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MONDAY MORNING MESSENGER

Message Prepared For Members of the American Institute of Inspectors®

April 5, 1999

GOOOOOD MORNING, A.I.I.™

It's a great day at Michael Leavitt & Co Home Inspections. I hope that your Easter weekend was a good one. We did our best to participate in the typical worldly bunny activities, while stressing the true remembrance of the crucifixion and resurrection of Jesus Christ. The little ones sure love to scurry around in search of the candy-filled plastic eggs...... What a day!!!

We just wrapped up what I thought was going to be our third best month ever. March 1999 turned out to be our biggest grossing month in history. It is no wonder that the month flew by so quickly. We beat our best month by a whopping $15. It was really close and I thought that I was going to have to pull a Bill Ball and pay myself the extra needed to become the top grossing month. Instead, as I was driving to the morning of the last day's inspection, the out-of-state client's agent called to say that they also wanted me to perform a Lead Hazard Screen with the inspection. That added service fee was enough to put us over the top.

FEE TOTALS

PLEASE NOTE: The following discussion is not meant to be a discussion for collusionary purposes amongst our industry members. Instead, I am using my real- life business totals to help all of us better understand the business principles involved. If this is offensive to you at all, please CLICK HERE and you will be transported past the section of this week's MMM dealing with actual fee totals.

It is extremely interesting to me to evaluate the difference between March 1999 and July 1997. Both months grossed in the mid 13,000s, but came in similar, yet different ways.

March 1999

July 1997

Home Inspections
38

47

Lead Hazard Screens
5

9

Termite Inspections
7

4

Radon Testing
7

Roof Evaluations
2

This chart is extremely telling to me as a business owner.

The first observation is that I managed to do 9 more full home inspections in a single month. That leaves me room to make even more money as the busier summer months approach. (My theory: If I did it once, I can do it again.)
I did 4 more Lead Hazard Screens, even though I did an equal amount of pre-1978 homes. This means that I need to stress the service more. Each time that I do, it will add $110 to my fee totals. I'm considering making it mandatory with all Pre-1978 Home Inspections.
I did more Termite Inspections this past month, but some were in conjunction with my internet special. This is not a big pest state, and I look at it as purely bonus money. I should stress it more and increase the totals.
The 7 paid Radon Test this past month added $770 to the totals. This more than pays for the $525 machine in a single month. I can also do more to market this service.

SIDE NOTE: When I share these type of numbers to groups of Home Inspectors the responses are always the same. I call it the "Yeah But" syndrome.

Yeah, But that is in your Utah market.
Yeah, But those numbers for added services aren't very many.
Yeah, But nobody asks for Radon in my area.
Yeah, But it is not worth my time and money to get the needed training.
Yeah, But your #'s really aren't that high and I thought you would be doing more Radon etc.

The same inspectors generally sit back and wonder:

Why their business phone doesn't ring more often
Why their competing inspectors are busy and they are not as busy.
Why their bank accounts are not as plentiful as they could/should be.
Why their market isn't as good as somebody else's (Grass is Greener Syndrome)

The bottom line is that in our business it is important that we set ourselves apart. We do this through advertising, marketing, personality, training, services, and credentials. As we add some of these strengths to our already strong AII™ training and certification, we can increase the amount of our "per inspection" average. Let me share some more revealing information. By taking your # of inspection addresses and dividing them into your gross fees, you can get your Dollar Per Transaction totals. The idea is that you are only capable of doing so many inspections in any given day, so how can you maximize your dollar intake?

When I was younger, I worked in a key shop. Through this experience I learned that you could take the preceeding 3 year's totals and almost exactly predict how many customers were going to walk through the door per month, per week and yes, even per day. Of course, there are other factors that can increase the customer total, but if you know that you will do about 35 inspections next month, how much money do you want to make off of them??? In the key business, if you sold each of the 50 customers 1 key for $1.50 , then your shop would gross $75 that day. This required no work at all by the keymaker. The transaction went like this........

Hi.... What do you need today?...... A key..... Okay, here it is...... That will be $1.50.

This requires little effort and an hourly, part-time worker is more than thrilled to do this very minimum task. Now let's start a promotion..... How about "Buy 2 keys and get a third FREE". The worker has to cut 2 more keys per customer and suddenly the same amount of customers walking through the door generates $150 per day instead of just $75. The totals could be raised without the promotion by just asking the customer...... "Are there any other keys that you need made while you are here today?" This generated more sales. When a key customer came into our key shop, they were focused on getting that key made..... that was it!!! It was important to get them to relax and possibly consider more ways that they could give us money.

The same is true in the Home Inspection business. Let's consider what is on your client's mind when they call....... "I need a Home Inspection." That is it!!! That is all that is on the consumer's mind. Shelly and I strive to first nail down the inspection order, and then get them to think about other added services possibilities. Our web site has been a great source of added income. We now lock down the inspection and then recommend that they visit our site for information on Lead, Termites, and Radon. It is not uncommon for the client to amend their order after visiting our site. This means that they are willing to give us more money. We are a business and we offer great services. We are not offering shameless services..... Each is valid and important. We offer them better than anybody else. We have the best training. We have the highest fees. We have the elite clientele. We have the waiting list. We have the reputation. We are leading the way....... There is nothing boastful or prideful in those statements. We have worked hard to get where we are.

MORE "YEAH BUT'S"

We'll get back to the dollar per transaction topic in a moment. I think it is important to now share a conversation I had two weeks ago with a fellow inspector in my county. Over the last six months we have been attempting to get the majority of the Home Inspectors in Northern Utah together in the same room. The caliber of Inspectors varies greatly and it is always INTERESTING to hear the different views expressed. My confirmation that you get what you pay for from a Home Inspector was reaffirmed.

After the last meeting, a PE Inspector came up to me and said (in summary)..... "I have been watching your efforts in the marketplace for the past few years and you have done everything that they taught us in my Business and Marketing classes in college. Every single thing they told us to do, you do. I am even more amazed at the PRICE of your inspections. Do people really pay it? Well, they must, but how do you do it? I wish that I could raise my fees?"

This Inspector is an educated Engineer with all of the needed credentials. If I had his background I would be eliciting a fee far above my current fees. I thought that you would be interested to know what his fees are, so visit this link and when you stop ROTFLOL (That is Rolling On The Floor Laughing Out Load - That is for you Richard G.) I hope that you will be able to return back here and finish enjoying the MMM. His site is at.... http://www.stinger.net/~crossrds/page3.html. His "PRICING" reminds me of a car painter in the Southern California area when I was growing up. "We'll paint any car for $29.95." Then it was $39.95, $79.95, $99.95, and then the last I remember was $299.95. With Earl Schieb painting, you always knew that you were getting the cheapest paint job available.

I discussed my fee philosophy in a very open manner with this genuine individual. There was no arrogance involved. Instead, we spoke as friendly individuals. He agreed with every ideal that I shared, but he continually expressed the "Yeah But" philosophy for justification in why he could not change his fees. This saddened me deeply. He came to me. He asked for guidance. He meekly left our discussion knowing that he was unable (unwilling) to raise his fees.

His Yeah Buts included:

Yeah But my fees have been at this level for 5 years.
Yeah But I might lose business.
Yeah But I have a steady group of referring agents who might get upset and stop referring me.
Yeah But It will never work for me.
Yeah But I really don't feel that I am worth more.

The last Yeah But was unspoken, but very self-evident. I took the time to explain that if he raised his fees near my level that he could lose 50% of his clientele, work half as much and make the same amount of money. This concept intrigued him, but it was paralyzing him inside to think that he might lose customers. The fact that he would keep the majority of his customers and instead double- triple his income did not seem a reality to him. The brief discussion that he was getting the biggest headache, price-shopping clientele was beyond him.

I was sad after our discussion because I knew that he was not really desiring change. I knew that he was not going to be the Inspector I needed to help raise the overall average fees in our area. I was left with the reality that I was still going to be doing that by myself. The difference is that this individual does a pretty good inspection. He needs to learn what an attic, respirator and jump suit are, but he is still a pretty good guy.

He exclaimed in glee that he had gotten an inspection last year away from me. I asked him about the home and he described an original, turn-of-the-century home that had additions coming off in each direction with lots of wiring, plumbing and heating issues. It was multi-crawl spaced and he said that it was a really cool home, but a very time consuming inspection. He said that he got the inspection because my schedule was booked up and because of my higher fee.

It amazed me that he could not understand why my schedule was so booked up and my fee higher. If you aren't laughing, let me run it by you again....... the home he described as an original, turn-of-the-century home that had additions coming off in each direction, with lots of wiring, plumbing and heating issues, and it was multi-crawl spaced...... need I say more. Now his fee was $189.95. My fee quote was probably $385 or more. He looked at his inspection booking as a great conquest, yet I look at it as an avoided headache...... Have I beat this horse into the ground yet???? Well, let's return back to the comparison tables, shall we???

DOLLAR PER TRANSACTION

It is great to be in business long enough to be able to compare yearly numbers. The Dollar Per Transaction (DPT) total is one of the most important figures that we have complete control over. When I first started back in 1995 my average transaction was $256. That is really great, but there were so few inspections that it is nothing to rave on about. 1996 DPT was $239 and I was quite thrilled with that. The # of inspections was also beyond my expectations. 1997's DPT was $244. 1998's DPT was $346. That is an incredible jump in DPT. I can attribute this to our Added Services marketing and because we started publishing our fees. This pre-warned our clientele to what the fee was going to be. This past month, our DPT was an amazing $357. Now I realize that this may not be an amazing DPT in areas where base fees are higher, and yet in other areas that our lower, it seems incredible. Everything is relative. So you high-fee, California rich-area inspectors, I expect even higher DPT's.

REQUEST: I would be very interested in receiving by private E-mail your DPT's from current and past years. Is this a new way of evaluating your business progress or is this something that you too have regularly concentrated on??? Click on this link to E-MAIL me your DPT's and Feedback

Using these numbers to evaluate our business is very revealing. Back in July 1997, I was so busy that I became a 1 key only type of inspection booker. I did not have the time to spend on the phone trying to increase the dollar value of the transaction. Instead it was a "Give me the address and I'll get it done" mentality. This past month we beat the previous record spending less time on the phone and doing less transactions. By applying that same DPT to our previous biggest month we would have made $16,779 back in July 1997. That is over $3,000 lost due to the lack of ability and time to offer our services.

This is the key..... Our website generates a bigger DPT without taking away from our human time. We don't have to do the selling...... The content on the site does the selling. We are looking towards even more records in the future due to the content on our website..... I doubt that we can increase our DPT much higher, but we will reap the benefits while our fellow inspectors are content with a DPT of $189.95. With their DPT, I would have made $7,218 last month....... Need I say more???

WHAT IN THE WORLD IS THIS??? FOLLOW-UP

Last week's photo yielded some very high quality responses as to what the growth in the picture is. Richard Grisham from Las Vegas took the time to compose these thoughts.......

The growth you took a picture of in front of the leaking washer hose bib, is a slime mold. The
vegetative body of a typical slime mold is a mass of protoplasm without cell walls, having many nuclei. It is most frequently called a "plasmodium" and is somewhat in-between plant and animal. A slimy fan-shaped network of living matter, it flows along in an amoeboid manner over forest mulch taking in small particles of rotting organic material. Personally, I can't quite seem to recognize what it might be feeding on in the laundry area?????

Betty Buckley from Oregon shared......

Yes Michael, I have come across this fungus a few times also. However, it has been in damp (not wet) crawl spaces and not inside the structure. The kind of crawl space that might also have mushrooms growing. I do not know what its scientific name would be and have never found it in any great quantity or where it seemed to be threatening the structure.

Sincerely, Betty Buckley - Midland, Oregon

Dan Back gets the prize for the most complete, informative response........

Michael, Mycology is the study of fungi. Mold, mildew, and fungus are all classified in the species of fungi. This flowering growth is most likely the mushroom-like fruiting body of the fungus called the "Macro fungi". During the reproduction process, this fruiting body produces tiny spores that literally fly into the air. There are millions of species of this type of organism. Most of them are beneficial. However, some can cause extreme allergic reaction to humans..... internal bleeding etc. They feed on organic matter (latex paint, wood molding, carpet, insulation drywall, dirt, furnace filters, ducts, ceiling material, paper products, etc.) and are one of the first organisms to initiate the breakdown of the decomposition process. Most require a high moisture content (free water) to proliferate. I believe there are many species in the environment that have not been identified. There identification requires an "Environmental Specialist".

The mold in your picture is not a normal location for fungi growth and this condition could be a potential hazard to persons. Recommend an Environmental Specialist for further evaluation.

Whoa! Sounds like an "Environmental Whacko." However, in our litigious society, health effects caused by molds and mildew have already been demonstrated in our courts. Something as little as mold on the shower wall and shower door and the young child gets sick. It is a good idea to report any mildew and/or mold observed in or under any home (the structural pest people don't know what it is). At least this brings an awareness to the new home owner.

In your picture, I can see what is growing on the outside. I have no idea what is going on inside the wall. The environmental specialist wears a "ceranax suit" and a full face mask to provide absolute protection.

Note: Stakki Butrus, a glossy, dark, black mold has been known to cause severe breathing difficulties, internal bleeding, etc. Dan Back

Thanks for the feedback from those of you that took the time to respond.

PROVE ITS NOT MOVING - FEEDBACK

Richard Grisham responded back to last week's challenge regarding the Mobile and/or Permanent home with.....

The 5 pictures you took of the property about to be foreclosed on appear to be of real property as opposed to personal property. There is a solid stem wall foundation with ventilation holes; there is a crawl space access; there is a concrete step-up porch in front and a concrete step-up (or down) porch at the rear SGD. There is no evidence of a towing tongue, axles, wheels, skirting or any other items that might be interpreted as belonging to a mobile home or Coach. Any house may be movable, but this structure (probably manufactured housing) looks as though it was intended to be transported to the site and set up as permanent housing, and never designed to be movable again without extended disassembly. That is my most authoritative, precisely descriptive and best accurate guess.

NEXT WEEK'S MMM

Next week's MMM should deal with the topic of the official Lead-Based Paint regulations. I just finished my official LBP EPA and State of Utah training and testing. The official EPA protocols are taking affect on August 30, 1999, and only those with the official credentials will be allowed to offer the services. Please send your questions, comments, experience and concerns with LBP so that they can be included in next week's MMM.