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MONDAY MORNING MESSENGER

Message prepared especially for Members of the American Institute of Inspectors® as well as Home Inspectors abroad

July 17, 2000

GOOOOOD MORNING A.I.I.™

It's a great day here in Orem, Utah. We are doing our best to keep our heads above water. The business is running me ragged and I'm to the point where I don't even want to answer the phone because I know it is one more person who I can't work quickly into the inspection schedule.

This is a real struggle...... Too much business. I am not complaining, I just wish that there was an easier way to take all of the fees being offered and perform all of the inspections that are needed....... Where were all of these people last January when we were all trying to keep food on our tables???

I discussed business affairs with Brent Foster in Lacey, WA, this past week and he confirmed my feelings that we both can't wait until the first week of September when you will find both of us with our wives face down in the clear blue ocean waters of the Caribbean in our snorkels and masks. Brent is doing about 25% higher volume than myself and I am not sure just how he is retaining his sanity. Brent's thoughts on inspection cancellations is simple...... Hallelujah!!!

NOTE: The photo is of Adam and Aaron at Big Rock Candy Mountain in Southern Utah on our recent Family Reunion trek. Watching these two young ones at play reminds me of the simplicity of their lives. When and why did I let life get so complicated?

TO BILL OR NOT TO BILL

Ken Ives asked the wonderful question last week as to whether or not we should bill out clients who cancel their inspections with us. This is not the first time that I have heard this question posed and I doubt it will be the last. I do find the answers interesting and they directly reflect how overworked the Inspector answering the question has been. Those needing every penny get quite upset over the cancellation, while those that are steadily working enjoy the unexpected time off. Betty Buckley responded with.....

I say, if I get to the job site and find I can't do the inspection because of something out of my control, they get billed a minimum visit fee of my hourly rate and I reschedule the inspection for the original fee quoted. I always seem to have something to do with the time whether it be business or personal. If they cancel at the
last minute before I leave the office I do not collect a fee. We reschedule the inspection. Then I go through my pending inspections to see if there is someting to move up or I feel grateful and go play. When I was a new inspector I would be really disappointed when these situations came up. Now I just take it in stride, it's okay if I have an easier schedule once in a while. Best regards, Betty Buckley - OR

Sylvan Stenge shared......

When I am as sought after as Michael Leavitt I will charge the "Doo" out of them. Until then I smile (visually and/or orally)and ask them to please let me know when the home will be ready for inspection.

The reward is that the agent usually knows the importance of the missed work time and expresses their gratitude for my understanding. Conversely, you will probably never get the money anyway and you will lose an agent.

The one exception was when the client gave me two days notice for re-inspection and threatened to engage another inspector when I could not meet her schedule. I threatened in return with a charge for the original trip, and she suddenly became more flexible. Sylvan Stenge - CA

Jim Corbin shared some thoughts on showing up unknowingly unannounced.........

I have had that happen a few times. Most often, a kind word, acknowledgement of their situation of not being advised and empathy for the trouble the inspection might cause. I then talk to them about what I would be doing, how I would be doing it, that I would be noninvasive to them and would take due care not to bother
children, pets, etc. In all my cases...so far...I have been allowed to enter and the seller was then able to turn their ire onto the agent. So far, lucky. I don't now what to do with an inspection that had to be cancelled because of a scheduling mistake. It is an interesting concept to consider. I need to think about it some. Thanks for the thought provoker. Have a good day! Jim Corbin - Bow, WA

Jon Gudnason once again shared some sage advice........

Go ahead and send the bill, but don't count on anyone paying it. It is part of the cost of doing business. If this happens more than a few times a year, you may be doing something wrong. If it doesn't happen at least a few times a year, you are not working enough. Jon Gudnason - Placerville, CA

CANCELLATION FEES

I went back into my e-mail archives and found this great discussion on cancellation fees that took place over a year ago. I have concealed the names of the contributors so that the information that was shared can be enjoyed without caring about who stated what. The "Cancellation Fees" topic covers cancellation fees, credit card bookings, real life phone answerers, and steps to setting up inspections. So pretend that you are a fly on the wall and enjoy the interchange of ideas that follows.........

NOTE: As you know, I am a big proponent of not using words like CHARGE, PRICE and COST. So please overlook the use of these words in the following exchange.

Here at the center of the World, we have so dang few rules.

I play it by ear. Cancellations are very rare. One for instance: Last week, a realtor I didn't know called to book an inspection. She sounded squirrelly to me; I got the feeling that the deal wasn't solid. I told her, straight up: "I'm not putting this on my book if there's any chance of it cancelling. I sell three inspection slots a day. When somebody cancels, it costs me money. So tell me: Any chance of this cancelling?"

"No," she says. So I fax the contract to the customer.

The next day, the realtor calls and cancels. Her name is Billie Cannon. She's on the @#$% list. If she, or any or her buyers call in the future, we're busy.

But here's one of the luxuries of being an established, busy company: When somebody cancels, we're kinda glad. We've been known to actually slap five. We particularly like it when Friday afternoon cancels.

We're too industrious to book much time off for ourselves. When somebody gives us the gift of time off, we just enjoy it. Time to go to the batting cage, or the computer store, or just go nap on a park bench. (A big favorite this time of year.)

I wonder how difficult it will be to get people to agree to give you their credit card info over the phone just for a booking. I'm suspecting that once you inform them that you require the # so that if they cancel, you can slap a $50.00 charge onto their card, the response will be, "Well, let me get back to you once I can be 100% sure I won't have to cancel." Although that sounds like what you want, it could be allowing them to make some more calls and discovering that most inspection companies do not ask for card #s up front. At that point I would think you'd lose them to the competition. Don't get me wrong though, I'm all for the idea, but making it work is another thing, isn't it?

We would treat it kind of like a hotel booking. You give us your charge card # as a deposit against your reservation. If you end up cancelling, that's fine, but we do charge a $50.00 cancellation fee.

As far as calling around, we love it. We tell our clients to go ahead and call down their list and pick the inspectors they're most comfortable with. After calling 5 other companies and either getting an answering machine, or a cell phone where the guy is obviously not interested in talking, they pretty much always come back. The ones who are looking for the cheapest inspection they can get don't come back. That's OK. We don't want them as clients anyhow.

We are thinking of it as a positive marketing thing. When people point out that nobody else charges a booking fee, we just smoothly say that nobody else runs their business like we do. We start working for you the minute you book your order. That's why we're so popular that we have to charge from the moment of booking. This same level of care extends through and way past the time of your inspection. Yada yada yada.....Its all just spin.

Must be nice living where people have some self-respect. Not around here, and not with Wall Streeters.

We just had one a couple of months ago that booked us for one of the nicest properties in town. Built in 1895 by a world-famous architect. 6,000 sf house with a 3000 sf guest house, barn, and a few other smaller structures. Listed at $1,995,000. We were the only inspectors who even knew the name of the architect. We also talked to her about 5 other houses he designed around here, and our experiences inspecting them. We set aside a full day for the inspection.

Wouldn't 'cha know it. We call her the day before the inspection, she says there's a problem with the deal, and they're going to have to postpone to the following week. OK, no problem, we're happy to throw away all that money we could've made tomorrow. We reschedule. The following week, we call the day before, she says, "Oh, we picked another inspector who'll do the job for $375.00"

Now I don't know what cheesed me more, the fact that she burned off 2 entire days of our time that we can never recover, or the fact that after the hours we spent with her on the phone, she still didn't understand anything at all about the value of our service. $375.00 for a house like that. I told her that if she was that damn cheap, she shouldn't even waste the $375.00. Just buy the damn thing and hope for the best.

BTW, this happened after we had instituted the $50.00 fee for cancellations within 24 hours. Of course she didn't pay that anyhow.......

Elaborate on your statement of "contacting Realtors," etc. I don't make any phone calls to anyone to set up an appointment. Isn't that the buyer's job-or the realtor-whoever calls to book? Am I missing something here?

I don't know if you're mising something or not. Its just something we do.

We contact the Realtor if the buyer's working with one. We have them set up the appointment with the sellers. Most of the realtors we deal with like to be kept in the loop. We also get a faxed copy of the listing for our files. These come in handy when the buyers have lied to us about the size or age of the house (this happens occasionally, but not often). We send out a letter confirming the inspection, explaining the things we'll look at, and asking them to read the contract, sign it, and bring it to the inspection. We also send a letter to the seller informing them about the date & time of the inspection, explaining the radon test protocols, and what we'll need access to.

We have found that this process works pretty well. It lets our clients feel that we are taking care of them. It lets the realtors think that they're important. It lets the sellers know what we'll be doing and give us a chance to get our brochure out to them before they buy their own house. In short, its good marketing and PR. It takes time, but it works. Its also worth at least $50.00.

No credit cards for me. You'll be fighting them tooth and nail just to get the 100 bucks. They'll write to their credit card companies and protest and you'll spend more time trying to collect than it's worth. I don't really have much of a problem with cancellations. I can only remember maybe 5 or so in 7 years--a pretty good track record. My thinking is that, if people are going to jerk me around, better off without them. Spend the day
cleaning the office.

I hadn't thought of it that way, but your point is valid. By the same token, if they are anxious to use you because your company came highly recommended, then they are unlikely to cancel, but to reschedule instead. IMHO asking for their credit card number up front suggests that you don't trust them to pay if they cancel late. Personally, since my company is still a little baby compared to most of you on this forum, I am reluctant to adopt a cancellation policy just yet.

We've just upped the ante a little bit for cancellations, and I thought I'd throw our new policy into the ring for discussion.

When we book an inspection, we do quite a bit of work to set it up. Between contacting Realtors, holding the buyer's hands for a while & getting their information, scheduling subcontractors for any additional inspections needed, etc., my wife spends about an hour or two on every buyer. This time is spent whether or not we actually perform the inspection.

We had been charging a $50.00 fee for cancellations within 24 hours of the inspection. Then we moved it to 48 hours. Still, we had people messing with the timing (calling 1/2 hour outside the limit @ 7:30 Sunday morning), people saying they didn't know about the fee, people just generally whining and treating us badly. The cancellation fee definitely did reduce last minute cancellations, though. It's amazing how people buying homes for $500,000 and up are so worked up about a $50.00 fee.

Our new policy is that once you have confirmed your inspection, we start working for you. We make it clear when we are booking the inspection that once we are confirmed, we're charging for our time. Any cancellations after that will incur a $50.00 cancellation fee. For an all-day inspection, its $100.00. We just started this week, and so far, people are buying it. You should see how hard our Clients are working to make sure that everyone is OK for the inspection.

In answer to one obvious question: Yes, people have paid the cancellation fee in the past. In general, they're pretty good about it, even when they've just been pricks about cancelling at the last minute because they felt like it. This is also one argument in favor of accepting Credit Cards. We're thinking about it just so we can get their card # at booking, and charge the card if they cancel.

Depending on the temperament and character of the folk in your part of the country, cancellations can be anything from a minor annoyance to a real enough revenue loser. A whole lot of folks don't see a problem with calling every HI company in the phone book, and "booking" everybody, then canceling the guys who cost more and/or are booked up. People who'll do this think nothing of canceling 1/2 hour ahead of time. During busy times, that's the same thing as setting fire to four hundred-dollar bills. You can't re-book the slot. Money's gone.

I think I'm pretty good at sniffing these people out. They usually give cues. I tell 'em straight up, I won't put a job on my schedule if there's any chance of it cancelling. Then I ask them, "Any chance that you might have
to cancel?" When I'm just this blunt, some people admit that they might've canceled, or that they were working through a list. I tell 'em when they know they have a deal, when they know they have a firm time, and when they know they want us to do the job, call me back. I explain that we are a small company, and all we have to sell is our time. I tell 'em that if a person reserves our time and then cancels, they have stolen a half-day's worth of our product. Amazingly, people understand this and do not get pissed.

They either call back in five minutes, or they're gone. So far, that's been my Cancellation Control Procedure.

Sweet Baby Jane! $375 for a two-million dollar property. We wouldn't even have done the 3,000 sq. ft. guest house for that.

I have to wonder: What is it that makes a potential customer think that one HI is going to do the same job as the next one? What makes 'em think that if you're going to "do the job" for, say, $1500, that somebody else can do the same "job" for $375?

I try, but I find it hard to explain to somebody the difference between hiring experience, depth of knowledge and communications skills, as opposed to a checklist-totin' buckethead. So far, the best I can do is tell people, "Be sure to look at an actual report, written by the actual inspector you're hiring. That way you can tell what he does, how he does it, and measure his overall competence level." That works, most of the time.

I've lost 2 jobs this week because of my high prices. One was a 150-year-old 3400 sf plantation home with 2 1000 sf guest houses. The guy could not believe that it would cost $975 to do this. Another "Lady" let loose a long string of expletives when my scheduler quoted her $500. We just don't have the civility here that they have in Nashville.

I've found that since raising my prices recently, I'm making more money and meeting fewer morons. It has also culled out a lot of the lower end, poorly maintained homes that are so much work.

I do have a scheduler... my sister-in-law. She has been working for me about 1.5 years and I couldn't get along without her. When I hired her, my business immediately doubled. I hear comments all the time that I am the only company that seemed to care enough to answer the phone and that Holly convinced them I was their inspector. I know when I want to schedule an appointment for a service, I may have questions and don't want to talk to a machine.

Holly tells them that if they have any questions, I can give them a call. Most understand. Do you expect the doctor to answer the phone when you call? I'd be wondering why he wasn't busy. Only a few ask to talk directly to me beforehand.

I also have a day job that precludes me from answering the phone during the day. The government takes a very dim view of running a private enterprise out of a government facility. This is something you can go to prison for. The last one I heard about was a guy out here that had business cards printed up with his NASA phone number on them. Seems he pissed off one of his coworkers who turned him in. The Inspector General didn't have too much difficulty making that case. They called him up and spent 30 minutes on the phone with him asking questions about his services. When they busted him, just for icing on the cake, they checked his timecard and got him for timecard fraud too.

Even when I go full time, I will continue to use Holly. First, my wife won't let me fire her and second, I don't want to divide my attention between a job in the hand and one in the bush (this sounds like the punchline to a bad joke).

I wonder, if the HI does all that arranging, does he have to take responsibility if something doesn't go right? What if the owner goes to work and doesn't leave the key under the mat? Or what if the house isn't closed up for the radon test? Or the plumbing isn't de-winterized as promised? Does he have to eat the trip back because he took the responsibility up front?

The Realtors think they do it all here, too. They just screw it up a lot. We do it again, just to make sure. We work mostly with buyers agents, sometimes disclosed dual agents. We let them make the actual phone contacts with the sellers, make the appointments, etc. They're happy and they get to feel important. Still, we do a lot of follow-up prep work.

First, we call the Realtor to get her working on the appointment. Once its conformed with everyone, we send a letter to our client. Just about all of us do that. It confirms the price, the date & time, and has our contract in it. We send a letter to the seller. It contains the date & time, a letter explaining Radon testing and closed house conditions, a list of the things we'll be looking at and need access to, and a copy of our brochure, in case they are needing an inspection of their own.

We've found that this level of effort provides several benefits: We have reduced what was a rather large amount of miscommunication when we left it up to our clients or their Realtors to make the arrangements. At least 2-3 times a month we get a phone call from a seller who got our letter but wasn't told about the inspection by the Realtors. We get an advance chance to market to the sellers. We show the sellers that we're pretty professional, and that we'll be doing a good job on their house. We get a chance to warn them about messing with the radon canister.

We think its worth it. We just need to charge more for the service. So far, there seems to be quite a bit of price flexibililty left in our market.

Boy, do I wish that would happen around here. When we gently suggest this to the realtors, they get real defensive, like we're trying to tell them how to do their jobs. We get sellers all the time who cancel because they want to be at the inspection, but its their golf day, or their dentist appointment, or they're having their legs waxed, or heck, life's just too stressful we're going to have to delay the whole thing. The crazy thing is that the realtors let them get away with it. The realtors haven't realized yet that this is screwing up their lives, too.

The $50.00 fee is drawing attention, but its getting people to modify their behavior. The thing I find the most amazing in this whole experiment is that people who have more money than the Almighty, who are selling a house for $500,000 or more, who are rude enough to pull this on us, get really worked up about a $50.00 fee. Blows my mind.

Well, then, you'll be *real* jealous of this local custom: Whenever a realtor shows a house, and that includes for an inspection, the local custom is that the sellers need to be *gone.* They can walk the mall, they can go to the park, they can drive around in circles. But the realtors do *not* want to interfere with the buyer's visualization process, which allows them to fall in love with the house. Plus, the realtors don't want the sellers asking us questions, or bugging the buyers, or flopping up on the sofa watching Oprah. They want the house clean and sans occupants, so they can do their sales magic. And they make these rules stick.

Oh, one other reason: They don't want sellers volunteering things to us or the buyers at inspection time. They want 'em to fill out their disclosure forms on listing day, and never bring up the topic again.

I'm telling ya, the realtors around here have this down to an art form.

Maybe you ought to do a newsletter, and gently explain why the sellers need to be absent at inspection time. Truly, there's no reason for them to be there other than to be meddlesome, which hurts their chances of a sale. Of course, in some parts of the world, people's lives revolve around being meddlesome and contrary. I once lived among these people. My adrenal glands grew to the size of toasters, and I started hearing voices in my head. I fled.

If Sellers are around they usually make themselves scarce and hide in an office or bedroom, but usually apologize and leave quickly. Rarely do I get a seller who is nosey. A good agent will handle it, if not I politely let the Seller know to butt out, and that the inspection is for the buyer, not them.

Sounds screwed up more than normal up there.

Most of my experience has been that the realtors don't want to have the seller's home during showings or inspections. Also, I've not run across any seller interference, for the most part, causing cancellations of inspections. The realtors want the sale to move along with minimal interference.

I've no cancellation fee--can count on one hand the number of inspections that have been cancelled at the last minute. Part of that may be due to the fact that I refuse to set an appointment until the contract attorney review has been completed...usually 3-5 days up here. This prevents rescheduled inspections due to an attorney wanting another clause to be added to his client's contract, thus delaying the review process. When this happens, I'm the only one sitting home due to a cancelled appointment due to an extended contract review. It's funny how even different counties in the same state can have varied business conditions. No wonder it's so hard for an association of any kind to gather us all under one common roof.

In fact, the realtors generally do recommend that the sellers not be present at the inspection. We just seem to have a lot of the meddlesome and contrary type around here, and the realtors are so scared of them that they let them get away with it. I think I'll go out of my way to start asking sellers detailed questions about the house. If I get all my HI brethren around here to do the same thing, maybe the realtors will wise up and get the sellers out of the way.

So what is your cancellation policy? Do you process credit card orders that would allow you to get payment? How do you feel about the inconsiderate clients who rob a timeslot from you?