What Should You Charge for a Home Inspection?
I am looking to become a home inspector here in Maryland. In order to do this, I need to figure out how much to charge for the service and about how many homes I will be able to do–as an average–in a given month/quarter/year. For the sake of this discussion, let’s talk about money in terms of yearly salary.
What is the current average price to inspect a home?
According to HomeAdvisor, the national average is $323. That is definitely low for around here, so I ran their data again and just selected DC and Baltimore and it’s $345. Not a huge difference, but that includes all size homes and condos. But here are some data from a few others:
Scott Home Inspection: $345. I am just taking his price for an average size home, since he charges by the range of sq. ft. But I like his methods and think this is a good representation of actual home inspectors at work.
Realtor.com: $300-$500. Kind of weak that they won’t say, but maybe this is helpful for a typical homeowner just looking to know what they are likely to be charged.
Thumbtack: $280 is their national average, but I feel more confident in the data provided by HomeAdvisor as they have been around longer and been gathering this data longer than ThumbTack has.
Angie’s List: $473, so I think that Angie is getting their data from the same place as Bankrate.
Home Advisor: $323, and just placing this here for everyone to see.
Then here’s a video from my neighbor to the south in Arlington, VA (I don’t know him). He sticks the prices in about the same place, but adds a little context on pricing in relation to size of home:
The point of the above is not to pinpoint what I am going to charge or debate whose data is the most sound, but rather to understand the current market and what might be appropriate to charge. My grandfather owned several rent houses in Waldorf, MD and he always wanted to rent them below market so that they always stayed occupied. That idea had its merits as well as its problems. While I love trying this and following in his footsteps, I’m not sure the home inspection market functions in the same way as rental property, which I will get into a bit later, but just to give you a sense of the way I am wired for how to position myself in the market.
Just to make my thinking visible, the range I am see is $323 – $473. Frankly, just from listening to people around here, I’d say our area averages in the higher part of that range. So just to make the math easy, I am going to think about charging $400 per inspection.
Top Line Income
I don’t yet want to get into the costs involved in running a home inspection business. I know they are not tremendous, but they are steady, such as gasoline, printed work or software to provide digital copies of the inspection, lead fees to places like HomeAdvisor or even real estate agents, plus just the general costs of having a business like website fees, taxes, payroll, and the like. But I want to hold on that for now, mainly because I’m not exactly sure what all of those are going to be. Instead, let’s look at the fun stuff: the income.
For now, just so that I can lay it out all in front of me, I’m going to just show a few levels of income and the number of inspections needed to hit that amount.
$40,000/year: 100/year | 8/month | 2/week
$50,000/year: 125/year | 10.5/month | 2.5/week
$60,000/year: 150/year | 12.5/month | 3/week
$70,000/year: 175/year | 14.5/month | 3.5/week
$80,000/year: 200/year | 16.5/month | 4/week
$90,000/year: 225/year | 18.5/month | 4.5/week
$100,000/year: 250/year | 20/month | 5/week
$110,000/year: 275/year | 23/month | 6/week
$120,000/year: 300/year | 25/month | 6/week
$130,000/year: 325/year | 27/month | 6.5/week
$140,000/year: 350/year | 29/month | 7/week
$150,000/year: 375/year | 31/month | 7.5/week
$160,000/year: 400/year | 33/month | 8.5/week
$170,000/year: 425/year | 35.5/month | 9/week
$180,000/year: 450/year | 37.5/month | 9.5/week
$190,000/year: 475/year | 40/month | 10/week
$200,000/year: 500/year | 41.5/month | 10.5/week
I have bolded the group that would require an average of at least one per week (regular M – F week, not that I wouldn’t do inspections on Saturdays or even Sundays). I drew that line because I think that would be some serious effort to maintain. I also put a space where I’m certain I would need to bring on or team up with another inspector. Another point in here is that I couldn’t just start out doing 350 inspections/year. It would take a while to gin up that kind of clientele base, and the point there is that by the time that gets here, I could push my prices up $20-$30/inspection or so and get to those income numbers without doing quite so much work.
How Days Break Down
I have bought a few houses in my day and since I am a handywoman, I am not too far away from tons of other real estate transactions, which is to say that I have a good feel for the potential wiggle room you have with clients. Meaning, you can’t schedule them a month in advance. Most real estate transactions are in the 30-60 day window and then your window is inside of there. I would guess that about the most wiggle you can get is 5 days.
Think about that for a second. I’m never going to have a full calendar. Ever. It might be 10 days out–at most–if you have some 60-day closes in there. There are going to be a lot of booms and busts as far as weeks go. I need to be prepared for this. I need to have cash in reserve for the weeks when I have nothing.
From the research I have done both online and off, it would seem that an inspection is likely going to take 4 hours on average. Or rather, I should create a 4 hour window to get it done. I don’t think each will take this long, and I doubt there are many that take longer, but I need to reserve this time. Easy enough, if I can line them up right, I can get two done in a day. In the summer, if I can find some people who can go early, say, 7:00a, then maybe I can sometimes squeeze a third in if everything lines up right before the sun sets. I likely can’t do this until I very deep into my experience and can better foresee potential issues, since you can’t just schedule an inspection and then bail because the others went late.
What I’m thinking is that I should only plan for 1 per day. And hey, if I can make that work, that would be $100k a year, top end. That’s not terrible. I think maybe $10-$12k in expenses/year, maybe. That seems pretty fat, but then $88-$90k before taxes only working half a day. It’d be a good life if you can get it, and most likely busting ass all summer during the buying/selling season, and then lighter during the colder months. But every day that I can schedule two, is one day off of work. That’s a pretty cool thought.
The next thing I want to discuss is where this business will come from? I have been thinking on that a lot and it’s one of the main reasons I haven’t yet gotten my license. This is a hard nut to crack.