Transcript HISTORY OF THE HOME INSPECTION INDUSTRY THE “PAST, …

HISTORY OF THE HOME
INSPECTION INDUSTRY
THE
“PAST, PRESENT, AND THE
FUTURE”
by John Bowman
John Bowman’s Qualifications
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Executive Director, National Association of Certified Home Inspectors (NACHI)
Founder, NACHI, NY Finger Lakes Region Chapter
Founder, NACHI, National “On-Line” Chapter
Author, Bowman’s Guide
Consultant, Gerson-Lehrman Group Real Estate Council
Retired – General Contractor
Retired – Certified Master Inspector
Past Expert Examiner & Consultant NYS, DOS
Vice President, Foundation for Safer Housing
Founder, Home Inspector Reference Manual
Founder, National Home Inspection Technical Institute
Past Chairman and Founder of the NACHI Awards Committee
Past member of the NACHI Steering Committee
Past member of the NACHI Education Committee
Past member of the NACHI Convention Committee
The Past
A Brief Description of our History
 How often have we heard that the Home
Inspection Profession/Industry is new to the
real estate world?
 To this day, the home inspection profession
is still considered a relatively young
profession, but in reality, people have been
seeking the services and advice of others
about home purchases since - - well, since
forever.
 However, prior to the late 1960’s, early 70’s, that
expert was usually a grandfather, father, cousin,
uncle, or some other friend or relative who had
some background or experience in real estate or
construction. True that experience was limited.
Normally these consultants or advisors had either
already gone through the process of buying a
home or remember helping their “Cousin Charlie”
build a barn or an addition to the house. In
addition people trusted or were dependant on the
word of the realtors and their assessment of the
home.
 But those were simpler times. Beginning in the
late 40’s, shortly after World War II, a huge
nationwide demographic shift began and the “baby
boomer” generation began. People began trading
the farm life for the suburbs, which was closer to
their factory jobs that offered stability and benefits.
These “Blue Collar” workers began sending their
children to college and from that came the next
generation of upwardly mobile professionals.
Professionals that were raised on the principle that
“Knowledge is Power” and, if you get an education
you can go beyond this factory life, etc. Which
leads us to today’s generation, who are privileged
to vast amounts of media and research by the
creation of the internet.
 In the early 70’s homebuyers began utilizing the services of
general building contractors to perform pre-purchase
inspections. The phrase “Contractors Inspection” was
coined and many contractors began offering there opinions
on the structural soundness of the home. But that was not
enough for the buying public. Rising costs of construction
and materials mandated that they also know about other
systems of the house before they purchased it. It soon
became apparent that a general knowledge of all the
systems of the home was necessary to fulfill the demands
of the consuming public. Gradually, the term, “Contractors
Inspection” evolved into the term, “Home Inspection”, a
term that adequately described the evaluation of the entire
home and all of its systems by an expert. The term “Home
Inspector” aptly describes an industry expert/professional
with the ability to examine all the systems of a house.
SOME HISTORY CHANGING
EVENTS
 1975 – A small group of concerned home
inspectors formed a study group to troubleshoot
inspection techniques and enhance their
knowledge and professionalism. Up to this point,
inspections had been performed on a very casual
basis by a very limited number of individuals. This
group morphed into the California Real Estate
Inspection Association (CREIA).
 1977 (Some say 1976) - The American
Society of Home Inspectors (ASHI) was
developed. In addition in cooperation with
CREIA the first Code of Ethics and
Standards of Practice for Home Inspectors
was developed.
 1984 – In California the famous “Easton vs.
Strassberger” court decision held that the
duties of a real estate broker include “the
affirmative duty to conduct a reasonably
competent and diligent inspection of the
residential property listed for sale and to
disclose to prospective purchasers all facts
materially effecting the value of the property
that such investigation would reveal.”
 This decision seemed unreasonable to ask,
therefore, brokers pushed, California Senate Bill
1406, which legislated to mandate disclosure in
California. The disclosure laws required seller to
tell homebuyers everything that they “know” about
the property being sold. This ranged from listing
all items in the home that are defective, to
identifying items not functioning, or additions built
without permits. The law also required that real
estate agents perform their own “diligent visual
inspection” and disclose any defect that they might
find.
 To circumvent this new law, and shield them
from litigation, The California Association of
Realtors altered their contract forms to
include a provision for the homebuyer to hire
their own professional inspector. Hence the
home inspection business emerged on the
west coast as an industry. Since then, one
state after another adopted California’s
disclosure laws leading to the emergence
and expansion of the Home Inspection
Industry.
 1985 – Texas enacted the first Professional
Practice Act regulating the home inspection
profession.
 1987 – The National Association of Home
Inspectors (NAHI) is formed.
 The Ontario Association of Home Inspectors
(OAHI) is formed. OAHI operated as a
Chapter of the American Society of Home
Inspectors (ASHI), until 1994 when they
became a self-regulating professional body
under the Ontario Association of Home
Inspectors Act.
 1987 – Texas required home inspectors to
be registered with the state.
 1990 – The National Association of Certified
Home Inspectors (NACHI) was formed.
 1991 – Texas was first to enact a full
licensing law for home inspectors.
 2002 – More than 14,000 home inspectors
had entered the profession nationwide. The
Home Inspection Industry continued to grow
and a professional, independent home
inspection had now become widely
recommended by real estate authors and
columnists.
 2007 – Recent estimates indicate that there
are approximately 50,000 home inspectors
in North America. (Some estimates have
even gone as far as 75,000).
The Present
Where are we now?
 To begin we must take a look at some statistics:
 One sixth of all Americans, an estimated 43 million
people, move each year. (U.S. Census Bureau)
 Approximately 17 percent of the total U.S.
population moves each year, which is more than
any other country. Australia ranks second in
annual citizen moves with 10.4 percent followed
closely by Canada. (U.S. Census Bureau)
 The average American moves 12 times in a
lifetime. (U.S. Census Bureau)
The Present
Where are we now?
 Almost half of all moves, an estimated 21.5 million
people, occur between the beginning of May and
Labor Day. (American Moving and Storage
Association)
 Moving is the third most stressful event in life
following death and divorce. (Employee
Relocation Council)
 The typical moving customer is a married couple
between the ages of 25 and 44, with one or two
children between the ages of 2 and 11.
(Mayflower)
 These staggering statistics show that the
need for professional home inspections is
needed and warranted. We (meaning the
home inspection profession) must take a
stance to ensure the safety and well being
of our fellow citizens, neighbors, children,
elderly, etc. Educating the public should
become our creed.
 Public awareness begins with us. We must
teach them that “What you don’t know can
harm you”. Take the following and use it to
your advantage to inform your customers.
 Houses degrade from the moment they are
completed. And with human nature the way
that it is, many people won’t fix their home
unless they are forced to. Until the home
inspection service evolved, houses were
typically purchased in “as is” condition. This
process continues from buyer to buyer or
until eventually the house falls apart or a
disaster occurs.
 Occasionally, houses are fixed up before they are
sold, but these are the exceptions and not the rule.
Owners who decide to market a house rarely want
to invest extreme amounts of time and money in it
because they usually feel that they won’t get their
money back from the sale. When they do decide
that the problem must be addressed or fixed, they
often times do it themselves (even though they
may not quite understand the problem or how to
fix it) or hire a not quite qualified unprofessional to
do the repairs, which may create additional
problems. This process is not new. The old
Roman Latin saying caveat emptor or “let the
buyer beware” is just as appropriate now as it was
then.
 Prior to the introduction of the home inspection
professional, rather than fix problems and be out
thousands of dollars, typical home sellers kept
quiet and assumed the attitude of “let the new
homeowners take care of it”. But with the advent
of the professional home inspection trade, many
houses now get repaired before they are placed
on the market, because homeowners know that
the house will be inspected and don’t want any
problems holding up the sale. Overall the home
inspection industry has increased the quality of
housing and has made for safer housing with
longer expected life expectancy.
 Our job as home inspectors is to provide a
general, overall inspection of the home. It’s
that simple. The properly trained inspector
is someone who has a working knowledge
of many trades and gives an overview of the
condition of the home. An overview means
that the inspector will list areas of concern.
If these areas are significant, the owner or
buyer will be advised to contact a specialist
in that area of expert evaluation.
 Home Inspectors are generalist. We do not
compete with the specialists – we work with them.
Anyone who wants a home inspected has really
two choices. Spend a lot of money and bring in
experts in all the trades, or spend significantly less
money and bring in one person who has a general
knowledge of all the trades. Most can ill afford to
bring in all those individual professional specialists
and choose us – the generalists. Hiring a certified
structural engineer, master electrician, plumber,
and so on to inspect a house would cost well over
$1,000.00 whereas a typical home inspector
charges $300.00 to $500.00. Think of the
headaches of trying to get that many people to a
house in such a short period of time.
TODAY’S INSPECTOR
 The home inspection profession as you can
well imagine has evolved into one of
compliance and regulation. Many if not
most states now regulate or license the
home inspector and require adherence to a
state mandated code of ethics and
standards of practice. Additionally, states
are beginning to require Continual
Education.
TODAY’S INSPECTOR
 In those states that do not regulate the
home inspection profession, industry
standards have developed to the point that a
non-conformist (if you will) does not stand
much of a chance in the industry.
 This leads us to my procrastinations,
musings and predictions for the future of the
home inspection industry.
THE FUTURE
My Predictions, Procrastinations,
and Musings
 This is where I separate the meek from the
strong. Many disagree with my future
analysis and probably rightfully so.
 In the beginning of our discussion we
learned of the evolvement of the profession.
We learned that the profession began with a
small concept (contractors doing a cursory
review of the structure as “Contractor
Inspections”) that evolved into a generalist
in all trades known as the “Home Inspector”.
 The consuming public in my opinion will
dictate the future of the profession. In fact, it
has already begun. Soon Home Inspectors
will find themselves needing to be specialist
rather than generalists in many facets of the
inspection process.
 What are now considered ancillary services
will become demanded services, (i.e. –
radon, mold, water testing, etc.). Other
structures, such as, swimming pools, hot
tubs, barns, sheds, etc. will also become a
mandatory part of the inspection process
and will be expected.
 In short the home inspection
industry will further evolve from a
generalist to a specialist because
of consumer demand on the
industry. This consumer demand
will be sparked by:
 Rising costs of construction/remodeling labor;
 Increasing Material Costs;
 Increased knowledge and education of the
consumer;
 Marketing trends of the home. (Future homes will
probably all have a swimming pool or other
amenities, as part of the new home package);
 And yes, even possibly future government
regulations that may place undo hardships on the
sale of a home. (i.e. – mandated septic
inspections or requiring certain systems to be up
to code or at minimum standards). You see this
code updating in the commercial industry already.
 The Home Inspector of the future will be
continuously tasked to improve his/her skills to
meet these demands through specialist training
and certification.
 To that extent, Associations, Societies, etc. will
need to expand their capabilities to service the
future inspector. Trade schools, colleges, and
others will need to expand, develop, and lead the
way in education and certification programs. To
answer my critics who say, “Certification of a
generalist is not possible” I rebut with, “Yes, you
are right. But, certification in specialist fields is”.
The future home inspector will need to be just that,
a specialist in the electrical, plumbing, HVAC,
Swimming Pools, etc., fields.
 Thank-you for your time and allow me to bring you
this presentation. I only wish all of you the best in
the future.
 Let’s all make 2007 “The Year of Recognition” for
everyone in the industry. The public needs to be
educated on the industry and how it best serves
them.
 THE END
 John Bowman- Author
 This presentation will be followed by a Q and A
session-