|| > E&O/GL Insurance for Home Inspectors
Competitive Rates, Broad Coverage,
Free Risk Management, online inspection
support for tough questions, discounts
on education and more...
Professional Coverage, Competitive Pricing
Shop OREP today!
>> Editor’s Note: To help you stay up-to-date and connected, OREP/Working RE has established a Coronavirus (COVID-19) Discussion and Resource Page where you can share your thoughts, experiences, advice and challenges with fellow inspectors. See what Inspectors are saying here!
>> Take the Coronavirus: National Home Inspector’s Survey. Provide your industry feedback.
Inspecting During a Pandemic
by Isaac Peck, Editor
Like many small business owners, home inspectors across the country have been struggling to maintain operations and navigate the dangers of the COVID-19 pandemic. Starting in late March, state Governors quickly began passing “Stay-at-Home” Executive Orders that shuttered all but “essential” businesses. While there was initial confusion over whether home inspectors are considered “essential,” the great majority of states carved out exemptions either directly for home inspectors or for “real estate services” broadly. Pennsylvania is one state that appears to have completely forbidden home inspectors from operating, along with all real estate services. Other states, like Michigan, did offer an allowance for home inspectors, but still failed to exempt real estate agents, essentially shutting down the vast majority of real estate transactions in the state.
Even in states where real estate services are considered essential, business is down substantially as of this writing (mid May). According to ShowingTime.com, in the peak of the lockdown (late March/early April), real estate showings across the country declined in aggregate by 50% compared to the first week of 2020. And compared to the same time last year, the decline was nearly two-thirds of last year’s spring volume (See Figure 1: US Nationwide Real Estate Showings).
Figure 1: Click Here for Full Size Image
Looking at the data, it appears that showings have been climbing back since April 10th, and as of late May, showings were up nationally by 3% compared to the same period in 2019. (To see how real estate showings are in your market, click here.)
In the midst of this decline in business, home inspectors have also been facing the dangers of visiting a property. They are trying to maintain social distancing and avoid putting themselves, their clients, and their own families at risk. Here’s a snapshot of the challenges faced by home inspectors and the inspection industry as a whole.
Stopped Work Voluntarily
According to the OREP/Working RE’s Coronavirus: National Home Inspector Survey, Over 20% of inspectors reported a complete work stoppage, with an additional 45% experiencing a 50% or greater decline in business. Over 1,000 inspectors have completed the survey at the time of this writing. (The OREP/ Working RE survey is still open; see details below.) In some states, like New York, home inspectors are considered “essential” and have been allowed to continue operations. However, not all home inspectors have chosen to continue inspecting through the pandemic.
John Smith (name changed for privacy), a home inspector in NY, says he stopped inspecting on March 23 to protect both himself and his family. “To me, it’s just not worth the risk for yourself and your family. As home inspectors, we are in the dirtiest spots of the house and we are constantly touching things that people avoid in public places. How do I decontaminate myself properly? I don’t think there’s a way to completely decontaminate yourself even between inspections. So I think it’s playing with the lives of others and the lives of myself and my family. If we were doing safety inspections or going in and protecting people, I think it’d be different, but these are just real estate transactions; it can wait a few weeks,” says Smith. The COVID-19 pandemic hit especially close to home for Smith since a local Realtor® he knew passed away due to COVID-19. The Realtor® was in his late fifties. “I knew him personally and it definitely had an effect on me. He was a well-known real estate agent in the area and was well-liked by everyone,” reports Smith.
Smith’s firm has several employees, all of whom are now collecting unemployment. In terms of when he plans to reopen, Smith says that he’s waiting for it to be relatively safe for all involved before he starts entering homes again. “My strategy is that you should never be the first with a pitchfork, but never the last to the table. I’m waiting for us to get halfway down the backside of the curve. When it looks like agents are able to go back into houses and people are getting used to it, then we’ll be back out doing home inspections,” says Smith.
Mark Melton, owner of Huron Inspections, LLC in Smiths Creek, Michigan is a staunch advocate of continuing operations as a home inspector. “Sheltering in place potentially has many greater risks than the course of the disease. People without work are more likely to become alcoholics, drug users, commit crimes, and hurt themselves or others. Additionally, people do not normally buy homes for the fun of it. They are moving because of work and life changes beyond their control. We should not be attempting to stop their ability to find shelter and a place to decrease the risk of catching the virus. The interactions required for real estate transactions from beginning to end are less than getting groceries or completing other allowed activities. While following the CDC guidelines, inspectors can continue to work and protect themselves and others,” argues Melton.
(story continues below)
Melton’s willingness to perform home inspections doesn’t mean his business hasn’t experienced a harsh blow due to COVID-19. Starting in early April, Melton says he saw a 50% decline in business, followed by a two-week period where he only performed a single home inspection.
This is because real estate agents were not exempt from Michigan Gov. Gretchen Whitmer’s “Stay at Home” Executive Order, so even though home inspections were allowed on properties already in contract, the flow of work essentially dried up within a few weeks of the Order.
Melton says his business has slowly been picking back up since late April, and his phone has started ringing again. “I think by late May and June we will really start seeing an increase in sales and inspections. People are going to be anxious to get back to normal life, including the plans that many had to buy and sell real estate. There’s going to be a big boom because of pent-up demand,” says Melton.
One of the things that helped Melton keep his head above water in April was that he also has a mold remediation business. “A few years ago, I decided to diversify and start a mold remediation business on the side. I haven’t worked hard building it, but it did help even things out. I actually got payment for a job in April and that kept me alive during those two weeks I wasn’t working. It’s been a struggle to keep my head above water with such a big decrease, so I’m thankful for the side work,” says Melton.
Dave Klima, co-founder of InspectedHouses.com and President of Aardvark Home Inspectors Inc., says that Aardvark has seen a decline across the board in terms of home inspections, with its Michigan sales falling through the floor when real estate agents were deemed non-essential. Aardvark also has a pest control division, Aardvark Pest Control, as well as a mold testing and remediation business and a radon testing and mitigation business, employing over 40 people—before the Coronavirus pandemic threw a wrench into the businesses. Klima says that the lesson learned from the real estate crash of 2008 was to diversify, and that’s part of why Aardvark offers radon mitigation, mold remediation and pest control services.
However, Klima says much of his radon and mold remediation work is dependent on real estate transactions, so those aspects of the business are struggling also. Even pest control has seen a decline because customers are wary about Coronavirus and schools are closed, another source of his business. “I didn’t think this was going to be as bad as 2008 because lenders are in good shape, the mortgage industry is doing well, and interest rates are really low. But in a way, it has been worse than 2008, 20–25% unemployment rates, people are really scared and they’re being told they shouldn’t leave their homes. In 2008, we could at least go and visit real estate agents to try to gain market share,” says Klima.
Another service that Klima is offering his Realtor® contacts in Michigan during the pandemic is performing the final walkthrough “re-inspection.” This is because the agents themselves are prohibited from visiting houses. “We let our agents know that we can perform the final walk-through with the client, so we can meet the client there and walk through the house, and make sure everything is looking good. We don’t even fill out any forms or paperwork. It makes our referring agents happy because we’re providing an additional service for the client,” says Klima.
Even with the decline in business overall, Klima says he’s still thankful to have the additional income coming in from the other businesses.
In terms of what precautions he is taking to protect himself and his family, Melton says that he is wearing gloves, using face masks, and trying to encourage his clients and real estate agents NOT to come to the inspection. “I recently had a couple buyers want to be there for the last part of the inspection to review everything with me. I’m fairly flexible, as long as people are taking precautions, but I still try to encourage people not to be at the inspections,” Melton says.
According to the OREP/WRE Coronavirus National Home Inspector’s Survey, over 70 percent of inspectors say they are using gloves and masks, with many calling ahead to make sure no one in the home is infected. For Klima’s part, he says that Aardvark insists that only one person can come to the inspection. “We believe someone is making the biggest investment of their life so we understand if a buyer wants to come along, but only one person can attend and only at the end for a quick walkthrough. We don’t let them attend the whole three-hour inspection. We also provide them with gloves, booties, and a mask. We also do our best to clean anything that we touch after we’re done, we put a towel down for our tools, we clean surfaces before and after the inspection. In essence, we do our best to be sanitary,” says Klima.
Marketing During a Pandemic
Klima has a number of very innovative “pandemic” marketing ideas, including passing out branded hand sanitizer bottles to agents and clients, branded reusable face masks for all staff, and “Hang in There” kits for all real estate agent contacts. Klima says that in slow times like this it’s important to nurture relationships and reach out to the Realtors® in your area. “We’ve been calling the agents that we work with, really trying just to relate with them and stay in touch. It’s tough for all of us. We’ve even had some Zoom meetings where we get a bunch of agents on and even make it a social thing and share stories like any other social setting. It’s really important to keep the relationships that you have,” says Klima.
Not shy about using technology, Klima says he also used his Inspection Support Network account to send out text messages to many of his agent contacts. “I sent text messages just saying ‘hey I know things are rough right now, we’ll make it through this thing, keep your head up,’ and other things like that. The idea is to let them know we care and maybe inspire them a little,” says Klima. “We also still send out birthday cards to agents on their birthdays wishing them well. We are just trying to do things to maintain contact with the agents without a high pressure sales pitch.”
Klima says business partner, Joe Mishak, also hand-delivered “Hang in There” kits to many real estate agents which included Corona beers, wine, some snacks, and a little note to lift their spirits. (See Figures 2 and 3.) “Anything to keep up the relationship and maybe start new relationships will help. That includes social media posts, showcasing what you’re doing, and even making educational videos. The goal is to stay topof- mind even in these slow times,” argues Klima.
Another great idea that Aardvark implemented is getting branded hand sanitizer bottles and distributing them to his clients and referring agents. “We were handing out hand sanitizer pre-COVID-19 and when we ran out we found some local distilleries in our area to replenish our supply. The hand sanitizers are a big hit,” reports Klima. (Figure 4.)
Lastly, Klima’s Aardvark team created branded reusable face masks for all employees, which he says were well-received by his clients. “Our daughters work in the healthcare field, so we gave them our N-95 masks and made our own branded masks. Some real estate agents actually saw them and they wanted their own masks, so we were able to do that for him too,” says Klima. (Figure 5.)
Leveraging Technology in a Pandemic and Beyond
While many states have already begun lifting their “Stay-at- Home” orders, Klima sees the real estate industry making changes that are here to stay. “More and more real estate agents are going to start using virtual tools; providing virtual tours of homes, and continuing to use technology even after the COVID- 19 scare passes. Agents have already discovered they can get offers on houses using the virtual tours process. What if another virus comes through or this one reemerges? Agents and home inspectors need to be prepared because things are going to change moving forward,” says Klima.
That includes offering additional services and value through technology. “Virtual tours are up 400% and it’s going to continue to grow and grow,” Klima says. “As home inspectors, we need to embrace technology and make ourselves more valuable in a changing real estate market. Anything we can do as inspectors to show more value and use technology. A lot of guys are using 3D cameras now with 360 degree views to use those pictures in virtual tours, and some home inspectors are offering that service as a way to make more money.”
InspectedHouses.com, an online real estate platform co-founded by Klima, is another way that home inspectors gain an edge with technology. Klima says that he’s found the service very valuable for his own business as well. The service allows real estate agents and home inspectors to showcase listed homes that come with pre-listing inspections, which not only gives more business to the home inspector, but also protects the seller and the buyer. “When we offer a pre-listing inspection, potential buyers are able to learn a ton about houses without physically visiting them, which limits their exposure to viruses because they have to see fewer homes. Buyers don’t know if someone’s been coughing or sneezing in the house. And it also helps sellers because they don’t have as many looky-loos coming through, he says.
It’s also been a useful tool to help market properties with a virtual tour experience and connecting with buyers directly. “We’ve been using InspectedHouses.com and helping sellers and agents market their listings because we can go in and do a prelisting inspection, take pictures of the home, get video from the agents, and load everything to the platform. Then we can put a lead capture sign in the yard, and it allows the agents to really jump-start their virtual marketing of the home, even during lockdown,” says Klima.
Like many home inspectors, Klima sees a boom coming for the real estate market once the quarantine is lifted and life begins returning to normal, but it may take a little longer than some think. “Even after quarantine is lifted, the market may not come roaring back until people are secure in their jobs. If people don’t have jobs they won’t be able to purchase homes. But I do think there’s going to be a lot of pent-up demand and we should see a big boost in sales transactions once the dust settles,” says Klima.
In terms of how to stay prepared for the real estate comeback, Klima recommends embracing technology. “The companies that benefit the most are the ones who can handle the rush the best. They’re going to do the best long term. If you’re an inspector who gets a week or two out during a boom and you don’t have any help, then you might be forcing your referring agent or client to try another company. The last thing you want to do is lose business because you cannot handle the volume. Our goal is to stay staffed so we can do an inspection within a day or two, certainly within the same week, when the boom comes. We’re gonna to be prepared to handle the rush,” says Klima.
About the Author
Isaac Peck is the Editor of Working RE magazine and the Vice President of Marketing and Operations at OREP.org, a leading provider of E&O insurance for home inspectors, appraisers and other real estate professionals in 50 states. He received his master’s degree in accounting at San Diego State University. He can be contacted at email@example.com or (888) 347-5273.
OREP/WRE Coronavirus Discussion and Resource Page
Coronavirus: National Home Inspector Survey
Free Risk Management Online Course Claims and Complaints: How to Stay Out of Trouble
Presenter: David Brauner, Senior Insurance Broker OREP
David Brauner, Senior Broker at OREP, shares insights and advice gained over 25+ years of providing E&O insurance for inspectors, showing you how to protect yourself and your business.. Watch Now!
Note: The Winter 2020 issue of Working RE Inspector is mailing now to over 25,000 home inspectors nationwide. OREP Insureds enjoy guaranteed delivery of each print magazine and many more benefits.