their right to an inspection.
Though final regulatory details of this landmark legislation must still be determined, it could serve as the blueprint for home inspectors and industry stakeholders across the United States who have an interest in passing similar measures. What follows are the details.
The state bills are essentially byproducts of the seller’s markets that emerged coming out of the pandemic. At the height of the frenzy, some home inspectors estimated that 80 percent of home sales were closing without a home inspection in their area,
Tony Jones is Senior Editor of Working RE magazine, published by OREP, a leading provider of E&O insurance for real estate professionals. Based in San Jose, California, he has nearly 30 years of business publishing experience and graduated with a bachelor’s degree in journalism from the University of Arizona. To reach him, email tony@orep.org. page 8 8
recalls Jameson Malgeri, president of the New England chapter of the American Society of Home Inspectors Inc. (ASHI) and owner of Another Level Inspection LLC in Gloucester, Massachusetts.
“Everyone that was waiving their inspections was essentially under a lot of pressure, striking out a lot of times trying to get a property,” says Malgeri. “Eventually, even if they started off with the intention of having an inspection, a lot of buyers ended up getting pushed to the point where they felt they were never going to get a property unless they waived.”
Like a boulder rolling downhill, that stance picked up momentum and became prevalent in many local markets. Malgeri and other inspectors wound up performing more post-sale inspections than usual, and heard buyers’ frustrations first-hand. “What I kept hearing from my clients was, ‘I was forced to do this. I really would have liked to get an inspection,’” notes Malgeri. “It’s almost like they were embarrassed or upset that they were forced into this position.”
Occasionally, those home inspections revealed big-ticket problems or unsafe conditions that might have ended the sale or at least deterred buyers from pursuing their purchase without additional negotiations. Collectively, several Massachusetts home inspectors who are members of ASHI New England came to believe they were “uniquely situated to see the negative results of waiving an inspection,” explains Malgeri, and decided to start writing a bill that would better protect consumers.
Eventually, attorney Tad Heuer, a partner at Foley Hoag LLP, was enlisted to draft a workable bill, and state Rep. Brian Ashe signed on to sponsor the bill in the House, while state Sen. Michael Moore brought it to the Senate.
Around the same time, the real estate market in New York faced similar challenges, including an influx of buyers who initially waived their home inspection contingency only to eventually obtain an inspection after their transaction had closed.
“Even in today’s market, if a real estate buyer puts in an offer with a contingency, it’s going to go in the bad stack,” says Henrey Jetty, president of the New York State Association of Home Inspectors (NYSAHI) and owner of Veterans Home Inspection Services LLC in Rochester, New York. “The seller will only accept offers that have no contingencies. Our contention with that is the whole reason for New York state licensing home inspectors was to ensure that due diligence was done on every real estate transaction, so that the buyer knew what they were getting into as far as the condition of the home.
“Home inspectors in New York and across the country do a lot of post-sale inspections now. I’ve had people start crying during the inspection when I start pointing out all the numerous things that are wrong with their home that they weren’t aware of,” notes Jetty. “We’ve had numerous examples of buried oil tanks, cracked foundations, mold in the
attic, bad roofs—the real show stoppers in a real estate transaction. People have bought their homes and then later found out that they’ve got $20,000 to $50,000 worth of repairs. And some of these people have found out that their house is uninsurable.”
Similarly frustrated by the changing market, NYSAHI had been actively monitoring for home inspection legislation nationwide, when it learned of the pending Massachusetts bill. It wound up using a first-generation version as a template for its own bill, which was introduced into the 2023-24 legislative session of the New York Assembly by Rep. Monica P. Wallace, with an assist from the Western New York Alliance of Home Inspectors.
As introduced, the bills were almost identical and set forth to ensure homebuyers have the option to exercise their right to a home inspection within 10 days of an offer being accepted. Again, the hearts of the measures were designed to effectively bar sellers from having advanced knowledge of a contingency waiver or using it as a selection tool when evaluating offers. Exceptions exist for properties under auction as well as those sold to a family member.
The strike down of having or sharing advanced knowledge of an intent to waive a home inspection would essentially change the standard purchase offer in both states, in which prospective buyers can currently indicate their wish for a home inspection if their offer is accepted or signify their intent to forego an inspection. As written, sellers and their real estate agents wouldn’t (or shouldn’t) know ahead of accepting or refusing an offer whether a buyer intends to pursue a home inspection.
The original language in both bills would allow buyers to terminate their offer if they aren’t satisfied with the results of the home inspection, and both expressly state that “nothing … shall be construed to require, mandate or otherwise compel a prospective purchaser to obtain an inspection following the acceptance by the seller of an offer to purchase.” In addition, the bills included a civil penalty that would fine sellers in violation of a buyer’s right to home inspection 4 percent of the home sale price or $10,000, whichever is greater.
The passage of the Massachusetts measure means it will now be illegal for a seller to discriminate offers based on inspection contingencies. However, the final regulatory aspects of the law will be determined by the Executive Office of Housing and Livable Communities.
The language included in the Affordable Homes Act was a distilled version that left the key intent for a buyer’s guarantee to a home inspection intact. It was attached as one of several amendments to the $5.16 billion housing bond bill (H 4977) at the 11th hour as formal legislative sessions drew to a close. Ultimately, the bond bill passed the House 128-24 and Senate 37-2. Gov. Maura Healey signed it into law on Aug. 6.
Meanwhile in New York, Assembly Bill 8889 remained in Committee Assembly after it was introduced on Jan. 26 and did not garner legislative sponsorship outside of Wallace. NYSAHI intends to seek Wallace’s support to reintroduce the bill when the State Assembly reconvenes early next year. In the meantime, the association is running a grassroots effort to educate the public about the value of securing the right to a home inspection as well as drum up additional support from lawmakers.
“Going into negotiations, we put a lot of loophole closures into the bill, knowing that it was going to be massaged and that other associations may have a word into the bill if it has a chance to pass,” explains Jetty. “We’re fighting to get it passed, but some things will come into the bill, and some things will go out.”
Influence from opposing groups could also play a factor in changing or killing the measure, as the bill faces opposition from the New York State Association of Realtors (NYSAR). In a “Memorandum in Opposition” written in March, NYSAR argues the New York bill has “unnecessary restrictions” that are “technically flawed and in search of a problem that does not exist.” It also claims the “bill has the potential to harm middle-class homebuyers with less capital and liquidity by limiting a potential competitive advantage in a tight housing market.”
NYSAR’s reasoning for the latter is the proposed 10-day due-diligence window, which the group argues would delay the transaction and potentially allow higher-priced offers to swoop in. In slower markets, NYSAR contends the 10-day period could harm sellers by holding up other potential offers and propel prospective buyers to move on. The group also maintains home inspections will increase as a result of the bill and likely result in price increases for inspections due to higher demand.
Though market conditions that result in buyers waiving a home inspection contingency are generally more favorable today than during the height of the seller’s markets that helped motivate the New England and New York associations to push for their respective right to home inspection bills, Malgeri and Jetty insist that prevalent factors still exist that make foregoing an inspection dangerous for buyers.
In New York, for example, Jetty says sellers often indicate “unknown” straight down the line on property-condition disclosure forms, which could raise their liability in a sale once an existing problem is discovered and unnecessarily places buyers in harm’s way if they elect not to pursue an inspection.
In both states, buyers waiving home inspections remains commonplace, both inspectors say, whether pressured by a real estate agent, used voluntarily as a tactic to make an offer more favorable, or even as a way to save money. Cost-savings also tends to be a driver for buyers who opt for a cursory walk-through or walk-and-talk, which is much smaller in scope than a typical home inspection, often doesn’t include a written report, and may be conducted by a non-licensed provider. Malgeri and Jetty
both condemn walk-throughs as a violation of accepted standards of practice for home inspectors as well as state requirements, and refuse to do them.
They also believe these conditions disproportionately impact buyers competing to purchase average- and lower-priced homes. “I would say houses in the lowest income brackets are the ones that are definitely being hit the most because those are also the people that don’t have $100,000 to fix a problem that comes up during an inspection,” says Malgeri. “That’s potentially going to completely change their buying decision.
“A lot of times these are the buyers I’m doing the inspection for after a sale and delivering bad news because the people selling those homes also often have trouble keeping up with the maintenance of the house, and that’s why they’re selling to begin with,” he continues. “So, it’s an unfortunate situation for the people who are probably in the worst financial situation.”
One of the arguments opponents make against the right to home inspection bills is that they’re unnecessary because buyers already have the opportunity to request a home inspection contingency when making an offer to purchase. But Malgeri argues that asking for a home inspection contingency is distinctly different than being guaranteed the right to execute one if an offer is accepted.
Despite their pursuit of legislation, ASHI New England and NYSAHI are adamant they don’t want home inspections to be mandatory because of the risks for commoditization, dilution of services and over standardization of reports and procedures. Ultimately, while they acknowledge these measures will benefit home inspector businesses, they also believe guaranteeing the right to home inspection will help reduce liability for all parties in home-sale transactions, and reduce financial hardship and avoidable health risks for buyers.
“It’s possible sellers might lose a little bit of rights, but realistically it’s not a big change,” notes Malgeri. “It’s really going back to pre-pandemic conditions. The advantage to doing that through legislation is we’re really going to keep more buyers and their families safe. To me, there’s no question it’s worth it.”
With one measure now on the law books, Malgeri and Jetty believe the right to home inspection bills could serve as templates in other states.
“I think there’s definitely potential for it to be accepted in many areas across the nation,” says Malgeri. “I could see it becoming a standard nationwide.”
“Home inspectors that I’ve talked to in other associations across the United States are all for this. They’re very interested in it,” agrees Jetty. “I think it’s going to be a domino effect once one gets passed. Neighboring states are going to take a look at this and say, ‘We need to protect consumers with the largest purchase of their lives and allow them to do due diligence on a home.’” WRE
by Kendra Budd, Editor
After two years of back-and-forth litigation, the Georgia Supreme Court recently decided against holding a home inspector liable for the death of a man whose retaining wall collapsed on him. In a unanimous decision, the court ruled that the inspector’s one-year statute of limitations did not violate a state ban on hold-harmless provisions in construction contracts.
In addition, the justices held that the widow, who sued the inspector and the company he worked for on grounds of negligence when the inspector examined the structure of the retaining wall, had no claim to make against the defendants despite a March 2023 trial court ruling in her favor.
So, how did the court come to its decision? There is a lot to be learned and dissected from this case, including the importance of polishing and updating pre-inspection agreements as a home inspector. Here’s how it all unfolded.
Albert Omstead was a husband and father of five who tragically lost his life in 2021 after a retaining wall at his home collapsed on him. The 38-year-old was known for his work in the camera and electrical departments of some notable Hollywood films including Captain America: Civil War and Baby Driver. Outside of his job he was often described as selfless and charismatic.
In an interview with Alive magazine, Omstead’s brother-in-law, Scott Wachtel, noted that, “He had his own kind of style, his own mojo, and he cared for everyone. Not fake cared but genuinely cared.” Wachtel also praised Omstead for the love he had for his children.
On July 19, 2021, rain caused a leak near Omstead’s garage. The driveway leading to the garage was protected by a retaining wall, which was the cause of the leak. Omstead decided to place a tarp and piece of particle board on top of the retaining wall in an attempt to divert the water away from the garage. As he was doing so, the wall suddenly collapsed on top of him. According to Wachtel, a van blocked his path to the garage, meaning Omstead wouldn’t have been able to run.
Kendra Budd is the Editor of Working RE Magazine and Marketing Coordinator for OREP Insurance. She graduated with a BA in Theatre and English from Western Washington University, and with an MFA in Creative Writing from Full Sail University. She is currently based in Seattle, WA.
Omstead’s wife, Jessique, desperately tried to remove the heavy cinder blocks off her husband with the help of her neighbors. When firefighters arrived, they tried to use a carjack near the garage to free him, but it was no use. Albert Omstead died shortly thereafter from his injuries.
Before this tragic accident, the Omsteads were simply a family looking to purchase a new home. Once they found one to their liking, they did what most homebuyers do—hire a home inspector.
Home inspector James Golden was hired by the Omsteads in February 2020 through BPG Inspection LLC. According to court documents, Golden’s inspection report “provided numerous comments on items needing repair or posing health and safety concerns, but stated that ‘[l]atent, inaccessible, or concealed defects are excluded from this inspection.’” This meant the inspection was considered “non-invasive” of readily accessible systems, which followed the Standards of Practice of the American Society of Home Inspectors.
In his inspection report, Golden wrote that the retaining wall had been inspected visually and appeared to be functioning as it was intended. In fact, Golden did a follow-up inspection a month after his original to ensure he hadn’t missed anything at the Omsteads request. No defects or recommended repairs were identified in either the original or follow-up inspection reports concerning the retaining wall.
Then, five months after the inspection, Omstead posted a series of photos on Instagram, featuring the now-leaking retaining wall. The caption under the photos read, “There are cracks in the retaining wall that spit water when it rains, but no official drain holes.” These cracks are said to have caused the retaining wall to ultimately collapse. Jessique Omstead later argued that because Golden hadn’t noticed the cracks, he was negligent in his inspection and should be held liable for her husband’s death.
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Fortunately for the inspector and BPG, Albert Omstead had signed off on a one-year limitation provision and damage cap contained in the pre-inspection agreement. The limitation read:
YOU MAY NOT FILE A LEGAL ACTION, WHETHER SOUNDING IN TORT (EVEN IF DUE TO OUR NEGLIGENCE OR OTHER FAULT), CONTRACT, ARBITRATION OR OTHERWISE, AGAINST US OR OUR EMPLOYEES MORE THAN ONE YEAR AFTER THE INSPECTION, EVEN IF YOU DO NOT DISCOVER A DEFECT UNTIL AFTER THAT.
This, of course, meant the Omsteads agreed that they had one year from the date of signing the agreement to bring forth any legal charges against BPG regarding their home and/or inspection. Since Omstead’s death occurred more than a year after the limitation ended, legally Jessique Omstead couldn’t sue BPG or Golden. Except, it wouldn’t be that easy for the inspector or the company.
Despite the signed limitation, Jessique Omstead maintained the provision should be void and filed a wrongful-death claim against Golden and BPG two months after informing them of her husband’s death, resulting in BPG Inspection LLC v. Omstead According to court records, the claim alleged “negligence, fraud, breach of contract and breach of warranty” against BPG and Golden.
In response, the defendants moved for a summary judgment, citing the signed limitation provision and damages cap and sought to enforce the inspection agreement’s limitations on liability as a whole.
Omstead then filed a cross-motion for summary judgments, asking the trial court to hold that the one-year limitation provision was void “as against public policy and, in the alternative, that the limitation did not pally Omstead’s claims because it is an exculpatory clause that must be read strictly against the drafter, and the clause only refers to claims for property damage,” court documents read.
Gwinnett County Superior Judge Joseph C. Iannazzone held a hearing for the case in which he denied BPG’s motion for summary judgment, concluding that “neither of the defendants’ contract provisions applied to the plaintiff’s case, and to the extent they did apply, they were both exculpatory clauses that were void as against public policy.”
Disagreeing with Iannazzone’s ruling, BPG Inspection then sought intervention from the Georgia Court of Appeals.
On appeal, the defendants argued that Omstead’s wrongful-death action against BPG and Golden could not be pursued, citing the one-year limitation period had passed for filing a lawsuit. Meanwhile, Omstead again argued that the contract provisions did not apply to the wrongful death claim because they should be considered “void as against public policy.”
However, a Georgia Court of Appeals panel comprised of Judges Anne Elizabeth Barnes, Christopher McFadden and Benjamin A. Land concluded that the one-year limitation provision included within the Omsteads’ contract was both lawfully binding and enforceable, meaning the wrongful-death claim was well beyond the one-year limitation. The panel reversed and directed the trial court to enter summary judgment in favor of BPG Inspection.
In his 21- page opinion, Land wrote, “There is no ambiguity, and the contract is plain on its face … We accordingly reject plaintiff’s argument that the one-year limitation provision does not apply.” Land also wrote that parties to a contract are “free to contract on any terms and about any subject matter in which they have interest,” so long as it isn’t prohibited by statute or public policy, and cannot be “left to speculation.”
However, Omstead wasn’t done fighting and challenged the intermediate appellate ruling to the Georgia Supreme Court.
Georgia’s highest court granted a review of the case in March 2024 to “consider whether the Court of Appeals erred in approving the one-year limitation and whether the limitation is void as against public policy,” according to court documents.
The case was argued orally on March 21. This time, Omstead argued that the second inspection made by Golden wasn’t covered by the inspection agreement, citing specific language in the contract that read: “This fee is based on a single visit to the property.” Essentially, the plaintiff argued that the re-inspection was separate from the original and, therefore, lacked a second agreement.
The defense countered that a follow-up inspection is not the same as ordering a second inspection. In fact, the follow-up inspection was organized by the Omsteads to ensure that the recommended repairs by Golden were made. Omstead herself did not dispute this fact during oral arguments. Thus, the second inspection “flows directly from the Inspection Agreement, and the evidence on which Omstead relies does not create a genuine issue of material fact as to whether the second inspection was covered by the Inspection Agreement,” Supreme Court documents state.
Omstead also argued that the one-year limitation should not be enforced because it contractually avoided the professional standards of conduct, which violated the outcome of Porubiansky v. Emory University. In that case, a patient sued Emory University School of Dentistry Clinic for malpractice. Emory asserted that the signing of an information-consent form was a complete bar to the action. Eventually, the Georgia Supreme Court ruled that licensed professionals had to uphold a statutory duty of care in Georgia, and therefore couldn’t limit the statute limitations.
However, in BPG Inspection LLC v. Omstead, the Georgia Supreme Court stated that Porubiansky was distinguishable, and that the “statutory backdrop in Porubiansky, which reflected ‘the
strong policy of the state … to regulate those professionals that it licenses,’” was not present in this case because Georgia doesn’t require home inspectors to be licensed.
After careful consideration over three months, the Georgia Supreme Court (with the exception of Justice Andrew Pinson, who was disqualified from deciding on the matter) sided with the defendants, concluding that the one-year limitation was enforceable and that provisions could not be void as against public policy. In the court’s 28-page unanimous order, Justice Carla Wong McMillian outlined:
“Omstead offers no case where we have rejected a contractual provision like the one-year limitation in this case on the grounds that the limitation period expired before a party’s claims accrued or on the grounds that the limitation period deprived a party of the opportunity to bring a claim. And given our longstanding caution in interfering with the freedom of parties to contract, our silence on ‘contractual repose’ periods is not enough for us to declare them void or unenforceable. Moreover, while we have not found a case from this Court considering whether to enforce a contractual limitation provision precisely like the one here, we have long enforced contractual provisions setting a time period in which a party can file an action, even when that period is shorter than the one, if any, set by statute—that is, even when the period functions to deprive a party of the chance to file suit where the law would otherwise permit suit.”
Further, Omstead claimed that the one-year limitation should have been rendered void for allegedly violating state law prohibiting indemnification and hold-harmless clauses in contracts that pertained to construction or maintenance of property. McMillian countered this claim, stating the one-year limitation did not require Omstead to reimburse any damage to BPG or Golden. “… the limitation only requires Omstead to ‘not file a legal action’ after one year from the inspection,” the judge clarified.
Though the vote to uphold the Georgia Court of Appeals decision was unanimous, Justice Nels S. D. Peterson acknowledged he had some “unresolved questions” about where a line should be drawn to decide if a limitation period is too short to enforce:
“There may not be just one line; it seems reasonable to think that the subject matter of the contract is relevant to how long a period must be. For example, a sufficient limitations period for a contract for replacement of brake pads could likely be shorter than the limitations period would need to be for a contract for construction of underground infrastructure, where one would expect a defect to take longer to become noticeable. And if that’s so, a contract for building inspection, like the one at issue here, would seem to be closer to the latter.”
Despite that stance, Peterson believed it was too difficult for the court to draw those distinctions in a principled manner, and he didn’t “see a clear legal basis under [the court’s] precedent for page 14 8
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doing so in a way that sets the line at more than one year in this case.” Finally, Peterson also said it was up to the legislature to draw those conclusions, not the Georgia Supreme Court, thus settling the matter once and for all that BPG and Golden could not be held liable for the death of Albert Omstead.
Though it’s unusual for litigation involving a home inspector to reach a state supreme court, the big takeaway from this case for inspectors nationwide should be the important role contracts play in protecting your business. Experienced trial attorney Geoff Binney, managing partner at Woodlands, Texasbased Gauntt, Koen, Binney & Kidd LLP, says it’s paramount inspectors have a pre-inspection agreement in place. “Have something in writing,” he says. “The days of being able to just go out there and do your best and think that that’s going to be sufficient to keep you out of litigation are over.”
In addition to making sure a pre-inspection agreement is signed prior to performing services, Binney advises including the following key clauses to help deter lawsuits and strengthen a case in court:
• Limitation of Liability Clause
• Attorney’s Fee Clause
• Notice/Waiver Clause
• Statute of Limitations
• Indemnification Clause
Even though the statute of limitations was upheld in BPG Inspection LLC v. Omstead, Binney warns that inspectors shouldn’t get too comfortable in thinking the outcome would be the same everywhere. “[This case] only applies to Georgia home inspectors,” says Binney. “The enforceability of these types of provisions is different in each state.”
“Clearly, [a statute of limitations] helps because [homeowners] have less time to move, less time to act, and oftentimes it does take a little while for them to notice that there’s a potential problem to the point where they’re willing to file a lawsuit,” he continues. Thus, Binney urges all home inspectors to research whether this type of clause is enforceable in their state before including one in a pre-inspection agreement.
It’s particularly notable that Binney, who has built his practice around construction-defect litigation, first-party insurance defense work and home inspector claim defense cases, found the conclusion of the Georgia case surprising compared to how courts in other states might predictably rule under similar circumstances.
A key differentiator in the Georgia ruling was the absence of a licensing requirement for home inspectors in the state, which is why the justices found Omstead’s limitation argument from the Porubiansky case irrelevant. “In most states, their home inspectors are licensed,” explains Binney, “So, if a Texas court, for example, was to look at this exact same situation, they might find [the limitation] unenforceable.”
Although a limitation of liability clause is legal in most states, Binney cautions home inspectors, including those in Georgia, not to become “too emboldened” by this case win. Inspectors should take time to research what is legal and not in their state and consult with their legal counsel to ensure their contracts are as strong as possible. “The more protections that you can have in your contract, the better,” says Binney, otherwise, you could diminish your defense in court.
Though the Georgia Supreme Court had some difficulty arriving at a ruling, the justices ultimately upheld the liability deadline Omstead acknowledged and signed.
The importance of fine-polishing your home inspection agreement with indemnification clauses should not be ignored. In the Georgia case, it may have saved Golden and BPG Inspection from financial ruin. Home inspectors should make sure their pre-inspection agreements are updated regularly, conspicuous and in adherence with state law.
Read more about what makes a good pre-inspection agreement at WorkingRE.com (search pre-inspection agreement).
Stay safe out there! WRE
by Kendra Budd, Editor
When it comes to generating business, home inspection is unusual compared to most business models because it traditionally relies heavily on referrals and as-they-happen real estate transactions. This generally works well for most inspectors when property-transaction volume is high, but can be problematic when house inventory is low and home sales slow to a crawl, as many markets have experienced for several months.
As markets tighten and there are fewer opportunities to conduct inspections, rising above the competition to earn business increases in significance. One way to get above the fray and gain traction is to actively engage prospective clients via direct-to-consumer (DTC) marketing. Though this approach incorporates a lot of traditional marketing methods used by most consumer brands and service businesses, it’s not a strategy commonly embraced by many home inspectors, which one could argue leaves opportunities for savvy marketers to exploit.
Ian Robertson, owner of three inspection companies and cofounder of Inspector Toolbelt Home Inspection software, is a proponent of home inspectors leveraging DTC marketing to increase business opportunities and has discussed the topic on his Inspector Toolbelt Talk podcast. Working RE Home Inspector recently sat down with Robertson, to get his insight on how home inspectors can best use the strategy to their advantage.
Essentially, DTC marketing is a strategy businesses use to reach out directly to their target audience. For home inspectors, it means promoting and selling services directly to homeowners, buyers and sellers, rather than waiting for an incoming referral that generates a work order.
This, of course, runs contrary to how most home inspectors have conducted business and marketing for decades. In most cases, home inspectors spend the bulk of their marketing outreach connecting with real estate agents who then refer clients who want an inspection conducted. “Up until now, when people have gone to buy a home, they’ve gone through a real estate agent, and the agent is the gatekeeper for every other vendor,” says Robertson. Homeowners tend to rely on their agent for everything connected to the transaction, including who to hire for a home inspection.
DTC marketing removes the reliance on a third party to find leads, gain visibility and build a brand presence. Some examples of marketing channels and activities home inspectors can use when deploying this strategy include:
• Social media
• Google Local Services ads
• Targeted social ads
• Email newsletters
• Fliers/door hangers/yard signs
• Direct mail
• Pop-ups/vendor exhibits
Although working directly with real estate agents has its advantages and still should be cultivated by home inspectors, DTC marketing can be used as a supplemental and complementary component to create brand identity and become top of mind for prospective customers when they require inspection services, including any ancillary offerings that may not be tied to the sale of a home.
One reason many home inspectors haven’t used DTC marketing much is it requires quite a bit of committed action, planning and execution compared to receiving work on referral. This includes figuring out who target customers are and how to reach and communicate with them effectively.
“You have to think about what different groups of buyers want and not just an agent. What does this age group of buyers want? What about a different age group in a different area? What will they be looking for at this period of time?” notes Robertson. “Whereas with an agent, all you need to know is one avenue of marketing—what does this agent want? And that is just easier.”
In addition to conducting market research and planning promotional activities, home inspectors may also have to push themselves out of their comfort zone to meet prospective customers. “You’ll have to plan more, understand where your actual clients are and not just agents,” says Robertson. “Direct-to-consumer marketing requires more thought and planning.”
Besides trying to drum up business when home sales are slow, one motivation for home inspectors to kickstart DTC marketing efforts could potentially be fallout from the landmark National Association of Realtors’ (NAR) class-action lawsuit settlement (See NAR Settlement: Where Do Inspectors Go From Here? in the Summer 2024 issue).
The slow real estate market has already caused attrition among the agent ranks, and there is speculation that the NAR settlement could further reduce the number of agents as well as change how buyers and sellers interact and rely on brokers. A significant reduction in agents could result in a steep fallout in referral business, while new options for buyers (think alternative buyer services and new technology solutions) could mean consumers stop relying on a home inspector referral from their broker and choose to hire one themselves.
“If you’re relying on 20 agents to give you most of your work throughout the year, what happens when one or two go out of business, one of them retires, and another finds a different home inspector?” asks Robertson. “All of sudden, 10 of your agents are gone, which means half of your work is gone.”
“This is a shift away from the inspector’s traditional agent referral marketing model,” Robertson told Working RE Home
Inspector in the Summer 2024 issue. “We don’t quite know how big of a shift it will be, but it will be something. Even if it’s only 5 or 10 percent, that’s still substantial in most markets.”
In fact, Robertson says he’s already seen a shift in consumer behavior. “People are going around the agents at a higher rate than I’ve seen in my career, and it’s a lost opportunity if home inspectors aren’t in position to capitalize on potential business,” he notes. Committing now to DTC marketing is mining for leads in channels going unused by competitors.
Ultimately, though DTC marketing can be daunting to launch, requires investment and takes time to ramp up, Robertson believes its benefits outweigh its downsides. The methods used are often more effective and less expensive than other marketing vehicles, and “in the long run, [DTC] is actually easier because once you have those groups of people figured out, then you can market to them directly,” he notes.
A key advantage to that change is better control over your branding and client relationships. “You can make your brand the way you envision it without worrying so much what a real estate agent will think,” says Robertson. Thus, DTC can help home inspectors gain more control over how they want their page 18 8
business to be represented to potential clients, rather than solely allowing messaging to be communicated by real estate agents and other third parties.
Adding an effective way to directly reach potential customers helps diversify your business and expand your reach, says Robertson. Using DTC tactics allows you to leverage multiple marketing approaches with different customers while establishing multidimensional connections. Instead of a real estate agent deciding what kind of relationship you’ll have with a client, you’re in control of creating your ideal customer relationship.
Because it requires planning and forethought, a comprehensive and effective DTC marketing strategy can take a while to implement, but evidence of a shifting market means now is an optimal time for home inspectors to get started.
“Most of our competition is still stuck in the ‘market to the agent’ mode,” notes Robertson. “Very few times do we get market openings like this, where everybody else is stuck in one mode, while there’s a brand new one waiting [to be capitalized on].” Home inspectors who begin implementing strategies now can get a head start and establish local brand positioning before competitors saturate the local market.
Robertson suggests beginning with social media marketing, but really committing to a posting schedule and engaging with audience members online rather than a lip-service approach. “We all like to say, ‘I do social media marketing,’ but that’s kind of like saying, ‘I work out,’” scoffs Robertson, “But are we giving 100 percent in the gym? Two people can work out and get different results. It comes down to who planned better and the effort they put into it. It’s the same with our social media marketing.” To be effective, home inspectors must not only plan but regularly execute posts and engagement.
Your messaging should align with a segment of your target audience and what it wants to hear. For example, you could start off by trying to reach a particular age demographic that you would like to appeal to. “Am I going to target an older group from 40s to 60s, or is it a retiree between 60 and 75? Or am I going after the 20 to 30 crowd?” asks Robertson. Your marketing strategy, messaging and channel may need to change depending on which audience you are trying to reach.
“You can post two to three times a day across multiple platforms such as TikTok, Facebook and YouTube,” says Robertson. The key is to meet your audience members where they are. While TikTok is most appropriate for potential customers in their 20s and early 30s, as a general rule, Robertson recommends Instagram to reach those in their mid-30s and 40s, and Facebook for those in their late 40s and older.
Once people begin to engage with your social media content, they will be inclined to look up your business. Thus, it’s critical for home inspectors who commit to DTC marketing to have a modern, functioning website that outlines your full scope of
services—including ancillary inspections like septic, chimney and other offerings—and provides an easy way for visitors to submit questions and their contact information to help with lead capture. You should also make sure that you’ve claimed your Google Business Profile and keep it updated.
“They’ll find your website,” says Robertson, “and it will make an even better impression if it’s professional looking, even if they’re not looking for an inspector yet.”
In addition to online outreach, Robertson recommends home inspectors be physically visible in their local community and meet potential customers in person by attending local events, such as home shows. Though people may attend a home show to look for design inspiration and other ideas for their current house or a future purchase, seeing a home inspector exhibit their services helps plant the seed for when the eventual need for a home inspection or specialty service arises. It also gives you the opportunity to dispense your knowledge and inform potential customers through direct conversations about any number of home-safety issues like mold, radon, allergens, sewage contamination and other environmental factors. Be sure to have appropriate fliers and handouts that attendees can take with them.
Remember, the idea is to become top of mind for future customers. In-person interactions should support and reinforce all of your DTC marketing efforts, including door hangers and yard signs. Canvassing neighborhoods from which you’d like to draw business with your branding can be an effective tool to keep your name and logo in front of prospects. When you perform an inspection, ask the homeowner if you can place a yard sign that indicates you provided a home inspection. This is great for branding and acts like a neighbor’s referral. Be sure to include a phone number, website or QR code, so potential customers can learn more or quickly contact you.
The more effective and comprehensive your DTC marketing efforts, the more likely future customers will remember you, says Robertson. “When they do find a home, guess who they’re going to call?” he notes. “Direct-to-consumer marketing is about chipping away at customers.” People naturally gravitate toward what is familiar to them, and DTC marketing is a great tool you can wield to your advantage.
Although DTC marketing can seem intimidating and foreign to home inspectors, it can help fill the business void caused by drop-offs in real estate agent referrals. As Robertson notes, it’s a way to broaden your net. When effective, you’ll be able to capture business by targeting consumers directly and then earn increased referrals from actual clients in addition to your broker network.
Though it takes legwork, investment and commitment, researching a client base, creating engaging content that pertains to them, and making yourself and your business visible within your community can yield positive results for your business. WRE
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by Preston Kincaid, Kincaid Services
B
eing a home inspector can lead to a very rewarding career. After all, you get to help homebuyers make one of the most important decisions of their lives. But there’s more to it than simply being good at inspecting homes or doing massive numbers of inspections.
Though many inspectors like to talk about the insane amount of inspections they do each month, what exactly does success mean? What follows is some of my philosophy on setting fees, knowing your self-worth and finding a healthy work-life balance.
Pricing is one area of the business where I think most inspectors go wrong. This is evident in the decades-long race to the bottom and price degradation that our industry has seen. In fact, the price for home inspections hasn’t really changed much in 20 years, while the cost of living, inflation and the services we are expected to deliver have all increased.
Most inspectors have simply had to make up for this deficit by finding ways to cram more inspections into their calendar. For most of us, this can be a big cost to our personal lives.
The most common trend is to price yourself “competitively.” Pricing strategy can make or break your career as a home inspector. It can make the difference between being successful in the long-term or burning out in three years.
If you price too low, you may find yourself overworked, with family and friends who miss you. But if you price too high, you might not have the right value proposition to support it. Finding the sweet spot is crucial.
That said, there are some rarely considered aspects and ramifications to pricing. For example, if you price too low, you create a low-cost brand identity and set precedence and expectation among real estate agents and clients that you are the “cheap inspector.” This trend can damage the entire industry and sets
Preston Kincaid is a Certified Master Inspector based in Oxford, New York. He is a social media influencer known as “Inspector Preston”on TikTok and other platforms. He runs a family business with his 23year-old daughter, Trista, managing the office, and his 17-year-old son, Austin, in training to take over the business. He also offers mentoring webinars for home inspectors via www.hijumpstart.com
the stage for a race to the bottom, such as finding ourselves in today’s reality in which inspectors by and large are competing around $300 nationwide.
This is the most common trend. It’s tempting for new inspectors to start with low prices to attract clients. Many of us started out broke and desperate for work. I get it. I’ve been there. But what often happens is you quickly figure out that you’re working long hours and scraping by, and that’s a fast track to burnout. Your personal relationships may suffer, or even worse, end over it.
Consider as well that low prices also attract cheap clients who may not value your expertise and hard work, and are the most likely to complain, question your qualifications or even file lawsuits.
By pricing yourself on the lower end of the spectrum, you wind up “competing” for the worst clients.
One of the most important steps in setting your prices is understanding your worth. This is also an area that many inspectors struggle with. This starts with believing in yourself and having the confidence to command premier pricing.
This means taking into account your certifications, experience, key differentiators and the value you bring to clients. Remember, you’re not just inspecting homes, you’re giving clients peace of mind and potentially saving them thousands of dollars in future repairs.
In my past life, I worked in marketing for the wine industry. It was common for a wine to be bottled in several different bottles and labels at different price points. The very same wine can be sold at $8 and at $60. The part that always intrigued me was that the $8 bottle always got terrible reviews, while everyone raved about the $60 bottle of wine. This is valuable insight into how the human mind works, and how pricing can impact the experience a customer has.
I often say in my webinars, “In a world full of Timex watches, be the Rolex.” The crazy truth is your clients will have a better experience and think more highly of your expertise when they have to pay a lot for it.
Let’s use my pricing as an example. Today, I serve a region in which the median base rate for a home inspection is between $300 and $425 on the high side. My base rate is $650 up to 2,000 square feet. Yes, that includes manufactured homes, cottages, tiny houses or log cabins. With ancillaries factored in, my current inspection average is around $870, but I routinely have inspections scheduled well above $1,000.
As a result, I am usually booked two weeks in advance and carry a waiting list from June to September. This is the first year I haven’t worked a single weekend, and I limit my schedule to only one inspection on Tuesdays and Thursdays.
With that in mind, how do you command a higher price when your competition is priced lower than you? This is the most common question I get, and this is where the real strategy has to come into play. The unfortunate reality is that very few inspectors have a business or pricing strategy at all.
To command a higher price for your services, you must communicate your value to potential clients and Realtors. This is where your marketing and client interactions are crucial. Make sure your website, business cards and other marketing materials clearly articulate why you’re worth the investment, and be sure to focus on key differentiators. For example, how are you better than your competition? You must set the bar high and strive to meet it—every day. You must strive to be the best in order to price yourself as the best.
When talking to potential clients, be confident in your pricing. Explain how thorough and detailed your reports are, and how it can save them money and stress in the long run. Use customer reviews and testimonials to back it up.
In addition, make sure your branding is top notch. Most inspectors I’ve helped start with the idea that branding is their logo. I often have to explain that branding is everything you do and are. It is your entire image. Branding is your reputation. It starts with your phone etiquette, marketing and advertising cohesion—all your ads and collateral should look professional and consistent. It is your uniform, your work vehicle and even your smile when you greet clients.
It’s all branding, and it should all support your value proposition.
Most of us were taught to be careful with money, money management, and how to save. However, few of us were ever raised to understand we are all born with just a finite handful of
minutes to live. You can always make more money. But with all the money in the world, you can’t buy an extra minute of life.
Thus, be careful how you spend your minutes!
Having the right pricing strategy doesn’t just affect your income; it also impacts your schedule. With higher prices, you don’t have to book as many inspections to meet your financial goals. This gives you more flexibility in your schedule and reduces the chances of burnout. It also leaves more inspections for your fellow inspectors to do. Our entire industry benefits when you raise your prices.
Use this extra time wisely. Invest in ongoing education to stay at the top of your field. Attend industry conferences, take courses, and stay updated on the latest inspection techniques and tools. This continuous learning will further justify your premium pricing. And, remember: Be great at communicating all of this in your marketing.
Ultimately, I hope your goal is to achieve a happy work-life balance. This means having enough time for your professional and personal life. When you price your services right, you won’t be constantly stressed about money, and you’ll have more time to spend on the things you love.
Set boundaries for your work hours and stick to them. It can be easy to let work spill over into evenings and weekends, but this can also lead to burnout. Prioritize your personal time just as you do your work time.
By setting your prices correctly and managing your time effectively, you’ll build a sustainable business. This means long-term success without compromising your health or happiness. Happy clients, a solid reputation and a balanced life will follow.
Succeeding as a home inspector isn’t just about being good at inspecting homes. It’s certainly not about how many inspections you can knock out quickly. And it’s definitely not about allowing your business to consume your life.
It’s about setting the right prices to achieve a healthy worklife balance. When you value your time and expertise, you can build a successful and sustainable business that allows you to enjoy all aspects of your life. Your loved ones will benefit, too.
Remember, it’s not just about making a living—it’s about living well. By pricing your services correctly, you can achieve the balance you need to succeed and thrive as a home inspector. So, take a step back, evaluate your worth and set your prices accordingly. Your future self will thank you, as will I. WRE
This isn’t our first rodeo. When the market slows (and even when it doesn’t!), somebody always wants to blame the home inspector.
That’s why you need a team with deep expertise who have been defending inspectors for decades.
OREP now offers its insureds PROFESSIONAL pre-claims assistance with trial attorney Geoff Binney, one of the nation’s most experienced home inspector attorneys. Geoff Binney writes decisive response letters to shut down frivolous claims.
When you’re facing a claim or complaint, you don’t have to go it alone or put your future in the hands of insurance adjusters who roll over and pay meritless claims.
Trusted by over 13,000 Professionals. Our
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by Greg Nelms, Nelms Inspections
Technically speaking, an addendum is additional material added to the end of a document, typically to correct, clarify or supplement something that precedes it. The word “addendum,” or the plural “addenda,” is derived from the Latin addere, which means “must be added.” While an addendum to a home inspection report is perfectly fine and somewhat common, it must be done correctly.
Additions to an inspection report are sometimes necessary due to reinspecting a system or area that could not be evaluated during the original home inspection. Sometimes, an inspector simply forgets to include something that should have been in the report or wants to clarify a statement to make it more easily understood. Whatever the case, it is important to understand this is additional information and amends the original inspection report.
However, when receiving a call from a client about something that wasn’t included in the inspection report, some home inspectors actually alter their original report and resend this “new” and “changed” version to the client, with the additional items that were in question. This is wrong on many levels and can land the home inspector in unexpected trouble.
The issue with this approach is the home inspector and client now have two separate reports, with different findings concerning the identical property and date for the same customer. This could be particularly problematic if a complaint from the client arises. For starters, your insurance claims department or state governing body will request a copy of the inspection report from you and the client. The client may send the “original” inspection report, while you submit the “new and corrected” version.
Greg Nelms is the author of this article. Mr. Nelms is the owner of Nelms Inspections and has been a home inspector for 35 years. Mr. Nelms is also an instructor for the home inspection courses required by the State of New Jersey to obtain a home inspection license. He is a guest educational speaker for seminars across the country and often is asked to specifically teach on the subject of report writing. He can be reached at nelmsinspections@gmail.com.
This will raise many red flags and questions for your insurance company, including:
• Did the inspector make a new report to hide the fact that he/she missed something important?
• Are there different versions of the report?
• Was the inspector incompetent or negligent?
• Which report will be used to prosecute or defend the claim?
The reason two inspection reports were created matters less than the fact both exist. Your insurance company now has to defend against a possible claim, including arguing that you, as the insured, were not trying to cover up a mistake with a “changed” report, which is very difficult. In addition, if your state has a governing body that oversees home inspectors, it will have serious questions you’ll have to answer.
While an addendum should be its own document and its purpose is to update or augment the initial report, it should follow the same format as the original as much as possible. By using the same language, font and style, no parties should have any doubt that the addendum is as important and relevant as the first report that was issued.
The addendum must make it clear what changes it makes to the original inspection report. This can be accomplished by choosing a title, such as “Electrical” or “Plumbing,” which clarifies what part of the initial report the addendum refers to. The new document should also have the property address, client name, inspection report number, date the addendum was drafted, and the new date for the reinspection if one was conducted. This all helps define the parties involved and the inspected property.
It is also important to refer back to the original home inspection report when drafting the addendum. For example, you can insert phrases like: “as stated in the original report,” “since the system was obstructed and could not be inspected or described within the original report,” etc. This helps tie the report and addendum together as one complete report.
If the reason for the addendum was to reinspect something that was inaccessible or inoperable during the initial home inspection, make it clear that only the system or component that could not be inspected is evaluated and described within the addendum report. Including this statement eliminates any misconception that other systems or observed defects from the original home inspection are also re-evaluated.
A “scope of inspection,” which defines what is going to be inspected and any limitations to the inspection should be in every inspection report and any follow-up addendum. All too often, the client has misperceptions of what is actually inspected, and the “scope of inspection” comments remove questions on what could and could not be accomplished during the inspection.
Critically, the original home inspection report and addendum must not be construed as separate reports but two documents that must be viewed together to comprise a completed, singular inspection report.
The bottom line for home inspectors is to never change your initial report. However, it is an acceptable practice to issue an addendum to the original as long as you make it clear that it is additional information to clarify a condition or include supplementary information. WRE
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by Kristine Gerber, Inspector Toolbelt
H ome inspection is a vital aspect of the real estate industry, where thoroughness and attention to detail are paramount. However, even the most experienced inspectors can fall prey to certain pitfalls that not only could cost them money but also tarnish their reputation.
In this article, let’s delve into 11 common mistakes that home inspectors should avoid at all costs to safeguard their financial interests and uphold their professional standing.
1. Skipping Pre-Inspection Agreements
Failure to establish clear pre-inspection agreements with clients can lead to misunderstandings and legal disputes down the line. These agreements outline the scope of the inspection, limitations of the inspector’s liability and the client’s responsibilities, ensuring transparency and clarity from the outset.
2. Inadequate Documentation
Insufficient documentation of inspection findings can leave inspectors vulnerable to liability claims. Detailed reports with accompanying photographs provide concrete evidence of property conditions and help mitigate client or stakeholder disputes.
3. Overlooking Safety Hazards
Neglecting to identify safety hazards, such as faulty electrical wiring, unstable structures or mold infestations, not only poses risks to occupants but also exposes inspectors to potential lawsuits. Prioritizing safety assessments during inspections is essential to protect clients and inspectors.
4. Rushing Through Inspections
Rushing through inspections to accommodate tight schedules can compromise the quality and thoroughness of assessments. Diligent inspectors take the time to meticulously examine every aspect of the property, ensuring nothing escapes their scrutiny and reducing the likelihood of oversight errors.
5. Failing to Stay Updated
Neglecting to stay updated on industry standards, regulations and best practices can render inspectors ill-equipped to handle evolving challenges and expectations. Continuous education
Kristine Gerber is part of the Customer Success team at Inspector Toolbelt Home Inspection Software. She helps home inspectors across the US and Canada become more proficient with Inspector Toolbelt and in their business. You can reach Kristine via email at info@inspectortoolbelt.com.
and professional development are essential to maintain competency and credibility in the field.
6. Overpromising and Underdelivering
Making unrealistic promises or guarantees to clients can set unrealistic expectations and ultimately lead to disappointment. Honesty and transparency about the limitations of inspections are crucial for managing client expectations and building trust.
7. Neglecting Professional Boundaries
Overstepping professional boundaries by offering unauthorized repair services or providing biased advice can undermine inspectors’ objectivity and integrity. Maintaining impartiality and refraining from conflicts of interest are essential to preserve professional credibility.
Disregarding environmental concerns, such as radon, lead paint or asbestos contamination, can have serious repercussions for clients as well as inspectors. A thorough assessment of environmental hazards is necessary to protect occupants’ health and avoid potential legal liabilities.
9. Inadequate Communication
Poor communication with clients, real estate agents or other stakeholders can lead to misunderstandings and dissatisfaction. Clear and timely communication throughout the inspection process fosters trust and ensures that all parties are well-informed.
10.
Operating without adequate professional liability insurance exposes inspectors to financial risks and potential legal liabilities. Investing in comprehensive insurance coverage provides financial protection and peace of mind in the event of unforeseen circumstances.
Posting images, comments or opinions about inspected properties can breach client confidentiality and violate privacy rights. Always maintain professionalism, discretion and adherence to ethical standards when engaging on social media to preserve integrity and trustworthiness.
Avoiding these common mistakes is essential for home inspectors to safeguard their financial interests and uphold their reputation in the industry. By prioritizing thoroughness, professionalism and continuous improvement, inspectors can mitigate risk and establish themselves as trusted experts in the field. WRE
by Isaac Peck, President at OREP.org
As you grow your home inspection business, sooner or later, you may end up hiring subcontractors. For example, you might hire another professional home inspector to pick up some overflow inspections that you can’t fit into your schedule. You might hire a plumber (or another inspector) to perform a sewer scope or perhaps sub-out pest inspections to certified pest control operators.
There are even some instances in which home inspectors hire an environmental specialist to test for mold, asbestos or lead. In some areas, real estate agents and/or buyers look to home inspectors to provide certain services, and inspectors feel like they are at a disadvantage if they don’t offer those services to their clients.
Here’s some practical advice on how to handle subcontractors from an insurance and risk management perspective.
The most important step you can take is to have a contract in place with any subcontractor you work with.
At OREP Insurance Services, we work with several thousand home inspectors every year providing risk management, insurance and liability advice to help inspectors stay out of trouble and, unavoidably, defending them when trouble arises.
One of the most common mistakes we see is not having a signed contract with subcontractors. In some cases, the professional you’re working with might be a friend. They might assure you that they carry their own business insurance, and that they will stand behind their work in the event of a claim.
All too often, what actually happens is the subcontractor is nowhere to be found when a claim gets filed.
More importantly, and less obvious, is that even if your subcontractor has insurance and shows you proof of their coverage, without a contract in place that indemnifies you and your company in the face of a claim that stems from the subcontractor’s work, their insurance is not going to stand up and do the right thing, i.e., their insurance is not going to defend or indemnify you.
Isaac Peck is the Publisher of Working RE magazine and the Senior Broker and President of OREP.org, a leading provider of E&O insurance for savvy professionals in 49 states and DC. Over 13,000 professionals trust OREP for their E&O. Isaac received his master’s degree in accounting at San Diego State University. Reach Isaac at isaac@orep.org or (888) 347-5273. CA License #4116465.
Imagine there is a home inspector who is subcontracting out pest inspections to a pest control operator. The home inspector collects the pest inspection fee and subs out the work to a licensed pest control individual. The home inspector is pleased because he is able to serve as a one-stop shop for his clients and pocket a $30-$40 fee for every pest inspection.
The pest control operator is a good friend and assures the home inspector that he carries his own business insurance. All is well.
Then one summer day, one of the home inspector’s clients moves into their new home and ambitiously sets out to fully remodel the house—gutting it down to the studs. The new homeowners discover substantial termite damage and send a demand letter to the home inspector.
The home inspector contacts the pest control operator and asks for a copy of his insurance. Crickets ensue.
Thankfully, the home inspector has comprehensive errors and omissions (E&O) and general liability insurance, and it’s his liability insurance that ends up defending him against the claim that involved the other professional’s work.
Here’s the crux of the issue: Even if the home inspector possessed a copy of the pest control operator’s insurance, the pest professional’s insurance would not have voluntarily stepped up to defend the home inspector. Barring a contract, the home inspector is left defending this claim on his own.
Could the home inspector sue the pest professional for the alleged mistaken reporting? Maybe. But will the home inspector’s insurance carrier want to go through that subrogation process? Unlikely—unless the ultimate court judgment is substantial. Regardless, the losses will remain on the home inspector’s record and affect their ability to get insurance going forward.
We’ve established that if you are going to hire subcontractors, you need signed agreements with the vendors. However, having a contract is just the first step. Here are some key clauses that you should have in that agreement:
• Requirement to Carry Insurance: You’ll want to not only require, but verify, that your subcontractor is carrying insurance that will respond to any claims relating to their work.
• Indemnification Clause: Just requiring your subcontractor to carry insurance will not protect you if you do not have an agreement that expressly requires the subcontractor to indemnify you for their work. The indemnification clause is 100 percent necessary to make their insurance respond.
Of course, there is more that goes into an effective subcontractor agreement, but these two points are a great start.
Now, you might be thinking that you don’t use subcontractors, and when you do work with other professionals—even other home inspectors—you simply refer the client to that professional. Those providers collect payment and deal directly with the client. There can’t possibly be liability associated with that, right? Not so.
This same type of referral relationship is rampant between real estate agents and home inspectors. Real estate agents frequently refer home inspectors to their clients. Consequently, real estate agents have astutely concluded that these referrals may create liability on their part, and the smart ones like to see that home inspectors have insurance that extends coverage to the agent for these referrals.
In fact, this is why the majority of leading providers of home inspector liability insurance include a Referral Additional Insured endorsement on home inspector insurance policies. This type of coverage effectively shields the referring party and promises to defend them from a claim that arises from the home inspector’s alleged errors or omissions. Savvy home inspectors often use this coverage as a marketing advantage and a way to make their referring real estate agent feel more comfortable.
Here is an example of how this is worded in OREP’s policy:
Solely with respect to any CLAIM brought and maintained against an INSURED for a WRONGFUL ACT committed or allegedly committed by an INSURED, this POLICY will provide coverage to any REFERRAL ADDITIONAL INSURED solely with respect to the REFERRAL ADDITIONAL INSURED’S vicarious liability for the WRONGFUL ACTS of the INSURED; provided, however, the COMPANY will only pay CLAIM EXPENSES for such CLAIM.
In other words, smart real estate agents are aware of the potential liability that they take on when they refer home inspectors to their clients. And you should be, too.
What this means for you is that even if you are just referring home inspections to another home inspector, or simply referring a client to an environmental specialist or a pest professional, you should have one of two things in place to truly protect yourself:
1. A written agreement with the professional you are referring in which they agree to indemnify you and your company for any claims that arise from their professional services; and/or 2. Evidence that the professional’s insurance policy provides Referral Additional Insured coverage (similar to what is quoted above) for parties like yourself who are referring clients to the professional.
I hope these tips are helpful. Stay safe out there! WRE
OREP Members enjoy an attorney-prepared Subcontractor Agreement and Pre-Inspection Agreement template, in addition to attorney pre-claims services led by trial attorney Geoff Binney. Visit OREP.org/inspectors to learn more.
by Reuben Saltzman, Structure Tech
Sealed attic access panels are a bane to home inspectors. If you talk to 10 different inspectors about how they deal with sealed attic access panels, you’ll probably get 11 different answers. While some may check a box in their software that says “not accessible” and move on, others might take a much more aggressive approach.
Frankly, nothing about home inspections causes more consternation than attic access panels that are sealed shut. This isn’t just true for the home inspector, but also for the buyer, seller and real estate agents involved in the sale. At my home inspection company, we’ve worked out every angle of an attic inspection and put some great policies in place to help eliminate problems for buyers and sellers. This ultimately makes our clients happy.
In Minnesota where I operate, home buyers typically use a standard purchase-agreement form. They don’t have to, but most do. This form has a line that specifically says the, “Seller will provide access to the attic(s) and crawlspace(s).”
Based on personal experience, I believe most licensed residential real estate salespeople (aka Realtors) are not aware of this language, and most buyers and sellers aren’t either.
If an attic access panel is sprayed shut, caulked shut, nailed shut or blocked by stored items, has the seller provided access? Have they fulfilled their contractual obligation? Heck no
If I were buying a home and the person I was purchasing from had signed an agreement saying they would provide access to the attic, I’d expect the attic to be accessible. Access panels that are sprayed shut, caulked shut, nailed shut or blocked by stored items are not accessible.
Here’s an overview of the policy and procedures we have in place at my company when it comes to attic access for inspection.
Reuben Saltzman is a second-generation home inspector with a passion for his work. He grew up remodeling homes and learning about carpentry since he was old enough to hold a hammer. He worked for Structure Tech since it was purchased in 1997 and is now the owner and CEO of the company. To connect with him, visit https://structuretech.com/
Before the inspection: As soon as my company schedules a home inspection, we email the listing agent to confirm the inspection and send a very short checklist that needs to be passed along to the seller. We ask for the seller to make the attic accessible or to leave a note giving us permission to open it if it’s sealed / caulked / painted shut. I secretly suspect that this email gets opened, read, forwarded, opened, read and followed approximately once every 10,000 times. But that won’t stop us from trying!
At the inspection: We begin every home inspection with a tour of the interior. If the attic access panel appears to be sealed or obstructed to make access difficult, we ask for permission to open it. We call the listing agent to explain that this will technically change the property from its original condition. In most cases, we won’t leave any evidence that we were there, but we can’t guarantee this.
We don’t get super stuffy about exactly how we’re supposed to get permission. We don’t have the sellers sign some kind of legal document or anything like that; we just want something in writing. It can be an email, a text message, a hand-written note, whatever. We’re not picky. We’ve also never had a home seller squawk after they’ve given us permission to open their “sealed” attic.
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If they give us permission, we open the attic and conduct the inspection as normal. If they don’t give us permission, we don’t go in the attic. Simple and logical, right? We think so.
If an access panel is sprayed shut, we access the attic by bumping the scuttle hole cover with our fist (See Figure 1, page 30). View a video of how we do this at https://bit.ly/3WtF7Ra. When we’re done, nobody ever knows we even opened it.
If an access panel is caulked or painted shut, we’ll use a sharp razor to cut the caulk or paint (See Figure 2). We will not recaulk the access panel, even if the homeowner or builder gives us permission to do so or provides the caulk. The quality of a caulk job is highly subjective, and I don’t want my company or any of my inspectors to be judged by this. Not only that, but it’s a code violation to caulk the panel shut, which I’ll discuss in a minute. This is a hard line I’ve drawn in the sand, and we’ve said no many times.
If an access panel is screwed shut, we don’t bother asking for permission. We just remove the screws and put them back when we’re done.
If an access panel is nailed shut, we don’t mess with it. At that point, we recommend having the attic made accessible and inspected by a qualified person.
If an attic is blocked with stored stuff, we usually move the items to make the attic accessible. Yes, I know … I’ve heard horror stories of home inspectors breaking things while moving stuff. But my company has been lucky enough to have never had a problem with this, and we’ve done it conducting hundreds, probably thousands, of inspections. If it’s an extreme situation, we’ll call the listing agent to ask for help. I believe the end justifies the means.
It’s important to note as well that in every case in which we access an attic, our inspectors wear respirators to protect their lungs and gloves to keep fingerprints off the ceiling. We also use a drop cloth or painter’s plastic to ensure we don’t leave a mess.
In addition, before accessing the attic, we take a picture to document what the access panel looked like before breaking the seal and then another picture showing what it looks like after we’re done.
Interestingly, the International Energy Conservation Code specifically addresses attic access panels. Section R402.2. 4 says, “Access doors from conditioned spaces to unconditioned spaces (e.g., attics and crawl spaces) shall be weatherstripped ...”
So, what does that mean? Well, weather stripping is not defined by the energy code. Here in Minnesota, we have a special section in our energy code (Section R201.4) that defaults to the Merriam-Webster Collegiate Dictionary when a term is undefined. Specifically it says:
Where terms are not defined through the methods authorized by this chapter, the Merriam-Webster Collegiate Dictionary, available at www.m-w.com, shall be considered as providing ordinarily accepted meanings. The dictionary is incorporated by reference, is subject to frequent change, and is available through the Minitex interlibrary loan system.
Merriam-Webster defines “weather strip” as follows:
A strip of material to cover the joint of a door or window and the sill, casing, or threshold so as to exclude rain, snow, and cold air — called also weather stripping.
So, does caulk or some other type of sealant cut it? Heck no
You’d think this would help, but finding a weather-stripped attic access panel on a newly constructed home is rare. That’s not to say they don’t exist, but it’s certainly the exception.
Attics are a critical part of each home inspection. Every home inspector ought to have a game plan for what to do when an attic can’t be inspected. Don’t be that inspector who says “Not Accessible” and moves on.
Attics pose many challenges for home inspectors, and I’ve probably written more about attic inspections than any other topic. To read other attic-related content, visit https://structuretech.com/all-blogs/ WRE
by Greg Johns
Where does water go when it dries? Though this may sound like a replacement line for “Lake of Fire,” a song written by the Meat Puppets and famously covered by Nirvana, it’s a serious question. Where does it go?
As home inspectors, building consultants, homeowners and trades professionals, we all seemingly have a magical understanding related to things drying. But what really happens when something dries, and how might this process be important to our understanding of its effects on modern homes and buildings? Well, strap on your thinking cap because we’re going on a Reading Rainbow journey!
Let’s take drying clothes as an achievable example. If we pull clothes from the washing machine and hang the delicates to dry, how does this happen? We can feel the clothes are wet when they come out of the washing machine drum, so we tangibly know the water is there. But, then we hang them and … poof … eventually the water is no longer within the clothes and isn’t anywhere else we can see.
This is what we call evaporation, but simply saying the water evaporated doesn’t adequately explain what occurs. Let’s think of it this way: Evaporation is the process in which a tiny mouse wizard comes behind us when we leave the room, waves around a wand, chants some very indiscernible words and creates just enough energy (think megajoules per kilogram) to disperse the bonds of the water molecules near the surface. These molecules are henceforth not a liquid, but a gas and, then like all well-meaning gases, leave to play pickleball, go see an overpriced movie or get their hair blown out. Eventually, the molecules will get lonely and recongregate into a nefarious fluffy cloud and phase change back into a liquid. They could also reappear as condensation (See Figure 3, page 38), depending on several variables.
Greg Johns is the owner of a home performance consulting company as well as a bustling home inspection business. He works hard to keep the humor, advocate for consumer protection and help industry professionals grow their own building science understandings. He can be reached at greg@tnergyservices.com
As a side note, as the water molecules nearest the surface change phase and evaporate, water molecules left behind take their place (more on this below) at the surface, and then, they too evaporate and disperse if conditions are proper. And thus, eventually, we get “dry” (See Figure 1).
Ok, so let’s maybe ditch the magical mouse and wand bit, but the energy part is true. The thing is, the required amount of energy to “dry” depends on several factors which we don’t have room to dig into here. The key for those of us who deal with building environments is what often gets phrased as “the drying potential.” While we may not need to worry about how our plasticized briefs and bras air dry (there’s a reason many of our undergarments come with warnings to avoid excessive heat), we should be concerned with the drying potential for moisture in the materials that comprise homes and other structures.
For example, in my glorious 1940 home, any water that adsorbs or absorbs (See the companion article Let’s Absorb Adsorption Together in the Winter/Spring 2024 issue) into the board sheathing will diffuse readily along the grains (wood in particular) and eventually evaporate/dry out with minimal effect because my home has great drying potential due to being poorly air sealed and insulated. Though this may be advantageous for drying, it’s far less so on my utility bills!
But, in some homes of various vintages, inclusive of modern builds and commercial applications, there is less drying potential due to modern configurations of wall assemblies and building materials. In other words, some areas that get wet don’t necessarily have access to the energy needed for evaporation because energy is being properly sequestered within the structure’s interior habitable enclosure.
This is not a bad thing, if you care about the status of the environment or your bank account. However, it is a bad thing if you want your walls to not be a terrarium of mush that can’t stand up to wind and pests and you build without paying heed to moisture movement.
Think about all the local news stories, social media posts and leaflets dropped from above that focus on toxic mold in homes. These “highly credible” news sources should be focused on how these fungi showed up to party in the first place. If we managed our assemblies better with a mind toward drying potential (read: evaporation), then it would be less frequent for these spores to rudely take over. But, I digress.
OK. Let’s get back to the discussion at hand. So, evaporation occurs when water molecules near the surface gain enough energy (heat energy, temperature) to free their oppressive bonds. Then, diffusion (think about perfume being sprayed in the air) via physics disperses these from high to low concentration and, hence, they “disappear.” (See Figure 2, page 36.) Again, remember that diffusion is also the reason one concentrated wet area spreads to less-concentrated dry areas during the stage of what we’ll call “water wetting” (this is named thusly because there’s page 36 8
another chemical process referred to “wetting” that I don’t want to confuse with our current topic). Without diffusion in the product/material, evaporation would not be possible, but we’re talking about diffusion in a liquid phase first, then in a gas phase post-evaporation.
Meanwhile, back at the farm, if your environment is really wet, or cold, the moisture in our materials, be they clothes or building supplies, will not evaporate as quickly because there isn’t enough potential energy and there may not be enough dry air for diffusing from wet to dry/more to less.
There’s also osmosis. Though this technically isn’t the same as water drying, it plays a role in the exchange of water from Point A to Point B. We won’t get deep into osmosis because it technically reverses the always high-to-low principle and is reliant on solutes to dilute water. As an aside, though, osmosis can be the force behind the death of brick and other masonry materials; the force is strong with this one! So, the next time you see spalling brick and efflorescence, you can thank me.
Why does this truly matter for home inspectors, builders and consumers? Well, if you have a failure in a wall, roof or floor assembly (use the same mental image of a rectangle, just rotate
for each position), whether that failure results in catastrophic damage and fungal growth partially depends on the drying potential, which happens via diffusion (liquid phase), evaporation and diffusion (gaseous phase). The longer organic-based materials (and non-plasticized composites) stay wet, the greater potential for degradation.
In many regions, some trade professionals remain ignorant to building with a mind’s eye toward the physics of drying, so moisture gets “trapped” in the assembly components. If you read the fine print from many manufacturers that make building materials, you will see they assume their products will get wet. After all, they are exposed on the exterior, which is outside. They provide instructions, configurations and videos explicitly showing how to make sure their products can be protected and/or can dry by not trapping water
So, if you find evidence of something wet, it has at least one source, which may or may not be readily obvious. Remember, water, heat, energy and pressure move from high to low, more to less. If you see something deteriorated from being wet, you can assume it doesn’t have the potential (energy) to dry via evaporation and diffusion because there are nearby variables askew for healthy conditions (or it was exposed to moisture in a way that it was never designed to be, such as composite cement cladding in direct contact with a roof/ ground surface).
Once you find the askew variables and can name “it” and “them,” you can put the puzzle pieces together, inform your client and help the right people answer, “So, what now?” WRE
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