79: How To Do Home Inspections Right, Kathleen Kuhn, Housemaster

Welcome to win, the Women Investing Network, the podcast where you can learn from successful entrepreneurs, business leaders and real estate investors who are winning in business and life. Learning from others is the fastest way to grow your skills, gain knowledge and avoid pitfalls so you can win.

It's my pleasure to welcome Kathleen Kuhn. She is president and CEO of Hausemaster. And we're going to talk about that all important component of your investment portfolio and that is home inspections. Always get a home inspection. Kathleen, welcome. Where are you located?

We are headquartered in New Jersey.

Fantastic. So you've got about 300 plus franchise units around the country. You're in 47 states. You've seen a lot of inspections being in the business for the past four years, 40 years or 35 years, I should say for you, 40 for the company. What are some of the most common items that people will see on home inspections? Most common problems the most common problems.

Really relate to water or moisture. So we find that whether it's a roofing issue, whether it's a plumbing issue, but basically houses and water don't mix. So anything to do with water penetration generally is the most common and we find it regularly in many houses, regardless of age, although age is often a factor. And it can be a result of, as I said, moisture or penetration, which really are two different things. For example, you could have a roofing problem that is a result of a moisture issue because of poor ventilation, or you could have a roofing problem because there's water seeping into the roof or a flashing problem. So water is definitely the number one thing that is the cause of the most common problems we find.

Now are there certain items on inspection reports that tend to look more serious or more ominous than they really are? And then conversely, are there some items that don't look like too big a deal, but they really are a big deal?

Well, that's a great question and I think it kind of goes back to water penetration. Water penetration or a roof leak sounds very, very scary when in reality 75% of all roof leaks are actually a flashing leak. And a flashing is a angled barri anywhere where you're going to find a protrusion in the roof or a whole roof. So it's you're going to find a flashing around a chimney. You're going to find a flashing where the in the valley where the garage may meet the roof and they wear and if they're not properly maintained and they're subject to penetration, as you can imagine, and those flashings wear and they.

Will cause leakage Is the flashing always that piece of metal that you see around the chimney, where the chimney meets the roof or where a venture meets the roof? You know, where there's a vent coming out of the roof and you've got this metal flashing, Is it always metal?

Well, it's metal, but it's also coated. Very, very often it's coated and sealed.

So.

Because metal will deteriorate, but so it's often sealed, and it needs to be sealed or it needs to be evaluated on a relatively regular basis. The flashing do. And most homeowners just don't do that. And certainly if the home has been vacant for a while, it's not going to get that kind of attention. So while it may look really bad because the roof seems to be leaking in several areas, but very possibly it's really not the roof that's the problem. It's really replacing the flashings or fixing the flashings. And that's a much less expensive undertaking than a major roof repair.

But it seems serious. When someone gets the report, they're likely to freak out and say, oh, my God, the roof is leaking. I can't buy this property. I'm scared.

Exactly. Well, and I think inversely, water in the basement. People see water in the basement and they. They get worried about mold, and they get worried about all these things. And very often, not always, but very often, it could be an easy fix, such as grading the property away from the foundation or fixing gutters and downspouts. So drainage away from the foundation can. Again, if it's not occurring, it can cause water penetration. And people think, oh, the basement's wet. I'm going to have all these issues. But very possibly it's an easy fix. Again, grading around the foundation and making sure your gutters and downspouts are operating properly, and fixing those can be relatively easy.

Now, are you actually, or were you actually a home inspector yourself? I know you were originally a franchisee of the company, but were you trained in home inspections personally?

Well, I was trained, but no, I never did home inspections. I hired my inspectors, but I had to manage my inspectors. Obviously.

Got it. And when you managed your inspectors directly, as opposed to being at the corporate level, where were you located? Was that also New Jersey?

No, actually, I was in Westchester County, New York.

Okay, got it. But similar climate then. Basically, yeah. So what I'm getting at by that question is, since our investors are investing in many, many parts of the country, are there certain geographies that sort of get off more easily with fewer problems than others? And I can Kind of think of some. In some areas you have tornadoes. In some areas you have hurricanes. In some you have earthquakes. In some you have lots of rain. In some it's very dry. You know, there's all these. In some areas you have big trees, and those can be problematic. You know, there's all. In some you have more termites, some you have less termites. You know, you have all these issues. Is there an ideal location?

Wow, that's a tough question. I don't know if there's an ideal location.

I've tried to answer that question myself over the years and I haven't figured it out.

I mean, certainly, certainly the construction in some parts of the country, I would say the Southeast, some of the Southwest, again, not as prone to rain, they have their own other issues. But the construction in those areas, some of the newer construction and some of the older construction is, I would say, easy to maintain and repair versus older homes in the Northeast or that have a little bit more. Number one, they're older. That's a factor. At the end of the day, age is a factor in the condition of the home. The older the house, unless it's been fully renovated, is going to play a role. So a house that's newer and if again, you look at the construction over the last 10 years in the Southeast and many areas in the Southwest, the houses are going to be newer and the construction is more straightforward very often. So that does make repairs and issues less prevalent.

Okay, now that's the next question I was going to ask you. Is there a certain style of home construction and it doesn't matter if it's new or old? I mean, there are old houses that are like bulletproof and new houses that are not that well built. But the materials used obviously vary quite a bit over the years. Are there certain construction styles, one over the other, that you like better or worse than others?

Well, it's funny because at Housemaster, it's not up to us to judge what's a good or bad house, right. Or what somebody likes, somebody else doesn't like. But I would say that certainly when you get into some of the stone construction, that's probably better than in areas particularly that are prone to termites, for example, than other types of construction. So it really depends on the area. But I would say definitely that that single story slab construction home is again, that's really what I refer to as a pretty straightforward structure.

Now, you don't get worried about that one, though. When the pipe breaks under the slab, you know, I mean, nothing is Perfect.

Yeah.

There's pros and cons to all of them. And when you're doing a, you know, or if you have ductwork, you know, let's just say there's ductwork built into this lab, and you're in an area that that construction is. And you need to treat the house for termite. So that's going to be a bigger issue. If there's no insulin, maybe then it's not as big of a. An issue. So it does. It always depends on the house. Every house is somewhat different. So, yeah, slab construction can be great, but there's definitely some downsides of slab constructions as well and making repairs and such.

Okay, all right. What would you like people to know? You know, what are some of the things that in your business really come up over and over?

Well, I think it's important, too. I think one of the biggest things is the additional services. I think most people understand that they should get a home inspection, and that's going to be all the major elements of the condition of the property. But there's so many other services that Housemaster offers or any professional home inspector offers that really need to be considered, too. And such as. And a lot of these are very regional. So if you're in the Northeast, you want to also get a buried fuel tank evaluation, because if you buy a property and it still has a buried fuel tank or that tank or the area has not, or it has not been properly disposed of, that could be a very big ticket item. And if you are buying a home.

And just for some people that may not have caught that, because you said it kind of quickly, she said buried fuel tank. In other words, a propane tank that's underground. Right. Is that mostly what you're referring to?

Exactly.

Okay.

Mostly more common in the Northeast, Sewer line scoping. So most people don't realize that they are responsible for the sewer line from the house to the street, in the street, municipality takes over. But if there's a problem between the house and the street, that is the homeowner's responsibility. And there's no way you're going to know there's a problem until you have a problem, unless you get a sewer line scope. So doing a sewer line scope is very, very prudent. Anywhere there's sewer lines, which is pretty much just about everywhere along those lines.

How much does that cost?

It can run anywhere from 250 to probably upwards of $450 or more, depending on the area of the country.

So let's talk about cost. And of course, These are just your prices, not everybody's prices. It's a competitive market. There's lots of choices out there. But what do you charge for, you know, generally for the basic home inspection. And then, you know, we'll talk about these add on services. Let's make sure we, we build this correctly. Go ahead. Yeah.

And the prices of home inspections, even just the standard home inspection, vary from area to area. So on average, our average is about $500 for a standard inspection. It might be a little bit lower in some areas. Where maybe in Florida or might be a little bit higher in Westchester, New York. But anywhere between four and five hundred dollars is generally going to be a basic inspection for a home, let's say up to 2,500 square feet.

Okay.

The additional add ons would be a sewer line would be an add on. And that is a comprehensive additional service that requires additional certification and equipment as well as buried fuel tank. Same thing. Another very common give the numbers for.

All of these things.

Okay. So for a sewer line inspection, it can run anywhere from an additional 250 to $450 depending on a buried fuel tank scan, which is just a scan of the property, basically trying to assess whether there is a buried fuel tank. Generally runs between 275 and $350. Again, does vary by area. And I would say another very common inspection or one that we highly recommend. If the home of course has a well in septic system, you need to have those checked out. We do do them in some areas, but in many areas we will just coordinate those for our customers. Septic and well is really vary by area. So I really can't give a price because in some areas.

But first off, listeners, very few of our properties have buried fuel tanks. We don't do much business in the northeast, so that's not an issue. Very few of them have septic or. Well, most of them are connected to utilities. Right. But occasionally that comes up. So go ahead with what you're saying.

So then I would say the other test would be a radon test. And a radon test generally will cost in the range of 150 to $250 if done in conjunction with the standard home inspection. And there's different types of radon tests, but overall that's what it's going to cost. It's going to take a few days to get the results. And that's one of those things that can really put off a buyer if a high level comes up. So it's one of those things that if you know about. It could be easily fixed.

In what areas does radon become an issue?

Well, a lot of people think it's just. That's another Northeast issue. But we see it all over Charlotte, all over North Carolina. I mean, we do tests all over the country, in the Midwest. So it's such an easy test. And if you're selling a home to somebody's moving from an area that has radon, they're going to do a radon test. So although it's more common in some areas, it's generally worth it to do it anywhere.

And there's no mitigation for radon. It's just either there or it's not. You don't fix that?

Oh, no, no.

There's.

It's very easy mitigate.

Okay, what do you do?

It's actually very easy to mitigate radon because radon is really a. It's a gas that. That basically gets caught in the home. So years ago, when our houses were not as tight because they're more airtight now and energy efficient, it's become more of an issue. So radon comes up from the ground and gets trapped in the house and they all. It's very easy to mitigate it because you basically pump it out. So if you purchase a house and you're going to renovate it or you're going to fix it for investment purposes, it's very easy to just install an exterior pipe or a radon mitigation, which is basically a fan and a pipe that goes out from the basement or the lower level.

Okay.

So the time to make that repair is then.

Okay, got it. And the one thing you did not mention yet is re inspections. So if the seller of the property has done a renovation, and sometimes they don't finish everything on the renovation before the buyer buys, you know, we're in a hot market where things are moving quickly even now. And by the way, the date I'm recording this is in the middle of our pandemic. Hopefully this will end soon and as well as it can be expected. And, you know, properties are moving pretty fast. And so a lot of times the seller is not finished with the renovation by the time the buyer does the home inspection. And we always tell buyers they must have the inspector go back, do a re inspection and make sure all of the repairs have been done before they close. Speak to that issue, if you would.

Yeah, that's not an uncommon request. And we have at Housemaster, we. Every customer gets inspection report. It includes digital images, so we're able to Take images of things that were in progress. And then the reinspection report would then document not only writing, but, but visually the repairs that were made. And every customer gets what we call a Housemaster cloud account, which is ideal for investors because all their inspection reports and documents are housed in one online repertoire or that holds all their documents. So it makes it very easy for them to manage their various properties. So that's a big plus. And generally that will run. A re inspection is generally going to run in the $200 range, depending on the size of the house.

Okay. That's fairly expensive, actually, compared to what we've seen. Any. Anything for that. I mean, these are not large houses, by the way. They're just little rental properties.

So again, that would be. But the, the inspector's time, if he's got so many appointments in one day and he's going to take. So some of it has the flexibility. If the, if the investor is very flexible. Well, about when the. When the appointment can be done, that could be a price concession. But if it's going to. And depending on how many repairs that is required, if it's going to take a lot of time, then we're giving up a full inspection appointment.

Okay, so talk to us. Since we brought that up, I want to ask you, I want to make sure we talk about two things. Number one, the use of drones, drone helicopters, in home inspections, and number two, how things have changed given the coronavirus environment. We've heard a lot about appraisers and how they're modifying the way they do business in the midst of the virus outbreak. What about inspectors, home inspectors? What are you doing differently?

Well, we're doing primarily as we're not having as many people attend the inspection. That's number one. And of course, if the inspector is not feeling well, they will cancel and reschedule. We are asking our customers to acknowledge that any attendees to the inspection also don't have any symptoms or have not been tested positively. And then we're taking all the CDC precautions. So mask gloves, washing our hands. We bring sanitizing wipes with us. So we wipe down our tools, we wipe down the counters, we wipe down whatever we touch, as well as use gloves, including our phones. And that's primarily what we're doing. So most of the time, we're asking buyers to either not attend the inspection or not join us on the interior of the inspection. And that's really. That's it. I mean, our inspections, as I said at Housemaster, we include digital images. So the report is Very thorough, well written. We are offering buyers who couldn't be on the inspection a virtual review of that report so that normally we like a buyer along, we can answer all their questions. And so that makes the written report more meaningful since they may not be able to be there on the inspection where then once they get the report, we will review that report with them remotely. So make sure all their questions are answered.

And how about the use of drones?

The use of drones is definitely booming in our industry. It's an ideal tool for multitude of reasons, but certainly houses that you can't access the roof and amazing the quality of images that we get. We even there's software that we use that will actually create a flight plan and it's really spectacular. So in areas like Atlanta and just many areas, Denver, where there's a lot of large roofs and very high roofs that normally would not be able to be inspected can now be inspected.

And do you offer roof certifications? Probably not, right?

It depends on the office. So some offices will offer roof certifications.

Okay. And do you want to explain a little bit about what a roof certification is and any cost associated with it?

Well, it depends on what kind of roof certification you're looking for because there's commercial roof certifications and then there's like FHA or VA roof certifications. So it really depends. I mean, in some areas you just. It's just basically a roof inspection. It really depends on what the purpose of the. Or what exactly the roof certification you're looking for. If it's just a roof inspection, the cost can be under $200. If it's a commercial roof inspection, it's much more involved and requires thermal imaging, et cetera.

Yeah. For commercial property. Okay. Yeah. And we're not dealing with commercial properties very much at all, so. Okay, good. What else should people know? Maybe something I haven't asked you.

Well, I think it's important. What people should know is that when it comes to finding a home inspector, you obviously want somebody you're comfortable with. You want somebody that's got a very detailed report. At Housemaster, we guarantee our inspections, which is very unique. So it's not a third party program, but we stand behind the quality and thoroughness of our inspection and that's really what somebody needs.

In addition, what does guarantee mean?

It means that any of the conditions that we find in the house, if they're anything that's inspected and documented to be in satisfactory condition is we're going to stand behind that for 90 days after closing. So what that means is if you move in. Or if the buyer moves in and their hot water heater.

Or it's an investor. And the tenant moves in.

Or it's an investor. Yeah. And the tenant moves in and their hot water heater fails. And we inspected it and we said it was in satisfactory condition, we would pay up to $1,500 for the repair of that item. So it's really just peace of mind with our investors or our customers that we're going to be as thorough as possible on every inspection.

Okay. What else were you going to say, Kathleen?

The other advantage is the Housemaster cloud. So that's a great tool that in addition to just an online place for all your inspection reports, we have. There's features in that. So, for example, if you're negotiating with the seller, we have a repair list generator tool. You can go right into the inspection report. Right. Pull right from the report online the conditions that you're going to try and negotiate and send that document right off out of the Housemaster cloud. So you're not cutting and pasting and circling and, you know, it just makes negotiations so much smoother and easier.

Okay, that's good to know. Good to know. All right, well, thank you very much for joining us, Kathleen. We appreciate it. And stay safe out there.

All right, you too. Thank you very much.

Thank you so much for listening to the Women Investing Network. Be sure to subscribe, rate and review the show on itunes or the platform of your choice. You can find the show notes and resources for today's episode@womeninvestingnetwork.com remember that guest opinions are their own and information is of general nature, so be sure to consult appropriate tax, legal or other professionals for specific advice.