Home Inspectors: How to Mitigate Risk through Communication
“To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others.” – Tony Robbins, American motivational speaker and writer of Unlimited Power: The New Science of Personal Achievement
As addressed in our last article, which discussed home inspection marketing to realtors, personal demeanor is one of realtors’ top criteria for inspectors. (See HomeHubZone‘s 2015 survey.) And your demeanor, or your behavior towards others, begins with how you communicate.
The words you say and how you say them can have a profound impact on the message you give your clients and your business partners. According to William Chandler, Owner of Property 360 in Florida, communication is paramount to an inspector’s success.
“Communication, reporting—that’s where the rubber meets the road,” Chandler said. “You can be an excellent inspector, but if you’re not competent in verbal and written communication, you’ll struggle to grow your business, or you’ll find yourself on the wrong end of a claim.”
In a technical field like home inspecting, it’s important that you communicate clearly and effectively. Only through strong communication can you both mitigate risk and satisfy clients.
What to Say
Most of the home inspection industry agrees that an inspector’s primary duty is to examine the physical structure and systems of the home and report the observed conditions to their client. The client then uses the information the inspector provides to guide their real estate purchasing or selling.
“[My job is] to look at a home and convey to the client—within the Standards of Practice—what’s wrong with the home at the time that I’m doing the inspection,” said Chuck Lambert, Owner of Sunrise Inspection Services in California. “My attitude is: It works. It doesn’t work.”
Contrary to the deal-killer myth, the realtors that we spoke with and that HomeHubZone surveyed want home inspectors to be thorough. That means that realtors want home inspectors to find and communicate defects to clients.
“We want the home inspector to perform a thorough, comprehensive inspection so that the buyer can make an informed decision as to whether or not to move forward,” said Linda J. Page, National Association of Realtors® Region 2 Vice President.
Home inspectors should want to find and communicate defects, too. According to our underwriters, home inspectors mitigate risk when they note defects. Our pre-claims assistants and claims adjusters also indicate that it’s easier to defend an inspector from a claim when they have evidence combating the allegation. (e.g. Claimant says you’re responsible for omitting roof damage. Your report and corresponding photos show that the roof was pristine on the day you inspected.)
What if there are just a few defects?
In communicating defects, however, it’s important to stick to the facts. Inspectors seeking to mitigate risk should avoid the temptation to create a laundry list of imperfections just to fill the report. Jim Brown of Final Word Home Inspection in Georgia suggests that inspectors let the house determine the inspection results rather than the client, realtor, or even the reporting format.
“I’ve gone into houses that’ve been remodeled and, whoever did the remodel job did just a tremendous job. And I found very, very little in this house,” Brown related. “There was a time in my past when I would feel the need to fill up my report with something. Well, I’ve just come to a place where, if there’s nothing or very little in the house, then I don’t put it down on the report.”
Most research suggests that focusing on aesthetic issues may hurt inspector-client communication by confounding clients’ expectations. When inspectors draw attention to cosmetic defects, clients may inherit unrealistic expectations of the inspection. (e.g. My home inspector should note every scratch on my hardwood floor.) And since superficial flaws are common in previously owned homes, it can be overwhelming or even confusing for clients to see such defects listed.
“There are some home inspectors that strain at a gnat. If the cabinet doors are not perfectly straight, they’ll put it in the report,” Brown said. “When you sum up a report with a bunch of non-essential, stupid stuff—quite frankly—then it’s going to cause the buyer to throw up all kinds of red flags.”
Cosmetic details can be difficult to address because their definitions may vary.
“When it’s cosmetic, it’s about what you accept and what you’re happy with aesthetically. I don’t know what that is,” explained David Kile of Texas Dependable Home Inspections. Thus, Kile believes the Texas Real Estate Commission (TREC) has prohibited inspectors from reporting on cosmetic defects “for good reason.”
In addition to many state regulations, both the American Society of Home Inspectors (ASHI) and the International Association of Certified Home Inspectors (InterNACHI) agree that cosmetic issues are beyond inspectors’ scopes. (See how both exclude aesthetic concerns in their Standards of Practice (SOPs): ASHI here and InterNACHI here.)
In Brown’s view, it’s only appropriate to list cosmetic issues during a pre-listing inspection. Doing so is a service to the seller so that they can fix issues before listing, Brown explained. Thus, Brown has excluded aesthetic defects in his standard inspection contract.
For Brown, it’s important to give clients the full picture. And since homes are made of more than just defects, Brown believes the full picture should include benefits.
“I point out good things in the house,” Brown said. “I don’t just talk about the negative things. Because the home owner wants to find out that they’ve got a real, top-quality furnace.”
Real estate agents have told Brown that his sharing positive findings helps sell houses. But beyond that, Brown believes pointing out benefits gives clients a better perspective that will assist them in deciding whether or not to purchase the home.
Other home inspectors leave benefits out, saying that observing benefits goes beyond the Standards of Practice and into matters of opinion.
“I don’t care if the A/C is a 20 SEER, high-efficiency unit or a 13 SEER. It just makes no difference to me. I point out issues which can cost my customers significant dollars after closing. That’s what they hired me to do,” Chandler said. “I like to be able to quantify things. If I can’t quantify it, it’s just an opinion. And, as we know, there’s a bunch of [opinions] out there. It’s just not our place to point out benefits.”
For those unsure of whether they should mention benefits, be sure to review state requirements.
How to Say It
In his self-published article entitled “What a Real Estate Agent Wants From a Home Inspector,” Bill Gassett, realtor at RE/MAX Executive Realty in Massachusetts, stated that the primary differentiation between good and bad inspectors is information delivery.
“Good delivery would be someone who takes the time and actually explains exactly what the problem is,” Gassett said.
Gassett stated that inspectors shouldn’t omit information but, rather, give clients a context to make reasonable conclusions. (Think not being “an alarmist,” as home inspector James Carr put it.)
In his 31 years of real estate experience, Gassett has found that clients rely on home inspectors to give context. Since typical clients don’t understand the significance of most issues reported, they need points of reference to better assess the property. Knowing if the issue is commonplace or easily fixed may help the client determine next steps.
Kile provides an example of giving context to an inspection finding:
“If it’s unusual, I’ll say that it’s an unusual thing to find. I don’t consider it to be a major issue. I think it needs to be addressed, and I want you to get it taken care of. And you’ll be good to go again,” Kile said.
For Chandler, taking things one step further and explaining the why behind the defect is essential.
“You have to, first of all, have knowledge of what you’re reporting so that you can competently explain why this is deficient or needs replacement or repair,” Chandler said. “You have to practice that. It’s a learned behavior. You have to be matter-of-fact and just let people know if it’s a routine component which, based on age or lack of maintenance, is going to need work.”
According to realtors interviewed, impartial delivery is paramount because it ensures the inspector isn’t making the decision for the buyer. A big part of giving context is how you go about it. The realtors we interviewed suggest that personal demeanor plays a large role in how clients understand the findings and their context.
“They need to be what I like to call non-inflammatory: very level, very balanced in their approach and the way they address, perhaps, deficiencies in a home” Page said. “We don’t want them to overlook [deficiencies], but we also don’t want them to make a mountain out of a molehill.”
For Kile, it helps to remember his place in the real estate transaction.
“My goal is to make [clients] feel more confident about the choices and the decisions that they’re making about the investment that they’re about to embark on. So whether or not it’s a good house or a bad house—I don’t get involved in that,” Kile said. “I’m trying to bridge the distance between what they do know and what they don’t know. I feel like, with understanding and knowledge, there’s less fear.”
According to Kile, all deficiencies are repairable or replaceable, and it’s the client’s duty to decide how they’d like to spend their money. James Yaeger of Bayou State Inspections in Louisiana agrees.
“The inspector should never be the one to decide how big of a deal [a defect] is. It should always be the client deciding how big that is,” Yaeger said.
Yaeger went on to explain that it’s the client that decides how they want to move forward with both the transaction and potential issues.
Lambert addresses deficiencies in a non-inflammatory way by leaving his opinion out of it. Instead, Lambert sticks to the facts, explaining defects plainly and openly.
With Next Steps
Home inspectors can continue to mitigate risk by communicating solutions to problems. The simplest way to do this is in broad strokes. Lambert compared inspectors revealing defects to doctors sharing diagnoses: A doctor can say a patient has cancer and leave it at that. Or a doctor can put emphasis on potential solutions. Inspectors can use the same bedside manner to arm clients with facts while preserving their right to choose what comes next.
Yaeger offers next steps by explaining what repairs or remodels may be necessary or desirable.
“I usually talk about how simple or how difficult it will be—the level of that repair,” Yaeger said. “We also tell them how they could improve on it…. [For example,] how the addition of an attic tent will improve their air quality and the air conditioning.”
(For another example of giving recommendations, see how Michael Patton addressed a client who called about water damage already noted in his report here.)
Remaining within Scope
Nevertheless, Chandler states that certain responsibilities fall outside of the home inspector’s scope.
“The job, as defined by most associations and most state SOPs, is to identify the primary components which are significantly deficient or at the end of their service lives and why. However, I see inspectors routinely change that role to simply refer for further evaluation by another party,” Chandler said. “I tell them what is wrong, [and] I tell them if it is a repair or probably a replacement issue. I do not provide means and methods of repair. That’s the contractor’s job.”
However, as with all requests, it’s important to look to state regulations to determine your ability to fulfill them.
“It’s important to know what your liability and risks are. How far do you carry it?” Kile explained. “If you don’t know that part, you’re as dangerous as the guy who didn’t do enough.”
When repairs are necessary, Kile asserts that it’s never wise to suggest that a client can perform the repairs themselves. By recommending professional assistance, home inspectors limit their liability—regardless of whether the client hires a licensed contractor or attempts the fix themselves.
In a profession full of potential risks, it’s important to prevent the pitfalls that you can.
“We’re not trying to prove how good you are as an inspector. We’re not trying to prove to the world how vast your knowledge is about something. What we’re trying to do is convey the information to the client as a professional inspector in a way that you’re giving them the information that they need and you’re protecting yourself in the process,” Kile said.
Through thoughtful and clear communication, clients are more likely to understand your inspection findings. And with that understanding comes customer satisfaction and a decreased chance of future claims.
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