Public Attitude Survey re Home Inspections

[James H. Bushart]

Nick...it's time to update this.

NAR & ASHI 2001 Home Inspection Study
Executive Summary

Overview:
Market Enhancement Group, Inc. (MEG) conducted the first-ever National Home Inspection Study during February, 2001. MEG was commissioned by the National Association of Realtors (NAR), based in Chicago, Ill., and the American Society of Home Inspectors (ASHI), based in Des Plaines, Ill., to conduct two studies, of home buyers and realtors, about attitudes and perceptions of the role and importance of home inspections in the real estate process.
Methodology:
The home buyer study was conducted through MEG's omnibus poll, which comprised 1000 telephone interviews divided equally between four census regions: Northeast (250 interviews), Midwest (250 interviews), South (250 interviews), West (250 interviews). Survey respondents are U.S. consumers who purchased a home within the last 18 months. Results are projectable at two standard deviations (a 95% confidence interval). Overall survey results are subject to a maximum sampling error of +/- 3.2%. Each of the four census regions has a maximum sampling error of +/- 6.3%.
The realtor study was conducted through MEG's omnibus poll, which comprised 900 telephone interviews divided equally between four census regions: Northeast (225 interviews), Midwest (225 interviews), South (225 interviews), West (225 interviews). Survey results are projectable at two standard deviations (a 95% confidence interval). Overall survey results are subject to a maximum sampling error of +/- 3.4%. Each of the four census regions has a maximum sampling error of +/- 6.7%.
Major Findings: Home Buyers Survey

• Seventy-seven (77%) percent of all recent home buyers obtained a home inspection prior to the purchase of their homes. Among these home buyers:
  • 81% had a contingency placed in the contract for the inspection.
  • 79% attended and participated in the home inspection.
  • 97% believe that the home inspection was a good value for the price they paid.
• Only twenty-three (23%) percent of recent home buyers nationally bought a home without a home inspection.
• Most recent home buyers nationally chose their home inspectors based upon the recommendations of a real estate agent (69%). Among these home buyers, 65% were first time buyers and 71% had previously purchased a home.
• A majority of home buyers (57%) personally requested home inspections be conducted on properties they were in the process of purchasing, while 43% followed their real estate agent's recommendation to include a home inspection in the real estate process.
• More than half (54%) of home buyers had knowledge of the inspector being a member of a professional home inspector organization. Of those aware of their inspectors professional affiliations, the most frequently (18%) cited organization was the American Society of Home Inspectors (ASHI).

DIFFERENCE BY GEOGRAPHY

• Incidence of getting a home inspection prior to home purchase was the highest in the West Region (81%) and the South Region (80%), followed by the Midwest Region (77%) and the Northeast Region (70%).
• Home buyers selecting their home inspector based on the recommendation of a real estate agent was the highest in the West Region (75%).
• For home buyers getting a home inspection, the percentage of inspections conducted at their personal request was highest in the South Region (65%) and the West Region (60%), followed by the Midwest Region (53%) and the Northeast Region (47%).
• For home buyers getting a home inspection, the percentage of inspections conducted at the real estate agent's request was highest in the Northwest Region (53%).

Major Findings: Realtors Survey

• According to realtors, eighty-four (84%) percent of buyers requested a home inspection as part of the purchase contract.
• Nearly all realtors (99%) recommend that the buyer get a home inspection, with 92% saying they ALWAYS make this recommendation, and an additional 7% saying they OFTEN make this recommendation.
• Most realtors (84%) have not had any sellers contracts terminated as a result of a home inspection.
• Using a mean score on a 5-point scale (with 1 being "strongly disagree" and 5 being "strongly agree") to evaluate the attitudes about the impact of home inspections on the real estate process, realtors strongly agreed (4.51) that the home inspection increases buyer confidence in their purchase, and they agreed (4.29) that the home inspection increases buyer confidence in their real estate agent/broker.

DIFFERENCE BY GEOGRAPHY

• Nearly all realtors in the Northeast Region (98%) recommend the buyer get a home inspection, with 92% saying they ALWAYS make this recommendation, and an additional 6% saying they OFTEN make this recommendation. In the Midwest Region, all (100%) realtors recommended the buyer get a home inspection, with 93% ALWAYS recommending and 7% OFTEN recommending.
• Seventy-three (73%) percent of realtors in the West Region said that what they liked most about the home inspection process is that it protects the buyers. Following this region were the Northeast Region (63%), the Midwest Region (56%), and the South (54%).
• The percentage of realtors who did not have any contracts terminated as a result of a home inspection was highest in the West Region (87%) and the Northeast Region (86%), with the Midwest and South Regions close behind (81% each).
• Using a mean score on a 5-point scale (with 1 being "strongly disagree" and 5 being "strongly agree") to evaluate the attitudes about the impact of home inspections on the real estate process, realtors in the South and West Regions "strongly agreed" (4.55) that the home inspection increases buyer confidence in their purchase. Those in the Midwest Region (4.53) and the Northeast Region (4.39) also agreed with that statement.

[Bob Elliott]

I doubt those percentages are correct today.
People are snapping up foreclosures as is and not getting inspections at a higher rate.

[Tim Spargo]

Many of the folks buying these places up right now are sweating inspection fees... how long 'til they're in trouble?

I've often said to someone calling and telling me "Tim, you're charging $300 and I can get the inspection for $150 (no kidding)"... I've asked them if they were just looking to save money or if there was actually a financial constraint on their inspection dollars. I've had several folks tell me that after paying for the appraisal, they're broke and trying to scrape money together... I've told them "In that case, maybe you should fore go the inspection process and save money for repairs " Some have responded, "Well, they did say AS IS anyway, maybe you're right" Then I will ask them, your purchase is AS IS, wouldn't an inspection be even MORE IMPORTANT, as you will be on your own after the sale?

Sometimes, you get the "You said you were available on Tues at 9?" after this exchange.

[James L. Keilson]

Originally Posted by tspargo

Many of the folks buying these places up right now are sweating inspection fees... how long 'til they're in trouble?

I've often said to someone calling and telling me "Tim, you're charging $300 and I can get the inspection for $150 (no kidding)"... I've asked them if they were just looking to save money or if there was actually a financial constraint on their inspection dollars. I've had several folks tell me that after paying for the appraisal, they're broke and trying to scrape money together... I've told them "In that case, maybe you should fore go the inspection process and save money for repairs " Some have responded, "Well, they did say AS IS anyway, maybe you're right" Then I will ask them, your purchase is AS IS, wouldn't an inspection be even MORE IMPORTANT, as you will be on your own after the sale?

Sometimes, you get the "You said you were available on Tues at 9?" after this exchange.

Good stuff Tim..!!

[William J. Decker]

Just goes to shw you that the old ASHI paradigm of linking themselves to Realtors is out-dated.

NACHI's paradigm of HIs being independent and professional, in and of themselves, is much better.

[Joseph Burkeson, CMI]

Originally Posted by wdecker

Just goes to shw you that the old ASHI paradigm of linking themselves to Realtors is out-dated.

NACHI's paradigm of HIs being independent and professional, in and of themselves, is much better.

Agreed, truth be told though Realtor's are not inherently evil, I know many who represent buyers and put their interest first. We should not be so quick to create animosity where no basis for it exists.

[William J. Decker]

Originally Posted by jburkeson1

Agreed, truth be told though Realtor's are not inherently evil, I know many who represent buyers and put their interest first. We should not be so quick to create animosity where no basis for it exists.

Totally agree, Joe.

I did not mean to say of imply that Realtors are bad. I know, and get referred, by many agents. However, I make it clear to them that I am a professional and independent from agents. I work for the cleint and not the Realtor.

I make sure that this is clear and never accept scheduling or "hook ups" of the client theough the agent. The client has to call and schedule, themselves.

I make it clear that I don't list houses or prepare contracts or anything like that, I just inspect. And I expect that the agent doesn't do inspection or comment on my work.

Two different professions, with one common client.

Hope this helps;

[James H. Bushart]

There is a new dynamic that benefits the inspector who distances himself from the used house salesman...and that is the fact that the 7% or 8% fee for putting a "For Sale" sign in the yard (sorry, guys, but that is the perception many have) is no longer being paid from equity. It is being added directly on top of the loss that the seller is already fighting hard to accept from the bill of goods (aka "investment") that the last salesman sold him.

All agents are not evil. True. Some are very good and decent people. But most buyers do not feel they are worth such a large amount ($5,000.00 TO $20,000)...and many salesmen are compounding that tragedy in an attempt to save costs by recommending the cut-rate inspector who is worth almost all of his very low fee.

I think a new survey is in order and would reveal much more than this one does.

[Christopher Currins]

Originally Posted by jbushart

There is a new dynamic that benefits the inspector who distances himself from the used house salesman...and that is the fact that the 7% or 8% fee for putting a "For Sale" sign in the yard (sorry, guys, but that is the perception many have) is no longer being paid from equity. It is being added directly on top of the loss that the seller is already fighting hard to accept from the bill of goods (aka "investment") that the last salesman sold him.

All agents are not evil. True. Some are very good and decent people. But most buyers do not feel they are worth their fee...and many salesmen are compounding that tragedy in an attempt to save costs by recommending the cut-rate inspector who is worth almost all of his very low fee.

I think a new survey is in order and would reveal much more than this one does.

Buyers generally do not pay any realtor fees; buyers are most home inspectors main client source.

[James H. Bushart]

Originally Posted by ccurrins

Buyers generally do not pay any realtor fees; buyers are most home inspectors main client source.

Duh. Really???

I am speaking of the public perception of real estate salesmen...which was very low at the time of this survey....and how it has crashed and burned since then. Buyer's agents are still getting a slice out of the sale and do not make a dime if the house doesn't sell.

Agents are neither appreciated or trusted by many....and the people that they recommend are falling into that same category.

I would never want to convince anyone (particularly a competitor) to market similarly, but my marketing efforts are aimed toward those who prefer to hire an inspector who IS NOT on the salesman's list of preferred inspectors.

[Tim Spargo]

As the buyer, you are paying a fee, it's built into the purchase price.

A friend of our family contacted me last week, he's buying a home out of the area... wanted to know my opinion about the referral he was getting from his agent..

I asked, did you call the Home Inspector your agent referred? "No" I told him "I know about as much about your inspector as you do"

Bottom line... people are and should starting to think outside the *box*