Posted by: Kaplan Real Estate Education
Updated: January 15, 2019
To be an effective home inspector, you clearly need the skill set necessary to perform inspections. But you also need to have an understanding of the local real estate market and the competitive landscape of other home inspection businesses in the area.
What geographic area will you realistically be able to cover? Keep in mind many home inspectors perform multiple home inspections a day, so distance between homes can be an issue. Over 40% of all home inspectors perform two or more inspections a day.
How many real estate home transactions are there typically in the area you will be covering and how many of those homes will be inspected. You should be able to find this information from your local real estate board. The American Society of Home Inspectors (ASHI) estimates that 77% of the homes sold in the United States and Canada today are inspected prior to purchase. The market is still underserved, and the remaining growth potential is considerable. However, local markets vary; you need to know local conditions. You can find this information by soliciting local real estate agents and boards. Remember, the home inspection market is driven by real estate transactions, not the real estate market as a whole. For example, if home prices go down but transactions go up, this may be considered a bad real estate market but a good home inspection market. By multiplying the number of inspections done in your market last year by the percentage of homes inspected you will have an estimated number of inspections done in that market.
Who are the other home inspectors currently working in the area you will be covering and what will you be offering that they currently do not? You should be able to find this information by searching the internet. Too many companies simply copy the marketing messages of the competition. To get people to switch to your service, you need to give them a fantastic reason to change. Do not sell your service simply based on price. This is a quick path to failure. Many standard market positions exist, such as innovation, speed, experience, quality, and so on. Make sure your chosen position fits your personality. By dividing the estimated number of inspections done in your market last year by the number of inspectors will give you a projected number of home inspections you could do in your first year.
How will you find your customers? New home inspectors will receive 100% of their business through direct referrals from real estate agents. Existing home inspectors receive approximately 90% of their business through REALTOR® referrals and 10% from their website. Home inspectors that have been in business for over 5 years will receive approximately 60% from REALTOR® referrals, 10% website, and 30% from past customers. This is a people business; the larger your network of satisfied people, the more prosperous your business.