[Annual Termite Issue] Home Inspectors: Friend or Foe?

Pest control operators adding on home inspection services… Home inspectors performing termite inspections… What has the world come to? While some pest management professionals are inclined to draw a line in the sand, others said relationships with home inspectors are a boon to business.

“A lot of folks in our industry have either added home inspection as a service or have partnered with a home inspection firm,” said National Pest Management Association Technical Director Greg Baumann.

A December 2006 survey of National Association of Home Inspectors members found 43% provided wood destroying insect/organism inspections as an ancillary service, said Executive Director J.R. Burke. That number has likely increased, he said.

Since many home inspectors are not licensed to perform WDI/WDO reports, they seek the services of pest management professionals. Home inspectors “get me a lot of work,” affirmed Chris Delaney, owner of A North Texas Termite Specialist (ANTTS) in North Richland Hills, Texas. Advance Termite & Pest Control Vice President Jeff Wells in Hutchinson, Kan., agreed. He’ll often serve as a sub-contractor to home inspectors who “don’t want to go through the licensing process.”

Aligning with such inspectors offers the “ability to get additional inspections that we normally wouldn’t have access to,” explained Joe Giaimo, president of Crest Termite Control in East Haven, Conn.

NOT All ROSES. Not everyone feels great about the relationship. Some PMPs resent the growing number of home inspectors getting licensed for WDI/WDO inspections. This could “cut the pest control guys totally out of the picture” for inspection revenue, said Kevin Burk, president of All-Rid Pest & Termite in North Richland Hills, Texas. Wells questioned some inspectors’ motives, namely “they think they can make a quick buck.”

Others said pros should stick to their strengths. “No one knows heating and air like a heating and air guy, and no one knows termites like a termite guy,” said Wells. “I think termite inspectors should be termite inspectors and home inspectors should be home inspectors,” said Delaney. His home inspection clients agree. One inspector expressed relief at not being responsible for termite inspections after Delaney found pin-hole termite evidence in a million dollar mansion, causing the deal to fall through.

But price remains the biggest sticking point. In Dallas-Ft. Worth, termite inspections once commanded $80 to $100 but now average $65, said Delaney. “Some firms are doing them for $50,” he exclaimed. “In Texas you have to charge tax so they’re doing them for closer to $45.”

Many pros will undercut each other to get the business, doing inspections for almost nothing, said Burk. As a result, PMPs are “letting the home inspectors and realtors set our fees.” Burk has opted not to play the game. “I quit pimping myself out.” Remember, the PMP is liable if termites or damage is found after closing, said Burk. “You’re going to put your neck out there for $50?”

LEADS. LEADS. LEADS. Yes, if the benefit of new business outweighs the risk. It’s like the “loss leader” in grocery stores, said Giaimo, who serves as president of the Connecticut Pest Control Association. He said a recent survey in Connecticut found 45 percent of properties inspected had issues with termites, carpenter ants, powder post beetles or carpenter bees. Some pros feel even if you lose money on inspections, “you have the potential to make a lot of money,” he said. “The money’s in the treatment, not in the inspection.”
One pro, who declined to use his name, performs WDI inspections for free. He’s doing three times as many inspections – more than 600 a year – compared to when he charged for them, and has significantly increased revenue from resulting termite work.

In Connecticut, the fear that home inspectors would take away business “never materialized,” said Giaimo. Though some inspections were lost, “clients were still calling us for the treatments.”

ONE-STOP SHOPPING. Other professionals have gone a step farther. Barry Robinson, president of ServisPros in Fredericksburg, Va., started a separate home inspection business in 2000. He found when long-time clients moved, they often switched pest management companies because the new home was under termite warranty by another firm. By offering a combined home and termite inspection to existing customers, he could, in a sense, move with them. And, since most real estate contracts are contingent on an acceptable home inspection, sellers usually are willing to pay for necessary termite treatment.

The first customer of Complete Service Inspections (CSI) of Virginia had used ServisPros for pest and termite control in his old home. During inspection of the new house, termites were found and the seller agreed to pay for standard treatment. Not only did the customer upgrade to premium termite coverage, he signed up for pest control and lawn services. “We went from a situation where normally we would have lost a customer to generating a little over $3,000 in revenue,” said Robinson.

During the home and termite inspection buyers get deeply acquainted with the property for the first time. It’s a perfect opportunity to inform them about general pest, wildlife, TAP insulation and lawn care services, said Robinson. Offering customers more services increases your value and your relationship, he explained. “They’re less likely to leave you.”

“People will pay for convenience,” added NPMA’s Baumann, who ran sister pest management and home inspection firms in Raleigh, N.C. At the time, his was the only operation in the state offering “one-stop-shopping,” a popular service despite being 40 percent more expensive.

HERE TO STAY. Add-on home inspection service is not for everyone, but it can be a good fit, said Robinson, who spoke on the subject at NPMA’s October convention. Integrated Pest Management inspections are “almost identical” to exterior evaluations done by home inspectors, and the industry’s shift to “detective” work uses the same skills needed in home inspection.

Although it does have a learning curve greater than lawn care, home inspection helps build revenue, said Robinson. On the flip side, he said, home inspectors are attracted to pest management’s recurring revenue stream. It appears this relationship is here to stay.
 
The author is a frequent contributor to PCT magazine.

Conflict of Interest?
In some states, termite inspections are a home seller’s responsibility. But as many professionals can attest, you’re being paid by someone “who really doesn’t want you  to find something,” said National Pest Management Association Technical Director Greg Baumann.

It’s a conflict of interest, said Kevin Burk, president of All-Rid Pest & Termite in North Richland Hills, Texas. He admits he’s made plenty of realtors mad. “I’m working for the buyer, not the realtor, not the home inspector.”

What started as a way for sellers to guarantee a home free of wood destroying insects sounds ridiculous in today’s market, said Baumann. Barry Robinson, president of ServisPros and Complete Service Inspection in Fredericksburg, Va., likened the process to having a used-car salesman’s mechanic test drive the vehicle you’re buying. “You’d never have the owner’s mechanic check it out.  You’d get your own.” 

Baumann encouraged professionals to work with state pest control associations to push for changes in state and local real estate contracts. “It’s good to make the change,” he said. “It’s in the best interest of the buyers to get an inspection that reports directly to them as opposed to the sellers.” This also eliminates pressure to bust the deal and “accusations of collusion” between the pest management professional and the seller or his agents. 

Although some say stronger regulations are needed, Baumann advocates industry-wide WDI / WDO inspection practices. Consistency in inspections eliminates the “gray area” in reporting, he said. “If you have consistent standards or guidelines produced by the state association, it eliminates a lot of problems.”

Befriending Home Inspectors
Making friends with home inspectors and realtors can be good for the bottom line. Professionals shared tips for making the most of the relationship:

Promote ’Em — Chris Delaney, owner of A North Texas Termite Specialist (ANTTS) in North Richland Hills, Texas, shares marketing ideas with 30 loyal home inspectors. “The more business I can help them get, the more business I’m going to get.”

Educate ’Em — Foster open dialogue through education, said Steve Fisher, owner of Fisher Pest Management in Eugene, Ore. Stick to the science: Insect biology, how pests relate to the structure, the importance of accurate identification and reporting, and when necessary, handing the job off to licensed pest control operators. Enlighten local realtors on the value of good inspections at their weekly meetings, said National Pest Management Association Technical Director Greg Baumann. “What an opportunity.”

Assure ’Em — Home inspectors and realtors appreciate how Delaney handles customers when termites are found. “I don’t scare them to death,” but rather explain that termites are a common problem and will have to be treated now that they’re found, he said. “When realtors hear my spiel, they say, ‘Give me your card.’”

Respect ’Em — Speaking badly about other professions “can only create bad feelings,” said Joe Giaimo, president of Crest Termite Control in East Haven, Conn. “They’re not the enemy. You’re better off aligning yourself with some because it could be a beneficial relationship.”

Associations Embrace Home Inspectors
Across the country, state associations are rolling out the welcome mat for home inspectors who now “make up a significant percentage of membership,” said National Pest Management Technical Director Greg Baumann.

In Oregon, more than one-third of Oregon Pest Control Association (OPCA) members are home inspectors, said Board Member Steve Fisher. And at the Connecticut Pest Control Association, they account for 15 percent of membership, said President Joe Giaimo.

Both groups provide home inspectors training in wood destroying insects or organisms, and OPCA even holds quarterly sessions on building techniques, materials, moisture and ventilation. “It’s become a real good fit,” said Fisher. “It’s helped swell our membership numbers.” Giaimo agreed. “It’s additional revenue. We get along fine.”

Consistent reporting was the reason OPCA courted inspectors. The association decided “it’d be in our industry’s best interest to get them in, get them educated,” so they could confidently identify termite, carpenter ant and beetle problems, explained Fisher.  OPCA worked with the Oregon Department of Agriculture to create a non-applicator’s license, which allowed home inspectors to become active association members and sign off on its copyrighted WDO report. “We find reports are much more valuable to all parties concerned. I feel it’s worked out quite well.”

Now, home inspectors accurately identify pests and bring in pest management professionals for treatment, Fisher explained.  More important, he said, “they’re bringing attention to real wood destroying insect situations.”

In Kansas, new legislation requires professionals who perform real estate inspections be licensed to apply termiticide or restricted-use products. “We had some home inspectors that were upset about that,” said Past President Jeff Wells. As a result, the group has seen an increase in home inspectors attending meetings and getting licensed. “That’s been a good thing, because the consumers were really the ones getting the raw end of the deal,” said Wells.

Some members of the Texas Pest Control Association offer both pest management and home inspection services, said Executive Director Ken Myers. He said home inspection could become a “bigger business over time,” but right now there’s “not much chatter about it.”

More than an Add-On
In 1997 when Congress considered making home inspections a required part of every government-backed mortgage, Barry Robinson, president of ServisPros in Fredericksburg, Va., saw opportunity. Three years later, home inspection was one of three separate companies under the ServisPros umbrella.

Catering mostly to pest customers buying new homes, the business grew slowly until Robinson began using infrared cameras. He had acquired the technology to give him an edge in the slowing termite market, but he found the cameras also identified leaks, missing insulation, mold and other structural problems. Customers loved the technology and said the inspection process was like the TV show, CSI: Crime Scene Investigation.

Robinson knew he was on to a good thing, and last year changed the firm’s name to Complete Service Inspections (CSI) of Virginia. Business jumped 400%. 

Unlike many home and termite inspectors who court real estate professionals, CSI targets home buyers. The CSI service van sports dramatic graphics, and Robinson gives customers t-shirts sporting infrared hot spots, the CSI logo, and “Are You Hot?” on the back. People on the street regularly ask if he’s affiliated with the TV show, and customers’ neighbors want to know what’s going on, Robinson smiled.

Home inspection fees range from $250.00 for condos to $450.00 for single family homes depending on the size and type of structure, he said.