Home inspectors don’t control their industry

Posted on January 30, 2012 by russelray

I’m not the only home inspector who believes that the home inspection industry is controlled by three groups of people: Realtors, insurance companies, and attorneys. Notice that I did not list home inspectors.

Insurance companies hold sway over the home inspection industry because (1) many states require that home inspectors carry “appropriate” insurance, and (2) most of us who see ourselves as responsible businesspeople and home inspectors carry “appropriate” insurance as a matter of conscience. The most expensive of the “appropriate” insurance is errors and omissions insurance.

In California, there is no licensing for home inspectors, so there are many home inspectors who do not carry errors and omissions insurance since it is quite expensive. Each year when I go to get my policy renewed, I get quotes as high as $17,600 a year and as low as $2,300 a year. The high end is prohibitive and the low end doesn’t cover all contingencies. I pay around $4,400 a year, almost $400 a month.

Insurance companies, then, hold sway over the home inspection industry by the very nature of their high premiums. Insurance companies require us to use a home inspection contract, so if your home inspector does not use a contract, there is a good possibility that s/he is not carrying E&O insurance.

Attorneys hold sway over the home inspection industry because they are only too happy to sue everyone and see who is left standing, i.e., who has the deepest pockets, the most insurance, the best insurance, the insurance that will pay with few questions asked. Those who don’t carry appropriate insurance can be forced out of business because they spend their financial reserves simply responding to a lawsuit. Those who do carry appropriate insurance can be forced out of business because they cannot renew their policy after a lawsuit, or the premiums rise so astronomically that they cannot continue to pay the premiums and thus either leave the industry or fall into the no-insurance category.

Realtors hold sway over the home inspection industry because they have the power to make or break a company through their referrals. Barriers to entry (insurance, etc.) for home inspectors are high because new inspectors who want to succeed immediately have to market to people (Realtors) who do not pay them for their services. While I understand personal referrals and marketing (I’ve been involved in marketing as a vocation, avocation, and business necessity for four decades), the home inspection industry is a rarity in that the majority of us market to Realtors hoping that Realtors will then refer us to their paying Clients. The most interesting of middlemen.

It’s a strange industry,
but those of us who survived the Great Recession
are still here and ready to help!

Creating your own bar

Posted on January 28, 2012 by russelray

Creating your own bar

I’m a former real estate agent in a different state, a former property investor, a former roofing contractor, a former pool and spa builder, a former heating and cooling technician, and a few other things. All of those former professions provide me with the knowledge to help people with their real estate needs, something I like doing.

Right now, I’m most able to help people in real estate through my career as a home inspector. However, I’m not your average home inspector.

I think the various standards set by the national home inspector trade associations (InterNACHI, ASHI, NAHI, etc.), as well as the state associations (CREIA here in California),

set the bar too low!

Since there isn’t a law preventing me from raising the bar, creating my own higher bar that can help my Clients better, that’s what I have done.

Although I have been a member of the International Association of Certified Home Inspectors (InterNACHI) since March 2003, I use their home inspection Standards of Practice and Code of Ethics as my low bar upon which to build my high bar.

When creating my high bar with my many different types of inspections for different people in different circumstances with different needs, I had to determine who those people were. This was easy for me to do because I have also been a Marketing & Business Consultant for several decades.

As an example, a friend of mine, a Realtor at Century 21, had a condo listing in what I call a “hotel condo” building where the hallways and condo entrances look just like a hotel. He came up on his fifth month of a sixth month listing and had no bites on it.

When he came to me for help, I asked him what the average age of the owners was. “Oh, probably about 60.” Ah-ha! So it was a condo building with empty nesters who had downsized. Consequently, advertising on realtor.com and craiglist, while good, probably are not the best place to advertise a condo where only another elderly person would want to live, even though the complex is near a major university.

I got him advertising with AARP, the local newspaper, and other places where senior citizens hang out (Symphony, high-class restaurants, etc.). Boom! People were calling. He got his first showing and his first offer within hours of the Sunday paper hitting the streets. While they were in negotiations, he continued to get inquiries and three backup offers. By the end of the six-month listing, I had done a home inspection and escrow had sold.

If you’re going to create your own bar,
you have to know your target market
and where they hang out.

Do your plant due diligence — Part three

Posted on January 27, 2012 by russelray

Any guesses where the following picture was taken?

If you cheated and said that it was somewhere in San Diego County just because I live in San Diego County, you’re a good cheater, the best.

San Diego’s temperatures define it as a Mediterranean climate. Its rainfall defines it as almost a desert, and many parts of the County actually are a desert. Basically, San Diego is a Mediterranean desert, so almost anything will grow here if you provide it with its basic water needs.

People who move to San Diego often find that they are homesick for the plants, trees, and flowers they had back home. What they wind up doing is landscaping their home so that it looks like “back home.”

Therein lies a problem, though.

San Diego averages about 11 inches of rainfall a year. Most of the water for its three million residents comes from the Colorado River and the San Francisco East Bay Delta. People who plant lush, tropical landscaping in San Diego are impacting the water supply for the whole region, and it’s not going to get better.

When I inspected the property shown in the photograph, I mentioned that the tropical landscaping was inappropriate for a desert climate and specifically recommended that they ask the Seller for copies of the water bill. They might be shocked at how high the water bill was.

Not responsible for advice not taken Several months after close of escrow, my Clients called me wondering if I had broken something during the inspection because the water bill was so high. I didn’t even need to pull up the pictures of the property to remind me of their house. Some memories last a lifetime.

I asked them if they had gotten copies of the water bill like I recommended. They didn’t.

I explained again about their tropical landscaping and told them to call the water company and get the monthly amounts for the previous years. I bet they would be similar. They did. They called me back to apologize for accusing me of breaking something and told me that the water bill had been that high for several years. No surprise to me. That’s mature tropical landscaping.

Moral of this story? It’s always worthwhile to ask the Seller for copies of the gas, water, and electricity bills to determine if you’ll be able to live in the house after you buy it. If the Seller refuses to provide them, you can always (in my experience) get the amounts from the utility companies if you explain to them that you’re thinking of buying the house.

Do your plant due diligence — Part two

Posted on January 26, 2012 by russelray

If you missed Part one, find it here: Do your plant due diligence — Part one.

Whenever I do a home inspection, one of the first things I do is simply walk around the property looking at things. One day I took this picture:

The Client buying that property told me on the phone while scheduling the inspection that he had some concerns about sagging floors. No doubt….

Those lime-green plants in the two small sqaures are cyperus, a plant that needs a lot of water to survive. In order to get that water in San Diego with its Mediterranean desert climate, someone has to water them. They won’t survive on our annual average of eleven inches of rain.

Those two square planters are not planters at all. That’s where one would crawl under the house — plumbers to fix leaks, home inspectors to check out the foundation and plumbing, and children to escape punishment.

I couldn’t get under the house but I was pretty sure that the area in that corner — the kitchen and dining room inside — had floor problems. I was correct. All I could do is tell my Client what I thought was going on because I don’t have the luxury of tearing out the Seller’s plants while doing an inspection.

Moral of the story? Just because you see some dirt doesn’t mean you should plant something there. If you do plant something there, do your plant due diligence to determine how big it gets and how much water it needs.

Join me tomorrow for part three.

Do your plant due diligence — Part one

Posted on January 25, 2012 by russelray

Several decades ago, my wise old grandmother introduced me to cactus and succulents. The rest is history.

I’ve taken that interest and developed it into a passion for landscaping, a passion that complements my passion for real estate and my career as a home inspector. My love of plants and real estate has developed into an intense interest to help people understand how the wrong tree, bush, or ground cover can have devastating effects on their home, effects that might not become visible until many years later.

Here in San Diego, virtually anything will grow because of our Mediterranean temperatures. With the proper amount of watering, those things will grow tall and wide. Some that you’ve never seen bloom before will bloom.

When I was growing up in South Texas, I was quite proud of my Norfolk Island Pine (also called a Star Pine) that had grown to six feet in ten years. Here in the canyons of San Diego, it’s not uncommon to find Norfolk Island Pines that are 35 or 40 feet tall, also in ten years.

The umbrella tree, or schefflera, is the same. We Texans were proud if they were six feet tall and still had all their lower leaves. Here in San Diego, they not only grow to 20 feet tall, but the darn things bloom! And beautiful blooms they are, too.

Unfortunately, because everything will grow here, people plant plants in the strangest places. Notwithstanding our desert environment with an average of 11 inches of rain a year, people will water their plants to make sure they grow big and strong.

Here’s an example of a ficus tree which not only grew big and strong, but its root system grew wide and destructive:

That tree was not at the home that I was inspecting; it was next door! Yet it had not only destroyed the foundation of the home in the picture, it had also destroyed the foundation of the home to the left, the home that I was inspecting.

Moral of the story? Don’t fall prey to the grocery stores that sell the cute, little ficus trees at all times of the year. Those cute, little ficus trees grow to be big, monster, destructive trees. So do many other small plants commonly sold in grocery stores, discount stores, home improvement stores, and, of course, at plant nurseries.

Join me tomorrow for part two.

Proof that garage doors don’t have to be ugly

Posted on January 24, 2012 by russelray

I usually schedule home inspections in the afternoon, but when certain real estate agents request otherwise, I’m happy to accommodate them.

I did an inspection this morning not too far from me, so I took some neighborhood streets to get from here to there and back again.

When I’m out driving I’m always looking around for interesting homes, interesting homeowner renovations, flowers, and…..

…..garage doors:

Here in this post is proof that garage doors do not have to be ugly!

Renovating or remodeling? Start with the foundation.

Posted on January 22, 2012 by russelray

As a former real estate agent several decades ago, and a property investor/flipper, and now as a property consultant/home inspector, I’ve had the opportunity to see the best and worst of renovation and remodeling. My own definition of the two is that remodeling is small scale and involves only select rooms. Renovation gets much more extensive.

I’m sure we’ve all remodeled a kitchen or bathroom. But how many of us have remodeled every room in the house, and replaced every appliance in the house, and replaced the roof, repaired the foundation, redone the exterior walls, renovated the fireplace and chimney, installed new doors and windows, etc.? That’s renovation. Regardless of whether or not you’re remodeling a room or renovating the structure, I have just one suggestion:

Start with the foundation.

If you follow that suggestion, 99% of the time your remodeling and renovation will hold up. On the other hand, if you remodel a room but don’t address any foundation problems, it’s highly likely that you’ll get cracks in the walls, ceilings, and the beautiful tile floor you just installed.

I can’t tell you how many times I’ve been in renovated homes over in Bankers Hill, Mission Hills, and Kensington where the beautiful remodeling and renovation was done “just last year” but is already full of cracks again. When I crawl under the house, well, it’s no wonder. Sometimes I wonder what is holding the house up.

Here are some interesting foundation work in homes that I’ve inspected. All of them were in homes that had been renovated or the owners consulted me about how to upgrade their foundations so that they wouldn’t have problems with their renovation and remodeling.

The following picture shows foundation renovation. I have not been able to find the design specifications for bent nails, perhaps because there are none.

In the following picture, you can see the brand new concrete piers that have been installed, but all the soil around the footings is gone!

Unfortunately, the tile floor, installed just a few months ago, had cracks everywhere. The owners were considering suing the floor installation people, but I believe I talked them out of it. It took a couple of months working on this problem to determine where all that soil went, but ultimately we did. Turns out that a few years previous, the city had come in and poured a new street drainage culvert to the side of this house. However, no one went out during our short rainy season to determine if the culvert was functioning properly. It wasn’t. Every time it rained, the water was running through this foundation, right to left, and carrying all the soil away. It took a couple of years to re-work the foundation and replace the tile floors, mainly because of the expense involved.

In the following renovation, a large eucalyptus tree had been removed from near the house foundation.

Hey, why not use that large tree trunk to help support the foundation? This is another instance where I could not find any structural engineering specifications for the tree trunk.

In the following picture, just a small corner of the house was sagging, so some good river rock was supposed to solve the problem.

As you can see, that front one isn’t supporting anything. This type of interesting fix could prevent the corner from sagging further, but it doesn’t address the sagging that has already occurred.

Finally, I find the following type of damage way more often that one might expect.

Usually it is caused by plumbers, but in this one, the heating and cooling company that was hired to remove the old floor heater and put in nice central heating and cooling found that the darn old foundation wall was in the way, so they just blasted through it.

Even if you recognize the fact that the foundation needs to be addressed before doing any other remodeling or renovation, once the foundation repairs have been done, have a or home inspector check up on those repairs. The good eyes of a third party can help protect your investment before the company’s warranty on their work expires.

There’s more to being a home inspector than just doing home inspections for buyers and pre-listing inspections for sellers.

Real Estate Solutions by Russel Ray

Unlocking the secrets of your home

Monthly Archives: January 2012

Home inspectors don’t control their industry

Creating your own bar

Do your plant due diligence — Part three

Do your plant due diligence — Part two

Do your plant due diligence — Part one

Proof that garage doors don’t have to be ugly

Renovating or remodeling? Start with the foundation.