Sorry to have to ask this but maybe someone would start a poll about this.
Florida is worried that our SOP will become like yours.
They claim that you are doing 100.00 home inspections based on your SOP
Any truth to this.
How has the sop hurt or helped your business…
Thanx
It hurt inspectors by adding reinforcement to the false belief that inspections are all the same and so should be treated as a commodity to be shopped by price only.
What makes the Texas SOP different vs. the Nachi SOP? Very few of my clients actually read the SOP.
Lowballers are everywhere!!!
I think you need to know about the ORIGINAL license and sop
Others will have a difference in opinion, but I believe the SOP has nothing to do with low prices. Does NACHI members have to lower prices to adhere and compete with the NACHI SOP. Texas has been licensing inspectors, I believe, since 1986. The lowest price I have seen advertised was $175 up to 2000 sq. ft. I would think the average around here would be $275 to $325 for 2000 sq. ft. with no ancillary’s other than the added in termite here and there.
I kinda blame it on the system in general. You have schools promising great rewards for becoming an inspector. I also had to go to a school for the required hours to get my license. I was shocked that 90% of the students in my class had no background in any construction related fields. Yet these schools teach you just enough to make you think you know and give you all the questions and answers to the test and all you need is a decent memory. I spent more time teaching on the field trips than the teacher did. The market is getting saturated with inspectors/test passers that know nothing about business or how a house was built.
Then you have all these new people trying to put food on the table and add in the economy and now you’ve got long term inspectors lowering prices to compete (not all!!)
Again my opinion only, home inspectors should be set up with a tier system for progressing thru stages to become a professional inspector. Something on the lines of electricians.
I understand the American way…blah blah blah. Professional Inspectors (top tier here without supervision) should be educated from the beginning and not learn on the fly. Only hurts the profession as a whole.
JMO
The Texas SOP is part of the state-mandated reporting form, which I very much oppose for the reasons aforementioned.
I have not heard of $100 inspectors in the Houston Area. Now $175 and $200 yes but the SOP’s have nothing to do with it. Inspector’s trying to capture the “Walmart” home buyer can have them.
What amazes me, after recently refinancing, is the $460 appraisal fee that took all of probably 2 hours start to finish. What is our industry going to do to make us truly professional by charging appropriately just like the appraisers? No one could dispute that our level of expertise far exceeds that profession. Not that I am knocking the appraisers as they serve a great purpose.
I’ve not heard of $100 inspections either. I believe there are several doing .10/sf regardless of the house size…therefore a 2000sf home gets a $200 inspection.
I’ve been told I’m too high and the lowest by different people. Makes me think I’m average. 
Appraisers around here are taking a beating. They are at $300 and getting lower all of the time or promising a same-day turnaround. The older guys shake their heads at turning one out in one afternoon.
Personally, I’ve not worked in a state without an SoP so I can’t tell you the difference. We realize that our’s has some inconsistencies, but I actually prefer working with the state SoP and the state form.
It has nothing to do with the SOP, it has everything to do with HI’s going into business without knowing anything about “Business”.
They come here from an hourly job and equate doing good if they can match there former take home pay…
Little do they realize that this ain’t AMWAY!
Most of the work done on a appraisal was in front of the computer filling in the grid and analyizing the comps. Cuomo, the Gov of NY destroyed the appraisal business with AMC’s while he was at HUD.
Substitute inspector for appraiser, Cuomo destroyed an entire profession in a few months! Be careful, VERY careful when govt gets involved in our profession. Instead of AMC Appraisal Management Company there could be an IMC Inspector Management Company.
**The Result of Low Appraisal Fees
**
By: Mike Foil
The current appraisal portion of the real estate lending process, thanks greatly to the HVCC, is designed to function around and through appraisal management companies (AMCs). Even though the HVCC has been retired, it has been replaced with rules and regulations which continue the inevitable situation where most appraisals will be ordered through AMCs. Like it or not, this is the new way-of-life for residential appraisers.
AMCs are in business to make money and just as any for-profit business, they look for ways to maximize revenue and minimize expenses. The competition from the multitude of AMCs for incoming business from lenders is strong and the lender/clients are shopping for the best deal for their own bottom-lines. The scenario has resulted in a pressure on the employees in the AMCs to find appraisers who will return an adequate product in a short time and for a low fee.
This is all fairly easy to understand and makes sense for their business model. But, how will the quick and cheap appraisals affect the long term interests of all parties?
Last week, I attended a conference with approximately 200 appraisers, most of which were residential and probably all were from Arizona. The moderator asked those in the audience to stand who were under 30 years old – there were around five. There were approximately 20 in their 30’s and maybe 45-50 in their 40’s. The rest, well over half, were 50 and over. They asked for a show of hands as to how many are training at least one appraiser right now – I only saw one hand go up.
Is residential appraising a dying profession? Will there be a sufficient number of appraisers still in the business in ten years to handle the demand? The continuing education classes are almost full of students who are over 50. At the same time that we are failing to attract young people into the profession, we are taking steps to make it more difficult to enter. I am not against having a set of requirements that must be met in order to join this profession and I understand the need to establish appraising as a profession and not just a job. But, there is not much to this job that is attractive, any longer.
Appraisers have been constantly made the “scapegoats” for various problems in housing or finance. There is a continual stream of new regulations to govern every move we make and every report we submit. We are threatened with a law suit or state sanctions whenever someone does not like the value opinion for their home. New laws require lenders to turn us into our state boards if they suspect any USPAP violations. We have to carry expensive E&O insurance which some AMCs want dangled in front of the borrowers as an attachment to our appraisal reports. We face added liability or losing business by many AMCs and lenders with indemnification clauses, which are not covered by our insurance.
When, in the past, you could meet Fannie Mae guidelines for your appraisal and the client would be fine. That is no longer the case. Just about every lender and every AMC has added specific and unique requirements for their reports. The standard has gone form including three or four comparables to six or more. Each report must have more documentation, support, photos, and most require the 1004-MC form. Soon, we will have to know how to complete reports for various delivery formats – MISMO and Fannie Mae’s uniform data set.
We are constantly being required to “correct” reports for items that have no bearing on the report or the conclusions, to add two more comps which are better than those you used, to explain why the AVM has a different result, to explain why we did not use the attached list of other sales, etc. Now, with the Dodd-Frank law, all parties have the right to question the appraiser. This is in spite of the fact that we are not allowed to discuss value with many of them.
All of this at the same time we are pressured to work for lower fees. The same Dodd-Frank law did require that we get paid a “reasonable and customary fee” and that this is not to be based on fees paid by AMCs. Even though this language is clear in the law, the preliminary rules issued last October indicate that the Federal Reserve, who is charged with implementing this portion of the law, is going to consider AMC fees.
Most appraisers I talk to are in survival mode. I have not heard from one who is making good money at this time. Some are leaving the business, others are scaling back on expenses, and some are barely making enough to pay bills. Why would any of us encourage someone to become an appraiser under these conditions? I began appraising in 1973 and have made a living at it during many of those years, but have not made a living during other years. I encouraged none of my children to become appraisers.
Recent legislation and regulation has elevated the necessity and importance of the role of the appraiser in the whole process. It has finally been acknowledged that BPOs and AVMs are not as reliable as an independent, educated, experienced person actually seeing the property and using an established process to develop an unbiased opinion of market value. Yet, appraisers remain the easy target for everyone from Washington to the property owner.
If the appraisal profession is to survive the retirement of the “old-timers”, there needs to be some changes. If we really are viewed as a necessary part of the loan process, then the government and the lenders need to recognize that “fastest and cheapest” is not the road to the continuing supply of appraisers. Appraising is a profession that requires education, experience and an understanding of many aspects of the real estate process and home construction. If we are viewed only as what is required for a decent hourly wage, we will all be gone in a few years.
Our fees should take into account the education, training, experience, liability, frustration, expenses, and the need to make more than what it takes to pay the bills at the end of the month. If we can only survive, based on low AMC fees, we cannot provide for our future or protect ourselves if we are injured or sick of a period of time. If we are barely making it, we will not attract the next generation of professionals that will be needed 10-20 years down the road. Our services are worth more than we are being paid!
The above is a direct reflection of goverment getting involved in an industry. ITs all under the disguise of “consumer protection” when then leads into industry manipulation.
Believe what you want…look at the above…Proof is right in front of you and you still don’t believe…
I like ot think that state licensing and a minimum SoP help maintain just that - a bare minimum. I am not sure it actually works out that way in practice and implementation. It also make it somewhat harder to distinguish yourself, but I think that is more of a problem if you are new - I hardly even think about it any more.
I have been actively pushing my prices very hard for the last 6 months. I am very busy and will keep pushing them. I have not heard of the $100 inspector, but there are always going to be lowballers. It is all perspective, as I know there are guys around that would think my prices are too low ($350 is pretty much my minimum charge.) I like the fact that I deal much less often with price shoppers now, I think attitude and confidence come through ont he phone with potential clients. I want to close deals, I am never rude or arrogant, but I do not bargain, I offer my fair price, I know and convey my quality and the majority of my calls get closed. The ones that don’t I do not lose sleep about.
We’re pretty much on the same page. I began pushing my prices back in May last year and am just as busy.
I also think of the SoP as the bare minimum and try to provide an “above the minimum” inspection.
Today’s home inspectors in Texas mainly consists of inspectors who entered the field AFTER the profession became a commodity of the Texas Real Estate Commission (TREC) which totally controls it.
Since it is all they know, the thought of change to becoming totally sufficient upon their own measures to stay in business is understandably frightening and something to readily reject.
Just as they cannot fathom the idea of NOT being under the control of the real estate industry, those of us who resist the attempts to be overtaken by it find their submission to it equally baffling.
John Cahill was an inspector before the Texas law…and has inspected under it, as well. I think he shares a more balanced perspective.
Hey Jim,
Why’d ya leave out the part about us all being toothless, knuckle dragging, Gun toting, goat roping morons?
because that’s obvious…why restate it
I will say, based on a few of James’ other posts, my first glance at this one was not necessarily favorable. However, I re-read it in the interest of “maybe I just didn’t get it the first time”.
I think he’s right. At least as it applies to me.
I’m still not sure about the use of the word commodity in a negative way (assuming you meant it to be negative, James). I’m not being facetious here. I believe we, here in Texas, provide a service and just because we have mandated forms and SoP’s, doesn’t necessarily mean we’re providing a commodity.
Bruce
James, that is one of the few statements of yours I have read that I could agree with up to a point - as it does apply to me as well.
I do not hold any illusions that the TREC SoP is the be all end all. As I said, I like the concept of a minimum standard, of controls being in place to protect the consumer (who is often ignorant of the details of the profession) from the potential completely unqualified inspector with absolutely no standard. I supoose I could be equally swayed by the thought that buyers must beware and educate themselves and avoid the cheapo shyster.
I am well aware of Mr. Cahill’s thoughts and for the most part I agree with him often. The TREC SoP is far far from perfect and has appears to have become more and more subject to political and personal maneuvering by the rules makers. Licensing requirements have been lowered. Contradictions seem to abound in the standards. Information is is extremely poorly conveyed to the licensees.
At the end of the day, I consider the SoP to be the minimum and I work to exceed it for my clients. That is the easiest way to distinguish oneself from the masses. I know James is very passionate about the licensing debate, my point in answer tot hte original question was that I do not believe that licensing really has much affect on the existence of lowballers or price shoppers. These are going both exist in any state regardless of the presence or absence of licensing. I also think that with the spread of information and the ease of access to information, the average consumer is becoming better educated. They understand the existence of technologies that might increase the value of a service, many are actively looking for those things. That is how you distinguish yourself. If you do this you do not have to worry about competing with the lowballers, your educated consumers understand the difference when you explain it.
As everyone knows, I started inspecting part-time in 1976 in Denver. Then in 1978 moved to Texas. Then in 1985 to Illinois, then 1 year later to St. Louis, then 4 years later back to KC.
Nobodys SoP are perfect BUT 1 thing I’ve always admired about the Texas SoP is that certain things are mandatory for an inspector.
For Example: Under the Texas SoP, IF a house built in 1950 DID NOT have GFCI’s the inspector is REQUIRED to report it as defective or in need of repair. The seller DOES NOT have to install one; the buyer DOES NOT have to install one; BUT the inspector has to report it as in need of repair … I really admire that sort of thing.
In most other areas this kind of thing is all across the boartd whether you belong to NACHI, ASHI or NAHI.
IN KC / one inspector does NOT mention it because in 1950 GFCI’s had not been invented; one inspector mentions it in his report as a nice UPGRADE for a new buyer to consider doing; a 3rd inspector writes it as a MAJOR defect and requires the seller to install one. ALL ACROSS THE BOARD
The Texas boys got some good stuff in their SoP
I agree. Nicely written.
The logic below has holes in it.
The InterNACHI SoP is good. If the same SoP became the law enforced by the state, it would now be bad because it is part of licensing of inspectors.
If someone charges low prices while being a InterNACHI member, it must be because of the InterNACHI SoP.
The above statements illustrate the absurd thinking of some when talking about Texas law.