February, 2012
Feature
Inspection News and Views from the American Society of Home Inspectors



Reducing Risk in the Property Inspection Business: Communication Risks

JOHN B. ELSON

Part 2 of a 2-part series.

Part 1 discussed how to perform an inspection to reduce the risk of a client complaining or filing a claim. Communication can expose inspectors to the same risk or offer the opportunity to lower it.



Communication Risks


This category encompasses verbal and written communication, the general nature of the home inspector's association with interested parties, the collection of information about the property, document retention and other interaction with clients.

 1. Establish a trusting relationship with every client.

Unlike fast-food restaurants, our business is an interpersonally driven service model. As such, it provides inspectors with tremendous advantages. We have the chance get to know about clients' education and their property buying/selling experience. An experienced buyer is different from an inexperienced buyer. This knowledge allows us to present our results with consistency, while tailoring certain comments such as home maintenance advice.

 Because we get to know our clients, we have an opportunity to develop trust. In business, trust is the belief that each party will deliver exactly what he/she stated.

 For example, when you tell your client you will perform an excellent property inspection, performed on time with a written report delivered on time for a fair fee, that's what your client expects.

Trust is an elusive concept. It rests on the summation of the entire business experience. Once someone trusts you, the relationship starts to achieve depth. Focusing on the development of trust with your clients will help you evolve from service provider to trusted advisor.

This evolution will increase referrals to clients' friends and family, while reducing the risk of receiving complaints.

2. Know your environment.

Collect as much information as you can about the client and the seller (or the occupant) of the property you are inspecting. Do not enter a home alone if there is a risk to you of bodily harm or a potential future claim. If you are concerned, ask the real estate agent to accompany you throughout the inspection.

Know ahead of time if there are tenants, because they often are reluctant to leave the home while it is being inspected. I've had to avoid children playing on the floor and personal belongings strewn everywhere, including closets filled to the brim. Occupants who have not owned a home and are unfamiliar with home inspections may be uneasy about the process. These inspections can be riskier and more time-consuming.

If you use an online scheduling system, use the email features to send out the standard memo to the seller's agent, notifying him or her of the inspection and explaining how to prepare the property for inspection. This serves as a reminder of what needs to be done at the property before the inspection takes place, such as having all utilities on or moving personal objects away from the water heater.

A dog that is left on the property is also a very real risk. Not only could the dog become aggressive with you or other parties (such as the prospective buyer's child), but it could bolt out the door during the inspection, leaving you with a big problem.

The same is true of an extra car left in the garage parked directly under an attic scuttle. If you can't get the seller or the seller's agent to move the car out of the garage, disclaim inspecting that attic space. Take photos of the car in the garage and the attic scuttle location and report this to your client. It's not worth taking the risk that your ladder kicks out and falls on the vintage 1956 Thunderbird.

3. Secure signed copies of all agreements.

If you are a client of an online scheduling system partner, your inspection documents are retained online and they are easily accessed and printed at any time. Even so, you may want to retain a hard copy of your client documents. Either way, be certain you have signed documents from the client that are accessible at any time. Signed documents are of great importance in the event of a claim. Provide a copy of these documents to your client at the inspection. This provides your client with an agreed-to scope of the inspection at the time the inspection was conducted.

4. Use a web-based back-up system.

Reports are the lifeblood of your business. If you don't use a scheduling system partner (from which you can send out and retain reports), you should use an online backup system. Without written reports, there is no documentation of the inspection experience. Online web-based systems are useful for backup, i.e., document copies are maintained in a secure location where you can access the document at any time.
I use an online scheduling system and maintain my documents both on a T-drive for archival storage (external high-speed memory drive), as well as online for replicated document storage. I recommend not using the Web as the only means of maintaining copies of your documents, nor would I count on a T-drive as the only means. T-drives are subject to fire/flood damage, breakage or being stolen.

5. Do not provide copies of your inspection report to anyone other than the client without the client's consent.


For ASHI members, distributing a client's report to a third party without the client's approval is a violation of 2.C. of the ASHI Code of Ethics. Whether or not an inspector is a member, distributing the report without permission represents a violation of the public trust placed on us by our clients. You cannot always control what others do with your written inspection reports, but you can control your response to that event.

I simply do not answer questions about an inspection report posed by a different buyer of the property, weeks or months later. I believe it is against our Code of Ethics, opens me up to liability with both my client and the new buyer, and negates the idea that the inspection is a snapshot in time. After all, how do I know the condition of any home after I have left the property?

6. Treat every client consistently.


After thousands of inspections, it will be hard for you to remember what you said to whom. To avoid misunderstandings, cover verbally with your clients the same points that are written on your Inspection Agreement. "Outside the Scope of the Inspection" is an important component of your relationship with every client. It helps you to manage expectations. Consistency is key.

I summarize the following points onsite with every client. Here are a few of the many outside-the-scope-of-the-inspection points listed on my document:

• Adequacy or efficiency of any system or component.

•  Prediction of future events or the life expectancy of any item.

• Concealed conditions that are hidden from view or not in readily accessible areas, such as inside walls, fixtures, etc.

Try NOT to increase your scope with any given client. For example, if you routinely do not inspect irrigation systems (they are outside the standard of most home inspection protocols, including ASHI's), follow that procedure with every client. If you only perform a cursory review or don't do anything at all with irrigation systems, tell the client both in person and in your written report. The key is to document what you have done (and not done). Confusion on the part of your client will result in client frustration. Client frustration can be the catalyst to an expanded complaint or lawsuit.

7. In the event of a complaint, write down everything.

If a client registers a complaint, you'll want to document as much as you can about the specifics, including the date, time, method of contact and your response. You'll also want to secure a copy of the signed inspection agreement, written inspection report, inspection notes and any other information that is relevant. Most states that have an inspector licensure 
act delineate specific requirements for document retention. A conservative view is to retain documents for 5-7 years.

Summary

Communication risks are as varied as the types of property and clients that you serve. All businesses are exposed to risk in one form or another. Like it or not, a large part of your success is based on your ability to effectively manage risk. As the business climate changes, you must be ever-vigilant to stay on top of risk, while still delivering an excellent property inspection.