Home Inspectors Are About to Enjoy a Large Increase in Demand

Last updated: March 22, 2020

by Nick Gromicko, CMI®

The North American home inspection industry is made up of only about 30,000 inspectors in the U.S. and Canada (nearly 25,000 of whom are members of InterNACHI®), and most of you are about to get swamped with home inspection jobs.  Start preparing now for the upcoming boom.  I'll explain what is happening with this global coronavirus pandemic, what is going to happen economically, and what home inspectors should do now to succeed.

But first, some economics:  Every bubble finds a pin.  The coronavirus is merely the pin that popped the U.S. debt bubble. We need not focus too much on the pin.  Let's begin by focusing on the bubble.

Digital wealth is wealth on paper or online. Examples of digital wealth include bank accounts, stocks, bonds, 401Ks and ETFs. Digital wealth preservation is dependent on third parties fulfilling their obligations.

When you have money in a bank... you actually don’t. You’ve loaned the bank your money. Your bank statement isn’t an accounting of how much money you have, but, rather, how much money you’ve loaned your bank. The bank is obligated to repay you your money upon request, and perhaps pay you a little interest for allowing them to borrow it. You are relying on your bank to fulfill its obligations, and the risk of them failing to do so is the counter-party risk. You can’t physically touch your money at the bank, so, therefore, it is digital wealth and it's exposed to this counter-party risk.

Dollars are notes. Notes are promises to pay. In the case of U.S. dollars, the Federal Reserve issues these notes, and if you have some in your wallet, you have a promise from the Federal Reserve to pay you for those notes. Guess what they pay you with? Other notes.  The U.S. dollar is no longer backed by gold. Today's dollar is simply a written promise that entitles you to exchange it for other promises. You have the right to exchange two $10 bills for a $20 bill or a $100 bill for ten $10 dollar bills, or whatever. They are only paper notes, as is all fiat currency. The U.S. dollar is actually referred to as a "note" on the front of the dollar itself, twice.  Pull a dollar out of your wallet or purse and look at it closely. See?

Not only are dollars just paper promises (notes), they lose purchasing power over time.  Those $100 bills stuffed under your mattress lose purchasing power every minute.  In my lifetime (I was born in 1962), everything has gone up in price about tenfold.

Here are the costs of a few common items sold in 1962:

  • First-class postage was 4¢.
  • A Coke was 10¢.   
  • A gallon of gas was 31¢.   
  • Tennis shoes were $5.   
  • A new car was $2,500.

Nowadays, everything costs about ten times as much as it did in 1962. That means that, since I was born, the dollar has lost 90% of its purchasing power.  Read my article about Motel 6 for more information about purchasing power.

Since 1919, everything has gone up almost a hundredfold.  For example, a loaf of bread in 1919 cost 4¢.  That means that in the past 100 years, the U.S. dollar has lost 99% of its purchasing power... and, yes, it will ultimately lose all of it and go to zero. All fiat currency in human history eventually goes to zero.  Why? Because of printing.  And the Federal Reserve is currently printing a lot of money.  Now, they say it is to counter the economic effects of the virus.  But, actually, the virus is just providing cover for the real reason they are creating so much money: They have to in order to cover our increasing debt.

Printing money causes inflation.  There are only so many $100 bills in the world.  Every time the Federal Reserve prints another one (or creates $100 digitally), the purchasing power or value of every other $100 bill goes down.  "Purchasing power is going down" is just another way of saying "Prices are going up."  But prices going up isn't inflation.  It is the result of inflation – the inflating of our money supply.

Right now, everyone wants or needs money.  American families want to be bailed out.  Airlines want to be bailed out.  The state of California wants to be bailed out.  And each day that any of them earns less revenue, the more they look to the federal government (run by politicians) to replace that lost revenue. Disgruntled home buyers often complain that it isn't their fault that a drain in their home got clogged, and they want to know how they can be made whole since it wasn't their fault. Americans seem to think that if they suffer damages through no fault of their own, someone else must owe them.

There is a problem with this mindset, though.  The U.S. government has no money.  It is trillions of dollars in debt.  How is this possible?  How is it that after our longest bull economy in our nation's history, we now have no reserves saved up?  The reason is our debt service.  We have to service an enormous debt. Again, it's not the virus, it's the debt. Visit the Debt Clock here.

After the 9/11 attacks, the U.S. borrowed $7 trillion and wasted it on attacking, invading, and occupying the wrong two countries when they waged America's longest two wars in our history on Afghanistan and Iraq.  That $7 trillion is a third of all debt we had run up since George Washington was president – all spent on two countries that had nothing to do with 9/11.  We must never forget that not a single 9/11 hijacker, mastermind, or financier was Afghan or Iraqi... not one. 

Now, as the founder of InterNACHI®, I'd love to be able to set the minimum price of a home inspection at $1,000 for the entire industry.  But price-fixing is illegal.  The Federal Reserve, however, fixes the cost of money all the time.  They set interest rates for all of us.  They do this because if interest rates were allowed to float, they'd rise, and we'd all have savings earning interest (which would be great).  But the government wouldn't be able to service their debt and the U.S. would have to default again. 

The U.S. defaulted once before when it went off the gold standard.  The "notes" I discussed earlier used to be redeemable for physical gold.  But then, in 1971, President Nixon announced that we would no longer honor those obligations.  And this meant that politicians could spend even more money.

Now we're defaulting again.  But instead of defaulting honestly by telling the Chinese government that we simply aren't ever going to pay them back, we're defaulting by paying them back with dollars that are worth much less.  Worth much less because we've created so many more of them... out of thin air.

China recently figured out how dumb they've been for loaning us money to use to buy their hard goods and has stopped lending us money altogether.  They finally wised up.  So, where is the money for the bailouts coming from?  Tax revenue is certainly going down.  Answer:  The Federal Reserve is simply going to print it. The last thing we need is more cheap money, but that's what we're going to get.  There is a silver lining for inspectors, though, and here is how this helps inspectors.

Let's first discuss why more people will want to sell their homes:

Some industries, like toilet paper manufacturers, don't enjoy pent-up demand.  People aren't holding back bowel movements until the virus pandemic ends. So, when it finally does end, there isn't going to be an increased demand for toilet paper. Americans may be hoarding toilet paper now, but they aren't going to need more in the future.

To illustrate:  I usually eat out at my favorite restaurant on Friday night.  My favorite restaurant is currently closed.  When it re-opens, I'm not going to eat two entrees each Friday night to make up for not dining out now.  Their lost revenue is lost forever.

The inspection industry is different than the toilet paper manufacturing and restaurant industries.  The inspection industry enjoys pent-up demand.  Many homeowners simply aren't going to list their homes and have strangers coming in and out of them until the risk of contracting the virus from those visitors has ended.  

Furthermore, there are these the "stay-at-home" orders.  It doesn't much matter that home inspectors are exempt because home inspections are an "essential service" (because we find safety and health issues).  The orders prevent real estate transactions from occurring.  These real estate transactions will eventually happen, though.  This is the first reason we are going to have high demand for inspections after this pandemic is over. We have an ever-growing, pent-up demand.

With all the shut-down orders, it feels as if our industry's health is correlated directly to the health of the economy.  It is not.  I mean no disrespect to those whose health or finances have been negatively affected by the virus when I say this:  The inspection industry thrives on disruption.  Disruption ultimately increases the number of real estate transactions, which, in turn, increases the demand for home inspections.  

So, you may be asking why this particular economic disruption will increase the number of real estate transactions.  There are many reasons:

  1. First is the pent-up demand, which I just discussed.
  2. Second, some people are losing their jobs.  Some employers, like my favorite restaurant, aren't likely to ever re-open.  Their employees will have to find other jobs, and some of those jobs are elsewhere, requiring them to sell their homes and move.
  3. Third, some people will have to sell their homes and move out because they've lost income and won't be able to afford to live in their homes any longer.  That's simply a result of an abrupt disruption in the economy.
  4. Fourth, the virus may end up killing a lot of people.  We just don't know.  I don't think it will, but who really knows?  As insensitive as it may sound, the death of a homeowner most often results in a home for sale.  

These are the four reasons people are going to sell:  They wanted to earlier but waited, they have to move for a job, they need to downsize, or they die.

Now, let's discuss reasons why more people will want to buy homes:

  1. First off, many people who move for a new job (discussed earlier) are going to buy homes in those new locations.
  2. Secondly, many people who are downsizing (discussed earlier) are going to buy smaller homes.
  3. Third, families are going to get pregnant.  They are home from work with nowhere to go for weeks.  The Italians have a saying: "A man and a woman can't be alone for hours without..." – well, you know.  Anyway, when families get pregnant, they often need and want a larger home.
  4. Fourth, sick employees will be allowed to work from home to avoid getting fellow employees sick.  And perhaps healthy employees will be allowed to work from home to avoid getting sick.  This will lead to employees being allowed to work from home permanently and thus causing them to consider moving to less expensive, rural areas.

But we aren't done yet.  Let's throw the federal government and Federal Reserve into the mix.  You'll note that I refer to them as two different things because the Federal Reserve is not part of our government.  The federal government doesn't need postage. But I once got a reply from a letter that I wrote to the Federal Reserve and it came with a stamp on the envelope.

So, how are the federal government and Federal Reserve helping increase demand for inspections?

  1. First off, as I explained in the beginning of this article, they are flooding us with money.  They are even considering sending cash payments to nearly every American.  That is going to increase the ability of people to buy homes.
  2. Secondly, they are postponing or outright forgiving debt repayments.  They may even forgive student loans altogether. Who knows?  And, again, less personal debt means more ability for people to secure a mortgage to buy a home.
  3. Third, they are cutting interest rates.  They may even go to negative interest rates.  This makes homes more affordable and increases their value as an investment.
  4. Fourth, they are loosening lending requirements on banks, even eliminating reserve requirements.  This is going to cause banks to write more mortgages.
  5. Fifth, they are bailing out a lot of industries, which makes people less hesitant to make real estate transactions.  When people see industries like banks not closing their doors but going about business as usual, they're psychologically more secure and relaxed about entering into real estate transactions.
  6. Sixth, the steps they are taking are actions that everyone knows lead to inflation.  The only hedge against inflation is a position in hard assets, like gold and real estate.  Americans are already concluding that prices of homes will go up and that they need to act now before they do.
    On a side note, the Canadian Royal Mint closed today, and although they blamed it on the virus, I suspect they simply ran out of physical gold.
  7. Seventh, the Federal Reserve is accepting stocks as collateral. That means they are sneakily going around their own prohibition to buy up equity in our companies.  Ultimately, this pumps up the stock market, and a bull market causes people to feel more comfortable about buying a home.
  8. And, finally, all their actions, even including stay-at-home orders, are disruptive.  And, again, although it sounds insensitive, disruption is ultimately the inspection industry's friend, at least financially.

The stars are basically aligning for home inspectors.  I predict that so many homes will be sold that housing inventories will dry up to the point that desperate buyers will be paying well over appraised values and even waiving inspections in an effort to make their offers more attractive.

Here are four ways you can respond to the forthcoming increase in demand:

  1. Hire help.  And you don't necessarily have to hire an additional home inspector.  You may just want to hire some help at the office.  Perhaps have someone come in and answer the phone two days a week, handle your books, and replace your printer ink.  Or, maybe you hire help around the house, someone to clean and do your laundry.  The idea is to buy yourself a little extra time so you can fit in a couple extra inspections a week. (Another positive side effect of this is stimulating the economy by employing someone who needs the income.)
  2. Turn down your least profitable work.  When I was a home inspector, I quickly got to the point where I refused home inspections that didn't also include some ancillary inspections. I also turned down really old homes (they take too long to inspect) and homes that were very far away.  In other words, I took the gravy jobs. 
  3. Raise your prices across the board.  This is the quickest way to increase your profits.  Watch my short five-minute video on raising prices. 
  4. Do a bit of all three.  Watch my short five-minute video on my hybrid method of responding to increased demand. 

But until this boom hits, here are some things you can do right now.  Treat your inspection business like a real job.  Every night, set your alarm clock, and when it rings in the morning, get up and go to work, even if you don't have an inspection scheduled.  

But what can you do when you don't have an inspection scheduled?  Here are some things you can do to help your company and yourself. 

  • Market.  If you market your inspection business every day that you don't have an inspection to do, you'll eventually have few days that aren't booked.  In this way, the inspection business is self-leveling:  the slower you get, the more you market, so the busier you get.  Using a magic marker is one of my favorite ways to market an inspection company. 
  • Take inspection courses.  Smart inspectors who are serious about their business will stay on top of their game by continually learning.  Furthermore, the growing innovations in the building industry mean that there's always something new for the inspector to know.  Improving your technical competency also reduces your liability.  InterNACHI® has hundreds of free, online inspection courses that can be completed in a day. 
  • Take InterNACHI's newly released COVID-19 Safety Guidelines for Home Inspectors Course.  It's free and open to all inspectors in the industry – not just InterNACHI® members. (Read our press release about the new course.)
  • Read. InterNACHI® has an enormous inspection-related article library. Inspector Outlet has dozens of downloadable inspection books, including my favorites: STACKS: A Home Inspector's Guide to Increasing Gross Revenue and  SLEEP WELL: A Home Inspector's Guide to Managing Risk.  InterNACHI's monster inspection forum also has 2.2 million posts to enjoy. 
  • Add a new inspection service.  Offering an additional ancillary inspection is a great way to increase your company's revenue.  And, again, InterNACHI® offers 45 different certifications.  InterNACHI® is the only home inspector school in the industry accredited by the U.S. Dept. of Education.   
  • Clean, organize and prepare. Wash your inspection vehicle and fuel it up.  Organize your office.  Answer emails.  Charge the batteries for your tools. 
  • Shop.  Look into the many vendors in our industry and see what products and services they have to offer.  Purchase new inspection equipment. Experiment with new reporting software. 
  • Save.  Compare insurance quotes.  InterNACHI® has 300,000 discounts in its Super Deals section.  Need a new inspection vehicle?  Check out the discount Ford gives to InterNACHI® members.  Whatever you and your family buy, InterNACHI® can likely save you money on it. 
  • Explore business development options.  Think about what you can do to grow your business.  Go through the recommended reading at www.BizVelop.com.  No, really.  Go through the recommended reading sections and actually follow through with some of them. 
  • Develop a totally new vertical market.  I recommend commercial property inspections.  Being a commercial inspector is the perfect "encore career" for many home inspectors, and you can operate your commercial inspection business long after physiology prevents you from performing home inspections.  Don't wait till then, though – get started today by joining CCPIA.
  • Apply for your Certified Master Inspector® professional designation.  Nothing will make you more money than those three little words.
  • Rest. The inspection business takes its toll both physically and mentally... and, more recently, emotionally.  Even God rested one day a week.

We're coming up on the best seasons our industry has ever enjoyed.  I'm looking forward to them, and so should you.

Nick Gromicko