March, 2004
Feature
Inspection News and Views from the American Society of Home Inspectors



News from NAR®

EDITED BY ASHI STAFF

NAR® study includes home inspection statistics

Inspection percentages rise
What percent of homebuyers purchase a home inspection? Eighty-two percent, according to the recent National Association of Realtors® 2003 Survey of Real Estate Services. In comparison to a study in 2001 co-produced by ASHI and NAR, the percentage of home inspections has increased five percent.

Responses to the most recent survey came from 2,703 recent homebuyers. The data vary by region of the United States and by the age of the home. Only 66 percent of new construction homebuyers had a home inspection. This is a growing market and an area of opportunity for ASHI inspectors (see the January and February 2004 Reporter articles on new construction inspections). If the home was ten years old or less, 74 percent of homebuyers purchased a home inspection versus a whopping 87 percent of home inspections purchased for homes that were 11 years old or older.

Regionally, the South led with total of 84 percent home inspection with home purchase. The West followed with 82, the Northeast came in at 81 percent, and the Midwest came in last at 79 percent.

According to the study, between nine and eleven percent of home purchases (varying with the age of the home) were delayed because of conditions uncovered during the home inspection.

Internet factor
Internet usage appears to play a role in home inspection awareness. Buyers who used the Internet most intensively were more likely to use the services of a home inspector. Eighty-seven percent of respondents who used the Internet “a lot” purchased home inspections, while 75 percent of respondents who used the Internet “not at all” had a home inspection. Falling in the middle, 83 percent who used the Internet “a little” had home inspections. The reason for this is not discernable from the data, but it’s clear that the Internet makes a big impact.

Choosing a home inspector
Fifty-one percent of buyers indicated that the main reason they chose a particular home inspector was real estate agent recommendation. This is a major difference from the 2001 study, which showed 69 percent of homebuyers relied on real estate agents for a home inspector recommendation. First-time buyers remained slightly less likely (49 percent) to use an agent’s recommendation than repeat buyers (53 percent). Another interesting comparison of data from the new study shows that while 51 percent of buyers used real estate agent recommendations, 78 percent of real estate agents made home inspector recommendations.

Regardless of how buyers chose their home inspectors, only 55 percent would “definitely recommend” that inspector, while 28 percent of buyers would “possibly” recommend the services of the home inspector they used (see graph below).

Environmental hazards
Lead-based paint led the way in environmental testing, with 22 percent of all homes being tested. Age of the home played a big role, with 33 percent of homes 50 years and older tested for lead-based paint. Regional differences were significant with radon testing, with 38 percent in the Northeast, 23 percent in the Midwest, 13 percent in the South and 12 percent in the West.

Termite/insect inspections
Termite and/or insect inspections were performed nationally on 69 percent of all home purchases. Regionally, the South led the way with 80 percent of homes being inspected for insects. Other regions ranged from 58-62 percent.

Realtor® Membership profileD

Newcomers entering the real estate industry accounted for three-fourths of a large increase in membership of the National Association of Realtors® during last year, according to a NAR survey.

NAR Chief Economist David Lereah said, “NAR has added 102,000 members in the last year for a total of 962,000 – a record that reflects the historic level of home sales while other sectors of the economy experienced weakness,” he said. “The survey shows eight percent of NAR members are newcomers to the industry, which accounts for 77,000 of our new members. An additional 25,000 practitioners were previously licensed but decided to join the Realtor® family.”

An additional five percent of NAR members, about 48,000, have been in the business for one to two years. The typical member has been in the business for 13 years, with a median of eight years for sales agents and 17 years for brokers.
For the first time, a majority of real estate brokers are women—52 percent—while women continue to dominate full-time sales agents at 54 percent.

Typical Realtor® snapshot

While the Realtor® universe is growing in diversity, the survey shows the typical member is a 51-year-old married female with a gross personal income of $52,200, who works 40 hours a week and often communicates with clients by e-mail.

Typical NAR members are agents who are affiliated with an independently owned, nonfranchised firm. They complete 13 transaction sides per year, equivalent to 6.5 full sales transactions. More than one out of four works as a member of a team, while 21 percent have personal assistants. For four out of five, the primary business activity is residential brokerage.

Half of all Realtors® practice both buyer agency and seller agency, with disclosed dual agency for in-company transactions; 73 percent of members are compensated by a percentage of commission split.

Four-out-of-five Realtors® frequently use e-mail for business purposes, 50 percent use a digital camera and 70 percent have a home office. “There’s been continued growth in the use of technology—46 percent of our members have a personal Web site, up from 43 percent in 2001, in addition to 87 percent of member firms, up from 82 percent two years ago,” Lereah said. Also, 84 percent of members place their listings on realtor.com, up from 68 percent in 2001; and 69 percent place listings on a local Realtor® association Web site.

Synthetic stucco again
Since the 1980s, the synthetic stucco or exterior insulation finish systems (EIFS) controversy has raged. Improper installation of EIFS (pronounced “eefs”) and/or faulty EIFS products created homes that literally rotted away while homeowners had no idea what was happening. Trapped moisture was the culprit. Unlike other systems that will develop leaks and show evidence of a problem, the EIFS were prone to trap water and leave no telltale signs.

In the January 2004 issue of Realtor®, the issue was taken up again, with the focus on the liability of real estate brokers and agents. At issue is the risk, mostly spared real estate professionals up until now, that may be looming. Why now? According to the article by Gary W. Jackson, the time limits for litigation against manufacturers, builders and subcontractors are expiring, which means that homeowners may be looking elsewhere for liable parties. Second, many EIFS homes are changing hands from initial owners to subsequent buyers. While the obvious defense for a home inspector is that the defects would not be apparent through a visible inspection, it’s better to cover the bases and prevent future misunderstandings. Recommending an EIFS inspection or providing the client with materials on EIFS are two ways to avoid problems. EIFS will continue to be an issue for a long time.