By Mark Cunningham, Revised 18-Apr-2023
(Original Post Date: 19-Nov-2013)
An old topic has risen again in recent conversation, so I’d like to revisit it for the benefit of my current and future clients. Ten years ago a prospective client was not happy with the inspection he received for one of the homes he was looking to purchase. This inspection had been performed by another inspection company, not DHI, LLC. He was now looking at a different home and wanted to compare quotes from different inspection companies. I asked him three questions: 1) how much did he pay for that inspection, 2) what was the list price of the home and 3) what was the home’s square footage? Based on his response, I knew he was undercharged. That home, most-likely, did not receive the inspection that its size required. Of course he was dissatisfied with the result.
My perspective client was currently interested in a house of similar size and price in a nearby development and wanted me to quote a price to inspect it. I told him that I will quote him but I would not beat his previous price for an inspection nor did I want to. In fact, my price would be higher than he would probably want to pay. He said that he knew inspection companies that could quote a price in his ballpark. My response was: “Respectfully, Sir, by your admission, you were dissatisfied with the previous inspections. Your ballpark is not realistic for the size of that property. I cannot see how an inspector would be able to do a proper job for less than my quotation or something near it.” I added, “You are looking at a $1.6 million dollar home; you would do yourself an injustice by not spending the correct amount of money for a proper inspection.”
I went on to explain that I price each inspection as a function of time. Larger homes require more time to inspect. An increased inspection time equals a higher cost. A one-sized inspection price does not fit all homes. In my experience, the inspection cost should be approximately one tenth of one percent of the list price of the home or the home's market value. This does vary slightly, depending on the home’s features, style of foundation and its size, but, by far, it has served as a great rule of thumb for the past dozen years. My goal is to give my clients the best value for their money and that includes taking the appropriate amount time to perform a proper inspection.
I’ve had similar conversations, on this topic, with multiple people. Some of them hired DHI, LLC; others did not. Unfortunately, I was not hired for this particular job, so instead, I wrote this newsletter to inform you of my pricing ideology. I also wanted to drive home the fact that your future home or income property is a significant investment. Don’t cheat yourself by saving a few dollars on the inspection, only to find you must pay, later on, to repair or replace some very costly items that were not uncovered by that cheap inspection.
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