BUYING A HOME is the biggest purchase most consumers make in their lifetimes, not to mention one of the most crucial. After all, while consumers may have to live with most other types of investments, good or bad, they actually have to live in their homes. Realizing this is not a decision to be made lightly, many people seek the advice of professionals.   Property inspectors often make that short list, contributing to a period of tremendous growth in the international property inspection industry.

Those working in the field have noticed the expansion as well. "The Yellow Pages in Edmonton lists in excess of 60 inspection companies," says Terry Fikowski, 51, a franchisee of HouseMaster® in Edmonton, Alberta. "When I started [in 1994], there were 35 to 40"-that's an increase of more than 30 percent in just four years.

There are approximately 15,000 home inspectors in the United States and Canada, according to Ken Austin, president and founder of Bound Brook, New Jersey-based HouseMaster®. Austin adds that the potential for increase is high, considering about 5 million resale homes are sold each year in these two countries alone. And while significant competition exists, there's still plenty of work to go around. Fikowski averages 200 inspections each month. Multiplying this number by an average of $250 to $300 per inspection, it's evident this is indeed a multimillion-dollar industry-and there's a lot of potential for growth. Although home inspection doesn't exist in all international markets, that doesn't mean there's no opportunity for entrepreneurs in the industry to expand beyond their own borders. Just research the need in a market before trying to transplant the concept.

SNAP INSPECTION
What exactly does a home inspector do? While the details differ between nations and companies, a standard inspection includes a visual survey of a property and its systems-electrical, plumbing, gas and so forth-and a written report of the findings. Inspectors are concerned with structural, rather than cosmetic, defects: Worn carpet would not be mentioned, but a leaky roof would.

The training, education and certification needed to become a home inspector also varies from country to country. For example, to become a member of The Royal Institution of Chartered Surveyors (RICS), a professional organization based in London, England, you must take an accredited postgraduate course in surveying, followed by two years of structures training while working in the field.

In Canada, on the other hand, the industry is still unregulated, although there's growing support for national certification. The property inspection community is heavily fragmented, with more than a dozen professional organizations operating throughout the country. There's a push from within the industry for national standards for education, ethics and certification in an effort to solidify the industry and improve its image. 

Indemnification insurance (also called errors and omissions insurance) is considered crucial within the industry, as it protects not only clients but inspectors. If an inspector neglects to mention a defect that causes problems after a house is sold, the buyers could hold him or her liable.

BUYER BEWARE
Unlike most businesses that market directly to prospective clients, property inspectors usually try to cultivate strong relationships with middlemen-the realtors. A strong sense of "let the buyer beware" is another factor fueling the growth of the industry. "It's like an insurance policy," says Fikowski. "There are no unpleasant surprises."

In Canada, the seller has a legal impetus to disclose all relevant information regarding a property to reduce liability, but sellers can't disclose what [they] don't know. Their solution: Hire a professional.

Unfortunately, inconsistencies regarding liability remain in the Canadian legal system. While you can't buy a used car in Canada without it being certified by an auto mechanic, no such laws exist regarding property. Many believe this will soon be corrected.

In other countries that have no property disclosure laws, such as South Africa, property inspection is almost nonexistent. "In South Africa, the market hasn't matured enough and consumers aren't sufficiently protected," says Graham Gavin regional director of RE/MAX Southern Africa, a real estate franchise. "But the real estate governing body is becoming more aware that we need to [protect] the consumer."

Gavin knows of several people interested in starting property inspection companies; however, a depressed real estate market has stifled their interest. Fortunately, that's not the end of the story: "I think within the next year, [the real estate market] will be booming," Gavin says. "Within two or three years, South Africa will be a good place to be [for property inspection]."

GROWTH SPURT
Although it varies from region to region, overall, property inspection is taking off. "When I started, maybe one in four or five homes was inspected," says Fikowski. "Now it's about two out of three."

Contrary to what you might think, this industry's strength doesn't seem to be dependent on a booming real estate market. Although when more houses are sold, the number of home inspections increases, a buyer's market doesn't spell disaster. When sellers are more anxious to sell, they're more likely to accept conditions on the sale, such as inspections. Although the total number of houses sold decreases, the percentage of houses inspected increases, resulting in a fairly stable client base.

By Rachel Balko

Sourc:housemaster.com