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So you decided that you want to be a home inspector and start your own home inspection company.  One of the first questions that should come to mind is how much is it going to cost me to be able to start and run this business. There are quite a number of factors that come into play that need to be addressed and prepared for. Some of the expenses associated with a home inspection business may not all be necessary at the onset and may be able to be put off for a short period of time. However, many of these areas are also very important and do need to be addressed in fairly quick order.

Home Inspector Licensing Fees

Before you can become a home inspector, you may need to become licensed in your particular state. State license and requirements vary from: 

    • no license required to very strict requirements
    • An approved pre-licensing course may be required
    • an exam may need to be passed to achieve the license. 

In states where licensing is NOT a requirement, it is highly recommended that the home inspector candidate become a member of one of the national home inspection associations and pass their association entry requirements.

The cost of becoming licensed in a licensed state can vary significantly.  On the low end of this commitment, to take a pre-licensing course, it is probably going to cost in the neighborhood of $1500-$2500. The application and testing for state licensing may run several hundred additional dollars.

Home Inspector Association Memberships Fees

As a home inspector, it is very important for you to be a member of a local, state and/or national home inspector association. Home inspector associations typically have minimum entry requirements and provide some bit of expertise and experience. National home inspector associations typically require a knowledge based entry test.  This can help you establish your credibility as a home inspector.  

Local & State Home Inspector Associations typically have monthly meetings and yearly conventions.  Typically, there is a monthly guest speaker specializing in an area of interest to home inspectors.  

National home inspector associations typically have yearly conventions offering continuing educational classes, vendor introductions pertinent to the home inspection industry and home inspector networking.

Typically state, local & national home inspector associations have yearly membership fees.  Typically membership fees can run from $150 -$250 for state & local, while membership fees for national association membership typically runs $500-$1000 yearly.

Realtor Association Fees

In addition to home inspector associations, it is recommended that you become a member of the local realtor association in your city/state. 

A good portion of your referrals for home inspections typically are a direct result of your relationships with real estate agents.  As a member of the realtor association, you can participate in their meetings, vendor fairs, and give short presentations about your home inspection expertise and services.

Getting referrals from real estate agents is more easily done when you are a member of the local real estate association and participate in their activities. 

Typically a home inspector is granted membership into the realtor association as an associate or secondary level membership. 

Typical membership fees for local realtor associations can vary widely but it is not unusual for it to be in the range of $200 to $400 per year.

MLS Electronic Supra Key Fees

Once you become a member of your local realtor association, you can be eligible to receive and use the multiple listing service electronic supra key access.  Electronic supra key access can allow a home inspector access into homes which are for sale and into homes that you will be inspecting. 

There are several regulations associated with the use of this electronic supra key access that need to be followed. The cost of supra key access may run from $200 to $300 per year.

Business Entity Start Up Costs

When you start any business, there are costs associated with establishing the business entity.  Also you will need the services of professionals such as an attorney, an accountant, office staff, etc. 

Typically, doing business as a home inspector, you do NOT want to set up your business as a sole proprietor business entity.   You want to have some protection by the use of some type of corporation whether it be an LLC or other type of corporation. This is where your attorney and tax accountant can education you on the advantages and disadvantages of different corporation entities. 

Typically, set up this type of entity with your state will cost between $150 and $250 per year plus any professional fees.

Home Inspection Insurance Coverage Costs

Another business expense, which is extremely important, is the need for insurance coverage. Typical insurance for a home inspector consist of errors & omission insurance and general liability insurance. 

Errors & omissions insurance coverage can help to protect you against claims, that, one, you did not perform your inspection in a proper fashion or that, two, a particular issue(s) was overlooked.  

General liability insurance coverage can protect you from a variety of claims including bodily injury, property damage, personal injury and other claims that can arise during the performance of your home inspections and other home inspection business operations.  

Some states with licensing requirements actually require both of these types of insurance coverage. Many times proof of insurance coverage is required at license renewal. 

Insurance can be purchased per each individual inspection or on an annual basis. 

One particularly easy way to get insurance coverage is to go with a company that offers insurance per home inspection. At last check, I think some companies were offering the insurance coverage for a fee of $15 per inspection. You may choose this coverage at startup. However, when you began doing a large number of home inspections per year,  paying for insurance coverage per home inspection can be very expensive. For example $15 per inspection times 400 inspections is $6000 annually.

Another method of securing insurance coverage is to choose a year-long or annual claims made policy that will cover however many inspections you do during a year. The cost of this type of coverage is dependent upon your length in home inspection business, expertise and any past errors and omissions claims which have been made against your home inspection company. Typical yearly cost for year-long claims coverage may range from $2000-$5000. The cost of year-long claims coverage can vary widely depending on services your home inspection company offers, coverage amounts, and your choice of deductible fees.

Attorney Fees

Attorney representation is necessary when you are getting into any business. Getting an attorney that specializes in home inspection industry with its needed contracts or agreements and types of claims that can be brought against a home inspector is in your best interest. It’s really important to find an attorney that is familiar with and experienced in the home inspection industry.

Hopefully this is not needed for some type of claim settlement but it is necessary to have an attorney in your state review your contracts or agreements and review the way your business entity has been set up. 

From time to time throughout the year, additional consultation with your attorney may become necessary. Attorneys do not come cheap, so it is advisable to shop around and secure the services of an attorney which is very familiar with the home inspection business as the home inspection business is very unique from a legal standpoint.

Accountant Fees

Last but not least, consider the services of an accountant especially a tax accountant.  

Having your taxes done by certified public accountant lends credence to your tax filing and can certainly help to reduce potential interactions with the Internal Revenue Service. 

Service of an accountant also helps to ensure that you are properly recording expenses and income throughout the year. The cost of an accountant can vary widely depending on their level of service, size of the firm and services desired. It is recommended that you shop around to find an accountant which is in tune with the needs of a home inspection service and small business needs in general.

Sometimes your accountant will recommend accounting software where you enter your expenses and income on a daily or regular basis.  

Setting up your business correctly in the beginning can save lots of time and work in the future.  Remember, in the beginning days of your business, you have the time to make these decisions, set up these important systems,  learn the necessary skill sets & incorporate these systems to your daily routine.  When you are busy with a full schedule, you will not have time to set up these systems, learn the skills or add these systems to your daily or weekly routine.

The above expenses are primary expenses which are necessary just to get your licensing and company off of the ground. The above expenses do not include any equipment necessary to actually complete home inspections.

Home Inspection Equipment Costs

While the home inspection business does not require a tremendous amount of equipment in order to become established, it does take a variety of smaller pieces which need to be evaluated and put into place in order to allow you to do a quality inspection in a timely fashion, such as vehicle costs, cell phone costs & fees, home inspection reporting system software, home inspector tools, phone answering fees, scheduling software fees, credit card processing, website fees, marketing & lead generation fees & startup living expenses, etc.

Vehicle Costs

Traveling is a big portion of your home inspection workday.

in order to do home inspections, you will be potentially traveling from one side of your city to the other side in the same day. In order to get from one inspection to the next, you need to have an always reliable vehicle that is capable of carrying the little bit of equipment that is necessary. Typically the biggest piece of equipment that is needed is some type of ladder. 

Most home inspectors will utilize some sort of pickup truck as their vehicle of choice. A number of other home inspectors will also use some type of SUV to carry the equipment. Both SUVs and small pickup trucks work well.  So the choice is yours. 

That being said your vehicle does need to present a professional appearance and needs to be always reliable and kept always clean inside and out. A battered older vehicle that may come cheap to you will not provide any level of reputable service in the eyes of your clients and referral sources. You only have one chance to make a first impression.

The cost of a vehicle can vary widely depending on whether you buy new or used and at what level of accessories you deem are necessary. 

If you already have a suitable vehicle you are one step ahead of the game. 

Vehicles can be purchased or leased. One thing to think about is that it is very easy to drive 25,000 to 30,000 miles annually. Leased options typically milage restrictions, making this choice less desirable once your schedule is full.  Run the numbers and include the cost of payments, tax deductions, gas, miles per gallon and maintenance to see which option and type of vehicle provides the best deal for you.  Average cost of a vehicle could run $15,000 to $40,000.

Cell Phone Costs & Fees

A cell phone is a necessary piece of equipment that you will be utilizing in your home inspection business. Some home inspection reporting software will utilize a cell phone to record home inspection findings, pictures etc. Scheduling Software typically will have an app for your cell phone for your convenience.  Oftentimes, a home inspector’s office is in his vehicle and his cell phone is his computer.  Typically real estate agents and your clients will need quick access to you 24/7 making a cell phone, preferably a smart phone.

Even if you are not using this type of reporting software, the cell phone is necessary in order to get directions, provide GPS service, talk to clients and emergency type of situations.  

Cell phone service costs can be dependent upon your local area, local providers and data requirements. Typical cell phone fees may run $50-$200 per month.

Inspection Reporting Software Fees

One key and necessary piece of equipment that you will need to complete professional home inspection reports is some type of inspection reporting software. The days of old handwritten checklist for doing home inspections are no longer viewed as professional work settled by most clients in real state referral sources. There are dozens and dozens of suppliers of home inspection reporting software. 

Each reporting system has its own benefits, ease-of-use and ease of manipulating inspection notes. There are a number of fairly large long time established home inspection company reporting software. And there are some smaller lesser-known companies. The choice of inspection software is highly personalized and it is one of the harder decisions to make. You will spend hours and hours working with the software so you want to select a software system that is easy for you to utilize to provide responsive reports. 

Also consider what the report would look like and how helpful the report would be to your client.  The report will represent you, your knowledge, your expertise, ie your reputation.  How easy will your client be able to understand the findings?  The home inspection report can greatly contribute to the continual growth of your home inspection company.

It is recommended that you review a number of inspection reporting programs to gain some knowledge on what you would like your program to do and how easily it can accomplish what you need. 

The cost of home inspection software can vary widely. Some software companies will allow you to use their software on a per report basis. Other software companies will allow you to outright purchase the software that you can use as much and as long as you want. Still other software companies may require you to lease the software at a monthly rate. 

Initial rates of a per inspection software may run $15-$20 per report. Outright purchase of home inspection software may run between $700 and $1500. Monthly leases of software can range from $70 per month to $100 or more per month.

Inspection Equipment Costs

There are a number of small items which are necessary in order to conduct a proper home inspection.

This type of equipment includes ladder(s), flashlight(s), binoculars, Screwdriver(s), electrical outlet tester, camera, backup camera, storage devices for pictures, videos, audio recordings taken at the property site, crawlspace gear (coveralls, probes, masks, gloves, boots), infrared thermometer, digital voice recorder, note taking device, tape measure, tool bags/pouches and other assorted small tools that you will find necessary as you go into business.  

You may find that some inspection training schools or national associations may have put together basic toolkits that may be helpful. It is worth looking into these as a particular starting point.  In order to have the bare necessities of equipment that is necessary the initial cost may run from $500-$1500.

You’ll need a way to organize these tools in your vehicle and your office.  You will also need to create a charging station in your office to charge any tools and batteries that need frequent charging.

Business Operating Requirements

Phone Answering Service Fees

initially, when starting your home inspection business, you may be answering the phone yourself. Typically a new home inspector will have minimal number of inspections and will have the time available to answer the phone. As your reputation grows and the demand for your services increases, answering the phone is a responsibility that needs to be directed to another source. It is really difficult to be in a crawlspace when a potential client phones to ask a lot of questions about what you do, availability and fees. 

There are a number of phone answering services which are particular to the home inspection industry.  Utilizing one of these services can provide professional interactions with potential clients and relieve you of the day-to-day strain of answering the phone. Typically these types of services will charge a flat monthly fee and a per inspection charge of $25-$35 per inspection. Since, whoever answers the phone is your potential clients first contact with your company, it is very important to utilize a firm that is very professional, very eloquent, kind and knowledgeable about your home inspection company & the services your home inspection company provides.

The other option for answering the phone is to actually hire someone to answer the phone directly for your company. This can be a more expensive proposition than answering service companies, however, there would be consistency with clients always speaking with the same person. Many home inspectors will utilize their wives to do this purpose if they are available. Another option is to find a new mother, young adult or retired adult who has some time during the day that could be devoted to answering of your company’s phones at least part-time.

Appointment Scheduling Services Fees

Whenever your phone rings and a client wishes to book or schedule an inspection, there is a lot of information that needs to be collected, ie the client, the particular property be inspected, timing and cost of the inspection and more.  The best way to keep track of all this information and the availability on your inspection calendar is to utilize an online inspection scheduling system. 

A scheduling software system allows you to input all that information and data directly into your appointment calendar. Scheduling software typically will also send out detailed emails to the clients, the sellers real estate agents, reminders, and more.  Typically, the scheduling software system will keep track of payments as well.  This is a real time-saving service and presents a very consistent and professional look to your clients.

Often, an online scheduling version is available as well where your clients can schedule their inspections online saving you time and money.

Typically the cost of utilizing a scheduling software service is approximately four dollars per inspection. Costs decrease with the quantity of inspections. Typically, monthly costs can run from $200-$400 a month.

Credit Card Payment Processing Fees

Most home inspection services fees will be paid through the use of a credit card. This is convenient payment method for clients and better ensures actual collection of payment into your company’s banking account.  Most credible professional businesses all offer credit card payment. Most clients will expect you to offer credit card payment as an option.

The cost of processing credit cards can range from 2% to 3 ½% of the transaction amount. This can add up to a substantial amount of money.  However, it is well worth the cost due to the simplification of collecting fees.  

Monthly fees can range from $150-$300 for approximately $10,000 in monthly transactions.  It is possible to shop around for different credit card processors as there may be lower fees involved.

Website Fees

In today’s environment, it is absolutely crucial for your home inspection company to have a good, functional website presence on the internet. Many purchasing decisions these days are made with an initial online search. Your website can help your potential clients to commit to using your services by explaining your services, providing testimonials, linking to other resources, scheduling their appointments online, paying for their inspection, and viewing their home inspection report online and much more.

The website should be professionally done and must allow positive interaction with a potential client.  Also the home inspection website must be mobile friendly since many  searches are done on mobile phones. The website will also need to be properly SEO optimized so that your information will appear organically at or very near the top of the search list when potential clients search for a home inspector in your area.

If you are somewhat savvy with computer technology and website graphics you can successfully create and maintain your website yourself or within your company as there are multiple website builder programs that can assist you. 

Regardless of who built your website, it must looked professional in nature.  Cost of a website can run from hundred dollars for doing it yourself to $1200-$5000 for professional web marketing company to produce and maintain.

Marketing Costs & Lead Generation Fees

Marketing is the engine that propels the home inspection company to maintain a full schedule of home inspections.  Marketing needs to be done in an efficient fashion whether it be online marketing such as Google ads or Facebook ads or good old-fashioned printed flyers and candy bowl set realtor’s offices. Marketing needs to be targeted to those people who may use your services and must be consistent with repeated follow-up contacts. When you’re just starting out and there is little money coming in, then marketing expenses may be less. It is recommended that you spend as much money as you can budget on marketing to produced faster results to build your income. As a home inspector just starting out it would not be unreasonable to expect you to spend approximately $200 per month on marketing materials and efforts.

Start Up Living Expenses

In starting up a new home inspection business, there will be the need for a sum of money that you can draw on to pay yourself an income even when the income being produced by the company does not meet your basic needs. A good recommendation when starting out would be to have approximately six months worth of living expenses that can be drawn upon to tide you over until the business actually begins to take off and produce sufficient income. The dollar value associated with this is greatly dependent on your lifestyle, living conditions and location.

After reading this article you may be intimidated and overwhelmed by all of the startup cost potentially necessary to grow your business. This is not an uncommon feeling. 

It’s better to be prepared.  

Oftentimes, a home inspector will have money to get the company going but not have enough monetary living expense reserves to carry himself and his family through until the business actually provides the needed monthly and yearly income amount. 

Many new home inspectors fail to take this needed monetary reserve seriously enough. Often, a new home inspector will mistakenly think, “oh I can do it cheaper than that” or “I can do it better”.  Unfortunately, this attitude never gives the business the opportunity to actually get to the point where it’s making a livable income.