Lawsuits happen, but they don’t always end badly for home inspectors.

It’s an unfortunate fact that we live in a litigious society, and home inspectors are not immune. By and large, inspections go off without a hitch. But every once in a while, something goes wrong.

In those cases, it’s more often the buyer who attempts to sue the inspector for allegedly overlooking a problem. But sometimes a seller can sue an inspector. It’s not common, but it does happen. Here’s how to guard against it.

Why Sellers Sue Inspectors

In the inspection business, the contractural obligation is usually with the buyer. The inspection reveals defects that the buyer should know about, which helps with the decision-making process. In a home with costly or dangerous defects, the buyer can back out before committing to the purchase and avoid a future of repairs and replacements.

From the seller’s perspective, a buyer who backs out is money lost. Inspectors might think that a lost sale isn’t their problem, since reporting defects is what inspecting is about. But sellers often disagree if the buyer backs out because of what’s contained in the inspection report. Oftentimes, seller claims against an inspector are frivolous. But sometimes they are not.

A seller might have a claim if the inspection report is misleading or if the inspector makes statements of fact when they are really just opinions. For example, if a buyer is present for the inspection and the inspector uses persuasive language to convince the buyer that the house is not worth buying, the seller might have a claim.

An opinion given in a quick phone call can have a lasting effect on a buyer.

How Inspectors Can Protect Themselves

Sometimes a seller claim is all about the language and its persuasive effect on the buyer. Working RE says that an inspector’s findings should always be stated as facts and observations, not just facts. That’s a subtle but important distinction.

If an inspector observes that a furnace isn’t working or that it’s long past its prime, the report should state the specific observed condition of the furnace, including its age and what is defective. But it’s probably best to avoid additional commentary that the furnace is in terrible shape and that it will cost a fortune to replace.

According to First Indemnity Group Insurance, inspectors have several ways to guard against frivolous lawsuits. One of the most important is keeping excellent records with ample photographs of the property. Recording all communication with the buyer and seller is also helpful. These can’t prevent someone from filing a lawsuit, but they will help defend against one.

Lawsuits are a dime a dozen these days, and sometimes they emerge from unlikely places. Even when a defendant is completely in the right, a judge can rule for the plaintiff if there aren’t enough provable facts to support the defense. It doesn’t seem fair, but it does happen.

The best methods of protection are keeping detailed records of every inspection, stating facts as facts, and being clear about when an observation is just an opinion. Disgruntled sellers are bound to appear every once in a while. With well-documented protection, the frivolous claims are easier for a judge to recognize and dismiss.

Study at your own pace, and you can keep your day job while training to be a home inspector.

If you’re looking for the best real estate inspection training program, you wouldn’t jump in before you knew what you’re buying. There’s an investment of both time and money, neither of which you want to waste.

Our program is different, and it’s better than a lot of the options that you’ll find online. We don’t just cover the basics. We go beyond to give you a well-rounded education both in inspecting and the inspection business.

Standards of Practice

Supporting everything that you do as a home inspector are the home inspection Standards of Practice. There’s more than one set of Standards, since they vary by which organization wrote them. They’re largely the same from one set to the next, but we give you the Standards for every major home inspection organization as well as Standards from the State of Illinois.

Home Hazards

You’ll get mold training, and also learn about radon. Wood-Destroying organisms are also included. These inspections might be separate for your customers. With the additional training, you can offer them a much broader service than a standard inspection.

With solid training on the front end, home inspectors can stay busy through market ups and downs.

Inspecting Home Systems

Much of your program covers all of the systems that home inspectors inspect. Throughout several modules, you’ll learn how to spot defects in roofs, foundations, plumbing, heating and cooling, and you’ll also learn how to detect a wide range of electrical defects.

Interiors covers a lot of ground, since it deals with everything from drywall and attics to roof sheathing and insulation. This is a big part of your training, and where you’ll spend a lot of time inspecting houses. Exteriors make up another large portion.

Starting and Running a Business

Marketing is a part of any profitable business, and we’ve got you covered there, too. With two modules in marketing, you’ll learn trade secrets on not just who you should market your business to, but how to go about it in the most effective way for the home inspection industry.

The better your training, the more you have to offer customers.

Plenty of Extras

Hard work gets your dream off the ground, and it’s worth every minute.

Starting your own business opens a lot of possibilities, but it also takes a lot of know-how. You’ll make your own hours, at least for the most part, and take on as much or as little work as you like. And for that part to function like it should, you need a strong underpinning; the bones of your business.

If you’ve never run a business before, the learning curve can look pretty steep. Which forms do you need? And how often should you pay taxes? There’s so much to answer. But as long as you take it one step at a time, you’ll have a great framework to support all of the home inspections yet to come.

Here are 3 strategies that can help you get off to the strongest start possible:

#1: Take an SBA Class

SBA’s course offerings include understanding your customer (your target market), and how to improve your sales skills. You can also take courses on market research, taxes and successful pricing models. And there are next-level courses once your business is established and you’re ready to work on growing it.

#2: Establish Your Business

Before you can get out there and inspect homes, you’ll need an established business. It’s not as intimidating as it sounds, but you will need to go through a few specific processes. The SBA recommends these 10 steps for every new business owner, although some may not apply to you:

If all of these seem overwhelming, the SBA can help with that, too. Check out their web page about starting a business for host of links to helpful information about each of their recommended steps.

Never miss an opportunity for networking.

#3: Get your Marketing and Advertising Feet Wet

You probably won’t have a storefront, so you can’t count on walk-in business the way that a new retail shop might. Home inspections need leads, and Entrepreneur magazine stresses the need for marketing and advertising from day-1.You’ll probably get some business from buyers who found your name online, but leads are what make the home inspection world go round.

Probably the most important part of starting your new home inspection business is to keep learning. No matter which phase of business that you’re focusing on, learn everything that you can about it.

Read blogs like this one, and those dedicated to entrepreneurship in general. That’s how you’ll gain efficient processes, stay up with the times, and be competitive among all of the other home inspectors already working out there. And once you join an association, go to the meetings and conferences. The value of networking can’t be overstated.

Starting a new business isn’t easy, but it doesn’t have to be overwhelming, either. Lay out your plan in advance, and you’ll have a guide to follow until you’re ready to take on your first inspection. Before you know it, you’ll be on your way with all of the complicated stuff behind you.

Who is looking at your house? Hopefully it’s an inspector and an appraiser.

There’s something about an industry-smart professional that can put people at ease. Your customers probably don’t know a lot about the differences between an inspection and an appraisal. To them, an appraisal might appear to be enough, but you know why your work is so important.

Question is, do you know what an appraisal is all about? The ability to answer those questions can breed a lot of goodwill and put your customers at ease. Here’s what you need to know about how inspections and appraisals are similar, how they’re different, and why they both matter.

Inspectors have the opportunity to create a lot of goodwill, which can lead to referrals.

Who Orders Appraisals and Inspections

Before a lender loans money to a borrower on a home mortgage, they want to know whether the house is worth it. The house itself is collateral for the loan, so it should be worth at least what the buyer is borrowing to protect the lender’s interest. For that reason, Bank of America says lenders require an appraisal for all financed home sales.

Unlike inspections, which the buyer orders or not if he chooses, the lender is usually the one who orders the appraisal. Buyers usually don’t have a say in who appraises the property, but there might be some room for negotiating that point with the lender. If an appraisal comes back too low, the borrower can request a new appraisal from a different source.

Who Pays for These Services

Lucky buyers, they foot the bill for everything. Even though the lender orders the appraisal and uses the information for their own interests, the buyer is responsible for paying the appraiser’s fee. This is usually one of the many costs that are settled up at the closing table. And if the buyer orders a new appraisal, they’ll pay the bill for both.

This is different from an inspection because you’ll be paid before closing. Your fees are unrelated to the financing of a home or any of the lender’s dealings. The buyer usually pays you up front, although you’re free to set your own payment requirements.

What Appraisals and Inspections Evaluate

The sole purpose of an appraisal is to determine whether or not it’s good business for a lender to finance it for the buyer. A lot of things factor into that. The appraiser will check the values of comparable properties in the area (usually called “comps”), look at data from recent sales nearby, and compare the house in question to those around it. She’ll also consider the age of the house and perform a walk-through to note its condition, plus take photos to document her findings for the lender.

Unlike an appraiser, your inspections are a hands-on examination of the whole house. An appraiser will probably spot major defects, such as a hole in the roof or broken windows. But Quicken Loans Zing suggests that she probably won’t know whether the breaker box is safe or if the furnace works at all. That is the biggest selling point for inspections.

Many buyers think that if an appraisal is required and the appraiser’s job is to evaluate the house, what else could they possibly need? For a layman, that’s a logical mindset. But you know the difference. An appraiser works for the lender and is more interested in overall home value. You work for the buyer, and you have the skills to find expensive and dangerous defects.

If the phone rings and it’s unhappy news, your good practices and planning can protect you against financial loss.

The question asked which are the top issues that home inspectors often overlook, and also what are the top issues that result in a claim against the inspector. Because there’s a lot more data to back up the volume of claims, that’s the portion of the question that was answered first.

Two Issues Consistently Result in More Claims

Of all of the issues that a home inspector might worry about, Bob Pearson, executive director of Allen Insurance Group, says that leaky roofs and wet basements are by and large the most common. So much so that no other issue, whether an oversight or otherwise, seems to come close.

The reasoning behind the frequency of claims for roofs and basements probably deals with cost, according to Pearson. If a roof goes bad, the customer, who is by then the homeowner, faces an expensive replacement cost. The average roof sets the homeowner back about $10,000 or more. Wet basements aren’t necessarily as expensive to mitigate, but they are easy to claim as an oversight. That’s especially true if the seller made some quick updates using primer and sealer to block old water stains.

Surprisingly, in Pearson’s experience, most claims don’t arise because the inspector failed to report a defective roof or wet basement. More often, the inspector did list the defect in the report, but the homeowner attempted to get the repair cost offset after the fact through the inspector’s Errors and Omissions insurance. With a good report, the claim doesn’t have as good a chance of succeeding.

Some Surprising Items Rarely Result Claims

According to Pearson, some items that inspectors might expect to result in a claim rarely do. Electrical issues are one of those. Homeowners almost never complain about an electrical problem. HVAC problems sometimes show up in claims, but the resulting payouts are usually small. But that’s reasonable, considering that replacement of a typical furnace is no more than about $3k, and an air conditioning unit is less.

Plumbing issues show up more often than electrical and HVAC, and those are tricky for an inspector to navigate. Where some leaks and other defects are obvious, a leak in the shower pan might not be. If there’s tile on the floor and there’s no indication of a leak under the floor, there’s no way for an inspector to know that a minor leak exists. But over time, a small amount of water can lead to major damage.

Sometimes working with an unhappy customer can help avoid an official claim.

Protecting Yourself is the Best Advice

The other way for an inspector to protect himself is through photographic evidence. Take photos of every defect, and submit those images with the report. But also, take photos of the whole house, including every wall, the floors and the ceilings in every room. If a claim arises in the future, photos serve as backup. If a customer says that a leak existed and the inspector didn’t spot it, photos will reveal the condition of the area at the time of the inspection. And aside from the cost of a storage device, such as a thumb drive, images cost nothing.

Preins reserved the question about common home inspector oversights for last. He explained that in his experience, there really aren’t any. Most inspectors will overlook something at one time or another. And some inspectors have a lot more claims against them than others. But there are no areas in a home that inspectors, in general, seem to ignore time and time again.

There’s a risk and reward with any career, especially when you start your own business. In home inspecting, the rewards are being your own boss, making your own hours, and offering help to customers who need it.

On the other side of that coin, the biggest risk is a claim against you, whether or not it’s meritorious. But if you follow your training, that’s not as likely to happen as you might think.