For HomeTeam Inspection President Adam Long, being a part of the real estate industry for 18 years has been richly rewarding. “At the end of the day, it’s all about helping clients and, especially from a home inspection standpoint, making sure they know what’s going on with their most important purchase,” he says.
As the privately-owned HomeTeam Inspection Service celebrates its 30th year in business, impressively doubling its unit count over the past five years, RISMedia Founder & CEO John Featherston and I sat down with Long to talk about the evolution of the home inspection space and how HomeTeam has set out to change home inspections from a mom-and-pop venture to a professional business.
Maria Patterson: Adam, let’s begin with a bit of retrospective on the home inspection industry itself. In your opinion, what are some of the biggest changes that have occurred over the 30 years you’ve been in business?
Adam Long: Some of the biggest things that have changed, and something that HomeTeam has been at the forefront of, are professionalism and technology. If you go back 30 years, you had a lot of unprofessional home inspectors—not a lot of licensing, not a lot of organizations paying attention to what’s going on. You also had a really low level of technology—people just taking a piece of paper, writing some things down and just handing it to the client.
So over 30 years, a tremendous amount has changed in a relatively young industry. Expectations from clients have changed as well because they’re dramatically more educated than they were. Because the home inspection industry is about 40 years old, a lot of home inspectors are retiring, so a lot of the old guard who maybe are still doing it the old way or maybe haven’t taken on some of those new technologies, are now opening up an opportunity for these more professional, technology-savvy inspectors and inspection companies to fill that gap, which is a benefit, of course, for the consumer and for the agent.
MP: Are we past the pandemic phenomenon where people were forgoing the home inspection to get the deal?
AL: It was crazy. Most people won’t go to a restaurant without checking an online review, but they’ll buy a $400,000 home without getting somebody to just make sure it’s okay. There were two components of that. One was clients waiving the inspection contingency, and the other was people actually waiving the inspection. There was a lot of misunderstanding in the real estate market because those were two completely different things; you can waive the inspection contingency and still have a home inspection prior to the close—you just can’t use it as a bargaining tool. With the number of buyers bidding on a potential property, a lot of agents were encouraging their buyers to waive the inspection contingency because they realized that would increase the likelihood of getting that home. We really educated consumers and REALTORSⓇ during that time to make sure they’re still getting the home inspection, even if they’re waving the inspection contingency.
The market is not as hot as it was before, but since there’s such low inventory, we are hearing in some markets that people are starting to waive inspection contingencies again. People seem a little more educated about it, so we’re hopeful that they will still have the inspection at least.
MP: You mentioned education. What are you doing to really make sure people understand the importance of the home inspection?
AL: It’s hard to educate consumers because you don’t know when they’re going to buy a house, so marketing broadly to all consumers doesn’t make a lot of sense. So we educate the real estate professionals who are involved, making sure they understand they have options, even if they or their client feel that waiving the inspection contingency might be something that improves the offer. Because in reality, if somebody waives the home inspection and a month after they move in, they have a major foundation issue or a major leak that’s going to cost them $30,000, they’re still going to sue everyone. The home inspection is not just for the buyer to be able to manipulate the price or to negotiate repairs, it’s so everybody in the entire transaction knows what’s going on. At the end of the day, if everybody knows the condition of the home, you’re better off in all facets of the sale. No one wants to be the seller who gets away with selling a home that has major issues. If they are, then they’re breaking laws anyway.
We’re looking at educating agents so they understand that the home inspection is critical even if it’s not part of the contingency. And then we’re educating clients who waive those inspection contingencies or don’t have the inspection to have the inspection afterwards. Because if there is something minor that needs to be repaired, often that can turn into something major. And then we’re ensuring that people who are waving a part of the inspection—like the radon test or the air quality test—have those tests done post real estate transaction. We’re educating those clients to do those secondary inspections or even more annualized inspections. Homes change, and if you live there for 10 years, there may be some safety issues that occur. So that’s part of our education that we’re really trying to push. That’s the long game, and it really benefits the clients and REALTORSⓇ.
MP: That really changes the relationship of the home inspector with the REALTORⓇ, right—making it more of a long-term partnership?
AL: That’s how we want people to look at it. We want them to realize that this is a third-party independent inspector that’s looking at the home. We’re not trying to scare somebody out of buying the home they’ve already fallen in love with. We’re just trying to give an independent opinion of the home so that all parties can make the right decisions, the right cost adjustments, et cetera, and move forward so that nobody looks back and says they made the bad decision. You have to educate everybody so they realize we’re all playing together as a team, not the buyer’s agent versus the seller’s agent.
John Featherston: Adam, you mentioned the influence technology has had on the home inspection industry. What have been some of the most significant technological evolutions at HomeTeam?
AL: My background is actually in technology. I came to HomeTeam to manage technology back in 1994, and back then, everybody was still doing inspections on paper, or maybe they had a really heavy laptop. HomeTeam made the decision to implement a brand-new software, which we developed in-house, that allowed home inspectors to take Pocket PCs into the inspection and not only collect the data in a way where the inspection report could be mostly completed by the end of the inspection, but also in a collaborative way, meaning we were the first company to ever develop a software that two inspectors could use at once—because we are HomeTeam Inspection Service—we send out two inspectors.
So we had to develop not only a software to collect that data, but a software where inspectors could collaborate with each other using two or three separate Pocket PCs that would take all the data and put it into one report. That was really life-changing for our franchises because of the amount of time it saved, but also for the clients because they could get their report more quickly and more concisely. That’s when we started sending out reports same-day, and that made a really big impact on clients and real estate agents. That was the first aspect. The second aspect was utilizing a technology that allowed clients and REALTORSⓇ to schedule inspections more quickly.
MP: Why was scheduling an important part of the puzzle?
AL: HomeTeam was very early in giving clients and REALTORSⓇ the ability to book online. Over the years, we developed that into app-based scheduling. And, of course, we also have our own national call center. So now there’s the option to call and book an inspection, go online and book an inspection, or REALTORSⓇ can download the HomeTeam app and book the inspection. That ability to schedule in a much more technological way has really improved over the years. The whole technology and ease of use and speed really goes along well with our model of doing inspections more quickly.
MP: That’s a great competitive differentiator. What other factors really set HomeTeam apart from your competition?
AL: I think there are three factors that set HomeTeam apart. One is the team; HomeTeam is the only one that always sends two inspectors, so that is a big differentiator. Getting to the inspection more quickly—having only a two-day turnaround for an inspection versus a five- or seven- or 10-day turnaround when it’s busy—and then adding in the technology difference. HomeTeam has really doubled down on making sure we’re using the latest and greatest technology in our report writing, in our report delivery and in our scheduling. And then lastly, our professionalism—making sure every home inspection HomeTeam shows up for is in a well-wrapped vehicle and everybody’s wearing HomeTeam attire.
JF: That’s great branding and professionalism…
AL: There’s a world out there of professional home inspections right now that’s replacing a lot of older home inspectors who have been at it for 30-plus years. Part of our success is that we’re ensuring that our franchise owners who have been around for 20 – 25 years are not just walking away and retiring, but that they’re selling their franchise to a new franchise that can step in and not only take over what they’ve done, but expand and make sure they’re implementing all the newest features of HomeTeam.
MP: Is it tough to scale that level of professionalism as HomeTeam expands?
AL: We have doubled in size over the past five years. The way we do that is through our franchise owner selection. We are the only franchise that has designated territories where an individual franchise purchases a territory and that territory is exclusive to that franchise owner. Most franchises have what’s called non-exclusive territories where four or five inspectors could be in the same territory, all competing with each other. That does allow you to sell more franchises, but the exclusive territories allow us to track more professional franchises that are looking at growing a business versus just being a home inspector.
Now there’s nothing wrong with just being a home inspector. There’s a lot of great home inspectors out there that don’t want any employees. But there’s a difference between being a home inspector and having a professional home inspection company. The difference is that when you have multiple inspectors and you have multiple teams, you can offer service above and beyond what a single individual can do because they’re going to not only get maxed out in the number of inspections they can do, but in most cases, they don’t have any employees handling phone calls, scheduling and things like that. They’re doing it all themselves. They may be great, but they can get burned out. So we attract people who are saying, ‘I want to own a home inspection business.’
And that’s where the industry’s changing—instead of just mom-and-pop home inspectors, there are now a lot more professional home inspection companies, and we see that that’s actually going to benefit the industry as a whole.
JF: How do you designate what becomes a new territory—is it based on populations or households?
AL: It’s actually based on owner-occupied households because those are the households that are most likely to be inspected. We also focus on real estate saturation because, of course, a lot of the home inspections are being generated by REALTORⓇ referrals. And so, most of our markets, depending on the size, are going to have between 100,000 and 150,000 owner-occupied households. That allows an owner to expand to multiple teams and service a greater area. If you’re a single home inspector, you’re often getting a very small territory or a territory that’s shared with other home inspectors because they realize the average home inspector can only do a few hundred inspections a year if they’re doing them by themselves. A team of home inspectors can do many more inspections, and we can cross over our teams as well, which really helps us with the high-end and larger homes. HomeTeam is the go-to home inspection company for a lot of luxury homes because we can bring multiple teams of inspectors to the home and get that inspection done in a few hours in a very professional way.
MP: Everything you’re talking about is very impressive, but ultimately, you need to create that relationship with the REALTORⓇ. What are you doing to help connect your inspectors with real estate professionals?
AL: Of course we’re trying to brand from a national standpoint so that REALTORSⓇ are more comfortable and more knowledgeable about the HomeTeam name. But at the end of the day, it really is the franchise owners individually in the local markets, building relationships and showing what we call the HomeTeam difference, because every REALTORⓇ out there has home inspection companies they already utilize. We’re telling our owners to create relationships with real estate professionals in their local areas and find out what their needs are.
In fact, that’s what HomeTeam has always been about: talking to real estate agents and saying, ‘what do you like about the home inspection process and what don’t you like about the home inspection process?’ and then trying to meet those needs. But it is very individualized. You have to create relationships in that local space. At the end of the day, we don’t need 100% of the transactions in a territory. We’re just looking to partner with REALTORSⓇ that see the difference with HomeTeam and say, this is something that I want to recommend to my clients.
JF: What is the biggest challenge facing your franchisees in the next six months?
AL: There are two aspects that we’re dealing with now. Inventory is low. It’s not going to be high anytime soon, at least not in the next six to 12 months. That is our biggest issue because our transactions are primarily contingent on inventory. Because inventory is low, a lot of home inspectors are getting out of the market. The home inspectors who entered the market in the last seven years when things were hot are leaving the market. We’ve seen the same with real estate agents who got into the market.
The second issue, which is also a potential opportunity, is that HomeTeam has the opportunity to connect with the strongest real estate agents as they’re taking up that inventory that is being lost by the smaller, less successful agents who are leaving the market. And the same thing with home inspections. We have the opportunity to grab home inspection marketshare. Once inventory starts to increase and it becomes a true buyer’s market—because it’s always cyclical—then that marketshare is going to expand. So right now we’re really trying to grab those relationships with the strongest REALTORSⓇ, knowing that inventory is going to increase at some point.
MP: And finally, what can we expect in the next six months to a year from HomeTeam?
AL: We’re really focusing on what HomeTeam can implement to add to the consumer experience that is going to be even more beneficial in separating HomeTeam from other home inspection companies. So we’ve been focusing on things such as offering options for clients to pay at close. That’s something that we just introduced in the last quarter. We’ve gotten a lot of great feedback from it. What we’ve introduced is a way for clients, if they choose, to pay their home inspection at closing, at no additional cost to them. And that has given real estate agents an added benefit. It also encourages homeowners to add those really important ancillary inspections because they can pay at closing. We believe we’re going to see a dynamic change in the industry because paying over time in general is becoming more commonplace.
We’re also encouraging our owners to add additional services and make sure everything a client might want to have at the inspection or after the inspection is available to them. We want our clients to realize they can call HomeTeam for a host of services related to home inspections.
Right now, the opportunity is making sure we’re partnering with the strong professional real estate agents who are going to move past this shift in the market and gain marketshare. We’re aligning with them so that when the market does pick back up and transactions go up, HomeTeam is already there to meet those inspection needs aggressively.
MP: There’s a real opportunity right now for building those relationships because it’s all about survival of the fittest.
AL: And that’s why it makes sense to look at home inspections as a business—looking at it as an investment versus just looking at what revenue I’m going to get out of the inspection. Right now, if you look at it as a business and you’re investing into it, you play the long game. And that’s what you do in these types of markets. You have to play the long game in order to be successful.