Should You Include Cost Estimates in Inspection Reports?

Should You Include Cost Estimates in Inspection Reports?

By Natalie Eisen, Staff Writer

Are home inspectors obligated to detail expected costs of repairs in their reports? Inspectors line up on both sides of the issue.

A home inspector’s job, first and foremost, is to help his or her clients make an informed decision by thoroughly inspecting a home and reporting the findings. In addition to reporting the condition of a home and highlighting potential problem areas, should inspectors discuss the cost to cure?

Such knowledge is certainly useful to a potential home buyer, but the added liability involved in providing such an estimate causes many inspectors to avoid them. While some home inspectors believe a cost estimate is necessary, many argue that it may do more harm than good.

“I provide estimates for my clients,” says John Arnold, home inspector, “but only when asked to do it. I make it clear that they are ‘ballpark’ estimates and urge clients to obtain more accurate and reliable estimates from appropriate contractors,” says Arnold.

Many inspectors are concerned about being able to provide an accurate estimate – both for ethical and business reasons. For example, if a home inspector estimates the cost of a new roof to be $3,000, when it turns out to cost $6,000, the client may not be too happy.  On the other hand, if the estimate is too high, the buyer may be scared away from the sale. For these reasons, many inspectors find it safer to not include a cost estimate at all.

“No home inspector in my area provides cost estimates, at least that I know of,” says Gunnar Alquist, California home inspector. He goes on to explain that bidding on a job takes both time and knowledge of costs that he simply does not have. In this case, it would be better to call in an expert. A tree-trimmer, for example, would be far more likely to know the cost estimate of removing the magnolia in the front yard than a home inspector. This process is likely safer for both parties, since the expert is able to more accurately estimate costs for a buyer.

What if a client asks specifically for a cost estimate? Home inspectors vary in their responses, with some refuse outright and others gently inform their client that such estimates are unlikely to be accurate. Other inspectors have different strategies. “I only provide cost estimates for clients who pay for this service and very few want to pay for this service,” says Scott Patterson, a home inspector in Tennessee. “For anyone who provides cost estimates, though, I would highly recommend that you purchase a copy of either RS Means or Craftsman publications guidebooks that cover repair cost. They are accurate if you use them as they are designed and will provide you with a trusted source you can cite should you get into a situation that you need to back-up your findings,” says Patterson.  Patterson’s suggestion provides a middle ground between completing the cost estimate yourself and finding a qualified expert or contractor who can provide a cost estimate.

There’s always the concern that a home inspector may not be able to diagnose the cause of a particular problem that he or she discovers with the house. This leaves some wary of making a cost estimate. “People really don’t realize how much stuff there is in a house,” explains a Texas engineer. “The small price of a home inspection just doesn’t justify troubleshooting. Since I can’t say for sure what the problem is, there is no way I can provide a meaningful estimate of the cost to fix it,” the engineer says.

For instance, a water stain on the ceiling could be caused by leaky pipes, a hole in the roof, or any number of possible causes. Upon first glance, an inspector is unlikely to correctly identify the cause – and the costs of these repairs would all be very different.

It’s important to note that requirements for cost estimates vary by state. In Florida, for example, a cost estimate is specifically not required in a home inspector’s report. Other states vary. “In Pennsylvania, we must cite a source in the report if we include cost ranges,” says a Pennsylvania home inspector. “But I also provide figures based on my own experience. Not made up but actual costs I have seen paid or paid myself. Almost everybody around here wants cost ranges in the report,” says the home inspector.

While Pennsylvania has many requirements when it comes to cost estimates, most states generally do not require them. The American Society of Home Inspectors does not require a home inspector to provide an estimate, and the National Association of Home Inspectors only requires the home inspector to identify a professional who could give an estimate.

Any home inspector who decides to offer cost estimates would be wise to include a disclaimer that the actual costs may vary widely.  Some repair cost guides warn that the actual costs may vary by as much as 300 percent!  Ultimately, whether or not to provide a cost estimate is all up to the home inspector.

About the Author
Natalie Eisen is a staff writer at Working RE / OREP, a leading provider of E&O Insurance for appraisers, inspectors, and other real estate professionals in 49 states.

Tags: , , , ,