Russel's Blog

I have some questions for Realtors, but first some background.

Most of us, home inspectors and Realtors, understand that the home inspection industry is really controlled by three groups of people: Realtors, insurance companies, and attorneys. Notice that I did not list home inspectors.

Insurance companies hold sway over the home inspection industry because several (1) states require that home inspectors carry "appropriate" insurance, and (2) most of us who see ourselves as responsible businesspeople and home inspectors carry "appropriate" insurance as a matter of conscience. Of course, all of us probably know that "appropriate" insurance means errors and omissions insurance. In California where I work, there is no licensing for home inspectors, so there are many home inspectors who do not carry errors and omissions insurance since they deem it too expensive. As a franchise home inspector, when the insurance companies look at me, they don't see one inspector. Rather, they see an individual who is a member of a about 600 HomeTeam franchises with thousands of employees. That creates a nice target market for those insurance companies since all they have to do is contact the Vice-President of Operations for the franchise. Thus, our partnership with various E&O insurance companies provides us with rather inexpensive E&O insurance, all things considered. However, note that inexpensive for me, as a multi-inspector company, is $4,400 a year. Each year when I go to get my policy renewed, I do shop around, and have gotten quotes as high as $17,600 a year. For one-person non-franchise companies, that's prohibitive, meaning that the prospective home inspector will probably quit before ever getting started unless he can find more reasonable insurance. And for that one-person non-franchise company, even $4,400 would probably be considered expensive. There we have insurance companies controlling the home inspection industry by the very nature of their high premiums. Since insurance companies require us to use a home inspection contract, if your home inspector does not use a contract, there is a good possibility that s/he is not carrying E&O insurance.

So, first set of questions for Realtors:
1 - Does it matter to you whether or not the home inspectors you refer carry E&O insurance?
2 - Do you require the home inspectors you refer to provide proof of insurance to you or your brokerage?

Attorneys hold sway over the home inspection industry because they are only too happy to sue everyone and see who is left standing, i.e., who has the deepest pockets. Those who don't carry appropriate insurance can be forced out of business because they spend their financial reserves simply responding to the lawsuit. Those who do carry appropriate insurance can be forced out of business because they cannot renew their policy after a lawsuit, or the premiums rise so astronomically that they cannot continue to pay the premiums and thus either leave the industry or fall into the no-insurance category for a while.

So, second set of questions for Realtors:
1 - When a Client calls with a problem, do you try to resolve it through communication or simply blame it on the home inspector?
2 - If there are questions about the home inspection report, do you refer your Client to the inspector who prepared the report, or do you try to interpret the report yourself?

Realtors hold sway over the home industry because they have the power to make or break a company very easily through their referrals. Notwithstanding the home inspector training schools pumping out home inspectors by the scores, barriers to entry for home inspectors are high because new inspectors who want to succeed immediately have to market to people (Realtors) who do not pay them for their home inspection services. While I understand personal referrals and marketing (I've been involved in marketing as a vocation, avocation, and business necessity for four decades), the home inspection industry is a rarity in that the majority of us market to Realtors hoping that Realtors will refer us to their paying Clients.

So, third set of questions for Realtors:
1 - Since the great majority of us understand that Realtors represent a very well-defined target audience for marketing our home inspections, what do you respond to positively?
2 - What do you respond to negatively?

A few marketing tactics that I have used successfully in my marketing to Realtors, or that people that I respect have used:
A - Direct mail envelopes
B - Direct mail postcards
C - Emails
D - Gift checks/coupons/discounts
E - Referral Rewards (for Clients, not Realtors, due to RESPA and many brokerage guidelines)—This is where a past Client can earn $20 for referring his family, friends, and business acquaintances to me. That, of course, takes the Realtor out of the equation, but Realtors here seem to like the program because they usually seem to be looking for the lowest price, and this program allows their Clients to earn all of their inspection fee back, and more, through referrals. (http://www.abouthomes.info/reports/Referral%20Rewards%20Program.pdf).
F - Office presentations
G - Free gifts (pens, flashlights, pens, notepads, calendars, etc.)
H - Referral thank you cards (sometimes with small gifts, e.g., movie tickets, etc.)
I - Monthly drawings (e.g., $50 gift certificates for fine dining, special events, sports events, etc.)

So, Realtors, what gets you excited? What gets your goat?

For anyone who wants to learn more about marketing, especially for small businesses that don't have the budget of a Wal-Mart, I have a "Marketing Think Tank" web site at http://www.gogetforum.com/?mforum=marketing. It's open to everyone, not just home inspectors.

Not that I agree or disagree with any of them, it's just that they made me pause to think, and I like to think.

"If you don't know where you're going, any road will take you there."—George Harrison, 2002 (posthumously)

"Religion was created by an—as was God himself. Politics, not faith, explained everything for her. How better to regulate the masses than by terrifying them with the wrath of an omnipotent being."—Katerina Lew in "The Third Secret," by Steve Berry

"My father once told me that the higher a circus monkey climbed a pole, the more his ass showed."-Katerina Lew in "The Third Secret," by Steve Berry

Can you tell I'm reading "The Third Secret" right now? A very interesting book.

I'm a home inspector, a former Realtor in a different state, and a former property investor. I like to HELP people with their real estate needs. Right now, I'm most able to help them through my career as a home inspector. 

I have fourteen different types of inspections. Each one has its own target markets. Some are described here: http://www.abouthomes.info/files/NACHI/Types.pdf. For example, my RENTER inspection is not marketed to the general public. While I list it with my common inspections, I do so only because at any time the public could become a renter. Investors probably are not going to become renters anytime soon. But I market RENTER inspections to renters so that they can document the condition of the property (and it's safety and maintenance shortcomings) at move-in and not rely on the landlord.

As with anything that one is selling, one has to know who to sell it to.

As an example, a friend of mine, a Realtor at Century 21, had a condo listing in what I call a "hotel condo" building. That's the type that has a huge building with, say, four entrances, and, once one is inside, the hallways and condo entrances look just like a hotel. He came up on his fifth month of a sixth month listing and had no bites on it. Finally, when he came to me for help, I asked him what the average age of the owners was. "Oh, probably about 60." Ah-ha! So it was a condo building with empty nesters who had downsized.

Consequently, advertising on realtor.com and craiglist, while good, probably are not the appropriate place to advertise a condo where only another senior citizen would want to live, even though the complex is just a hop, skip, and a jump from a major university. So I got him advertising with AARP, the local newspaper (expensive), and other places where senior citizens hang out (Symphony, high-class restaurants, etc.). Boom! People were calling like mad. He got his first showing and his first offer within hours of the Sunday paper hitting the streets (Saturday evening). While they were in negotiations, he continued to get inquiries and three backup offers. By the end of the six-month listing, he was in escrow, I had done a home inspection, and the place sold.

Moral of the story: Ya gots ta know your target market and where they hang out.

I believe Commandments #11-20, on the tablets that Moses broke when he stumbled coming down from the mountain, were these:

11 - HELP thy brethren
12 - LOVE to HELP thy brethren
13 - LOVE to provide FREE HELP to that brethren
14 - Know thy merchandise and thy services
15 - Know thy target audience
16 - Market to thy target audience
17 - Market persistently and consistently to thy target audience
18 - Know thy Clients
19 - Follow up with thy Clients
20 - Market persistently and consistently to thy Clients

Being able to address people's concerns, whatever those concerns are, without overselling them, is a key to keeping them as Clients.

I'm reminded of the used-car salesmen. They constantly are trying to oversell us on the used car. We hate that. Ditto with telemarketers. Ditto with spam. People everywhere hate being oversold. As I regularly tell many prospects over the phone when I'm downselling them, "I've listened to your concerns. Don't get me wrong, now, because I like money just as much as anyone else. However, I don't like taking money from someone needlessly.

Instead of my STANDARD inspection, what you need is my BASIC inspection [or my WALK inspection, or whatever inspection fits their needs.] You know how many referrals I get because I don't oversell and am even willing to undersell? A few gazillionbazillion. I'm in the enviable position right now of choosing who I want to work with and what properties I want to inspect. I turned down six inspections last week because they all were older properties for Realtors whom I did not know. I did do one inspection on a 1918 property because it was 2,528 square feet, a local historic property, and the Realtor has provided me with a gazillionbazillion inspections in the past 5½ years. I'm not going to let him down.

Many of my home inspections are very specialized inspections; in fact, many of them are not even "inspections" in the traditional sense of the word in this industry. But I'm not a traditional person (as long-time friends and business acquaintances can tell you) . I like to think outside the box, color outside the lines, colorize those old black-and-white movies. As with Captain Kirk, Admiral Ray here likes to go where no one has gone before. It's fun being out front, being the leader. Others condemning me because I don't fit their prescribed mold of a home inspector is fine with me because my banker and my creditors are quite happy, not to mention my Clients and Realtors.

So if someone wants an inexpensive inspection, and there are many people who do, I developed the protocols to provide it to them. And then I do the best inexpensive inspection I can. Always be the best. Always, always, always. Even the 99¢ store here is the best 99¢ store around. Do they compete with Nordstroms? Of course not. But that doesn't mean that their 99¢ stuff is not the best 99¢ stuff. And I wouldn't mind owning one of those 99¢ stores. They do a booming business.

When one listens to one's customers, one is bound to succeed. There can be no other way. People love to be listened to. And when one can address the needs of those people to whom one is listening, one will succeed beyond all matter of comprehension. That person needing an inexpensive inspection today might win the lottery tomorrow (or at least get a nice inheritance from mom and dad) and need an inspection on a 25,000-SF mansion next year. Don't let one's ego and attitude get in the way of HELPing people, regardless of what their current lot in life happens to be.

Forty-two years ago now, my wise ol' grandmother introduced me to cactus and succulents. The rest, as they say, is history.

I've taken that interest and developed it into a passion for landscaping, a passion that complements nicely my passion for real estate and my career as a property inspector.

My love of plants and real estate has developed into an intense interest to help people understand how the wrong tree, bush, or ground cover planted on their property can have devastating effects on their home, effects that might not become visible until many years later.

Here in San Diego, virtually anything will grow because of our climate, and with the proper amount of watering, those things will grow tall and wide, and some that you've never seen bloom before, will bloom.

When I was growing up in South Texas several decades ago, my grandmother was quite proud of her Norfolk Island Pine (also called a Star Pine) that had grown to six feet in ten years. Here in the canyons of San Diego, it's not uncommon to find Norfolk Island Pines that are 35 or 40 feet tall—also in ten years.

The umbrella tree, or schefflera, is the same. We Texans were proud if they were six feet tall and still had all their lower leaves. Here in San Diego, they not only grow to 20 feet tall, but the darn things bloom! And beautiful blooms they are, too.

Unfortunately, because everything will grow here, people plant plants in the strangest places, and notwithstanding our desert environment with an average of only 10 inches of rain a year, they will water them and water them to make sure they grow big and strong. Here's an example of a ficus tree which not only grew big and strong, but its root system grew wide and destructive:

That tree was not at the home that I was inspecting; it was next door! Yet it had not only destroyed the foundation of the home in the picture, it had also destroyed the foundation of the home to the left, the home that I was inspecting.

Moral of the story? Don't fall prey to the grocery stores that sell the cute, little ficus trees at all times of the year. Those cute, little ficus trees grow to be big, monster, destructive trees, as do many other small plants common sold in grocery stores, discount stores, home improvement stores, and, of course, at plant nurseries.

This next picture is at a home that I was inspecting that had some sagging floors. Since I normally walk around the outside of the home before going inside, I knew before ever going inside that there were probably some sloping/sagging floors in this area.

The two lime-green plants in the picture are cyperus plants, typically categorized under "aquatic, wetland, and invasive" plants. Since those two plants were looking quite nice, and we live in a desert, I knew that they were being watered well. And since the house was on a raised foundation, my suspicion about sloping/sagging floors in that area was confirmed from the interior. The extreme amount of watering they were providing to these two plants had caused the concrete piers to sink in mud. Unfortunately, the plants were planted in the two access openings to the foundation crawl space, so I couldn't tell my Clients much more.

Moral of the story? Just because a nursery sells a beautiful plant doesn't mean that it is right for your home.

This last picture is of a tropical paradise:

Nope, it's not Miami or the Mediterranean. It's right here in San Diego, a desert that gets an average of 10 inches of rain a year, not to mention about 30 days of 100+ temperatures in some areas and the all-too-often hot, dry Santa Ana winds that dessicate everything they blow across. To have a tropical paradise like that in an environment like San Diego, again, requires lots of water. I don't normally mention vegetation at the time of the inspection, but I have an extensive vegetation section in my SOLUTIONS real estate library that I quite often reference (readers can find it here: http://www.russel-ray.com/reports/Vegetation.pdf).

In this case, my Clients loved the tropical paradise and didn't bother reading the vegetation section of their property inspection report. A couple of months after they moved in, they called me wanting to know if I had broken some plumbing during the inspection because they had a $250 monthly water bill. After I pulled up pictures of their paradise, I told them exactly what was going on and asked them if they had read the vegetation section. Nope, they hadn't.—Clients not reading all of their property inspection reports is a common occurrence in the home inspection industry. :(  They weren't too happy with their water bill, and apparently they hadn't asked the sellers about the utility bills, but when I went by their house for their first anniversary of close of escrow, they still had a tropical paradise. So I guess the sticker shock of the first couple of water bills wore off once they really got around to enjoying their paradise. Unfortunately, being in a desert environment with almost 3 million people in a state with 37 million people, and a state that is commonly subject to the extremes of weather, these Clients with an inappropriate tropical paradise in a desert quite often deprive others of needed water during times of drought.

Moral of the story? Just because you fall in love with mature landscaping doesn't mean it's the right landscaping.

Moral of this blog? If you fall in love with a plant, do your due diligence to find out more about the plant. How big will it grow? How fast does it grow? How much water does it need? How much light does it need? Is it a shade plant or a sun plant? Can it survive droughts? Can it survive floods? What insect pests is it susceptible to? There are many resources on the Internet. Use them, or at the very least, ask the salesperson where you are going to buy the plant. If necessary, ask me!

At the age of 10, while my friends were mowing lawns and pulling weeds to make extra money, I was researching and typing term papers for college students. When I started that first business, my wise ol' grandmother taught me that HELP is the second most powerful word in the English language, right behind LOVE and right in front of FREE. I've lived that throughout my life and LOVE to provide FREE HELP believing that if one is willing to help, the monetary rewards will take care of themselves. So far, after 42 years of business experience, that has proven to be true.

I've founded or owned successful businesses in the restaurant industry, as a Realtor, as a Home Inspector, in computer sales, in telecommunications, in typing and word processing, and in proofing/editing/copywriting. Other aspects of my business career include installing roofs and heating and cooling systems.

Along with real estate, my hobbies/loves include landscaping (especially with native plants, cactus, and succulents—xeriscaping), history, music (both as a listener and as a performer), wildlife and pets, trains, sports, and travel. I guess really one could say that I simply LOVE life (note that LIFE is another four-letter word!).

I grew up in a large, lower middle-class family, so we did everything ourselves, resulting in me becoming a Jack-of-all-trades. As I like to tell my Clients, "I'm a home inspector. What that means is that I'm a generalist, not an expert. I know something about everything but everything about nothing." That gets a chuckle out of them, helps me to set their expectations, and helps establish rapport with everyone involved.

As a former Realtor a couple of decades ago, I'm a firm believer that a home inspector is crucial to happy buyers and, in the long term, happy sellers and Realtors. To that end, I believe in working with everyone to solve problems. After all, there is a seller willing to sell to a buyer who is willing to buy, and there are typically two Realtors who are trying their best to make it all happen to everyone's satisfaction.

Then, of course, comes the home inspector documenting any variety of conditions and problems. I believe in helping everyone understand what that documentation means, even if it is the documentation of a different home inspector. So if readers here have questions, or can't reach their home inspector, know that I answer my phones 24/7 and you can always email me.

I don't know everything, but I darn sure know how to use my personal library, my local libraries, and the Internet to find out what I don't know.

Be sure to read my other blogs (get your 10 daily comments done right here, right now!):

• What are you thinking? Yes, you! (electrical extension cords)
• What are you thinking? Yes, you! (sink cabinets and chemical storage)
• What the heck were they thinking? (garage)
• What the heck were they thinking? (water heater)
• What the heck were they thinking? (electrical)
• Your laundry room is about more than just washing and drying
• X-ray vision
• How Sellers can prepare for a Buyer's home inspection
• Renovating or remodeling? Start with the foundation.
• Wildland fires
• Marketing to Realtors
• Knowing whom to sell to
• Plants, plants, plants
• GOLD
• HELP is a four-letter word