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Tuesday, January 10, 2006

Has Licensing Hurt the Inspection Industry in Phoenix?

In 2003, all home inspectors in Arizona were required to become licensed with the Arizona Board of Technical Registration (BTR).  At that time, only about 250 inspectors were able or willing to jump through the hoops that were required to become licensed.  In the 3 years since, our ranks have grown to over 1200 inspectors.  That means that over 3/4 of the inspectors in Arizona have less than 3 years of experience as an inspector. 

In that time, there have been several positive and negative ramifications that have been left in the wake of licensing.  Setting minimum standards for inspectors is great for the real estate community and the public at large, not to mention the inspection community.  The BTR has adopted the AZ ASHI Standards of Practice as the minimum standards for inspectors to follow.  Additionally, to become a Certified Home Inspector in Arizona you must pass the National Home Inspectors Examination (NHIE), complete 90 hours of classroom training, conduct 30 parallel inspections with a Certified Inspector, have one report reviewed by the BTR, pass a background check, and of course, pay fees!  This gives our profession a credential that elevates us to the level of the other professions regulated by the BTR, such as surveyors, architects, engineers and so on.

As with all things, nature abhors a vacuum.  With so few inspectors to handle the needs of the community, several home inspection schools have popped up to educate the on slot of new inspectors entering the industry.  As I'm sure that all of you real estate agents know (just think back to when you were in real estate school) school is mainly designed to get you through the state education requirements and pass the test.  You are not generally competent and all-knowing the minute you get out of school - that takes experience.  Well it is really no different with the inspection schools.  Even with the 30 parallel inspections required by the BTR to get a license, proficiency only comes with time and practice (not to mention continuing education, for which there is currently no state requirement for home inspectors).

Many of the new inspectors entering the business are coming from related fields such as the construction industry, however, many are not.  It is this "many are not" group that has me concerned.  I regularly read the disciplinary actions section of the BTR's website and am amazed at some of the stupid stuff that my fellow inspectors are being sited for.  For example, home inspection report that failed to meet the Standards of Professional Practice ... failure to report the presence of an evaporative cooler, adverse conditions on the roof and recommend further repairs by a licensed roofing contractor; failure to report the presence of the gas and water shut off valves for the water heater; failure to accurately report the type of fireplace and chimney in the converted garage; failure to report truss alterations in the attic and  the type of plumbing waste and supply lines.  And a really dumb error to make...failure to register the firm with the BTR (a $10 registration but a $200 fine).  So what are the home inspection schools teaching if not the basics?

Why are they missing this stuff?  Is it because they were lured into an industry that promised easy money (make $100 an hour and set your own schedule), or did they think that this was some kind of easy sham job.  Or is it because the schools are not properly teaching the knowledge needed to be a competent inspector and how to write an inspection report to standards.  Well, I think that it is probably a combination of these and other factors.  In short, many of these inspectors just don't know how to do their job.

On several occasions I have had Realtors make comments to me about the "last" inspection they had.  "That inspector only spent 20 minutes inspecting the house and he missed (fill in the blank)".  I don't know if these stories are exaggerated or not, but they are believable when I see some of the mistakes.  My intention in writing this post is not to 'bash' the competition, but simply to warn homebuyers and real estate professionals that licensed does not equal proficient when it comes to home inspectors.

I believe that new inspectors who go to work for an established multi-inspector firm have a significant advantage over the one man start-up companies.  The experience and resources are there for them to draw from.  It is certainly like that for most other related professions.  Real estate agents are required to have a broker for at least 3 years before venturing off on their own.  And similar requirements are in place for appraisers, contractors, pest control, etc.  It can be kind of scary to think that 90 hours of training and 30 Parallel inspections (sometimes 5 a day) with only 1 reviewed report constitutes a trained and proficient home inspector as far as the state is concerned.

In my opinion, I would like to see the state adopt a qualifying party rule for new inspectors.  That way, there is some kind of oversight for newly licensed inspectors.  I also think it would be a good idea for the BTR to have some kind of recovery fund like the Arizona Department of Real Estate (ADRE) and the Registrar of Contractors (ROC).  This would also help protect the public from fly by night companies that don't maintain adequate financial assurance.

This flood of new inspectors has also impacted the inspection community in the way of fees.  Many of these new companies have adopted a policy of under cutting the competition.  Now don't get me wrong, I am all on board with the free market economy driving the price of an inspection.  While more choice creates more competition, hiring an inexperienced inspector really kind of defeats the purpose of having an inspection.  Inspectors that provide half the service at half the price hurts not only our wallet, but our reputation as professionals as well.  It never ceases to amaze me how some people underestimate the importance and value of a good home inspection.  After all, even an inspection that costs several hundred dollars is only a tiny fraction of the total sales price of the home and is much cheaper than most repairs.  The good inspector finds more deficiencies.  Knowing about these deficiencies upfront saves money and prevents headaches for everybody involved in the transaction.

While I think that regulation of home inspectors has been positive in many respects, there have also been some negative, probably unintended effects that have not been good for the home inspection industry or the public.  One such effect is the sudden flood of new inspectors into the industry.  The competition might make consumers happy by lowering prices, but they are not happy for long if quality has to be sacrificed (and quality has to be sacrificed to do a $150 inspection - trust me!).  The ones that really benefit all the way around are the home inspection schools.  It's not that I disagree with licensing; I think it is necessary.  If anything, I don't think they went far enough.  I think new home inspectors should face a more strict experience requirement or even an apprenticeship, much like appraisers and real estate agents/brokers.  But in the end, what the government doesn't do, free enterprise will handle.  The $150 inspectors will be put out of business either because they don't know enough or they don't charge enough.  And the best of us will remain in the industry and continue providing a valuable service to our deserving Clients!

Written By: Scott Hubbard Certified Home Inspector, ASHI Member Homewerx Home Inspections Office: (480) 503-2611 Toll Free: 1-888-THE-WERX Email me

Posted by Scott Hubbard, Arizona Home Inspector on January 10, 2006 | Permalink

Comments

Licensing requirements for real estate inspectors needs to be maintained and education and/or competency review shouls be implemented to make sure that these professionals have a minimum level of training and are competent to provide at least a minimum level of expertise. Just like any industry, you have very competent and very incompetent people. The only way to standardize is to require minimus.

-Randy

Posted by: Randall James | Jan 31, 2006 7:07:00 PM

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