When was the last time you raised your prices?
If your answer is "never" or "more than 10 years ago", it might be time to consider how you price your home inspections.
Between the cost of the home itself, inflation, and the value a home inspection provides, home inspectors are likely undercharging for an inspection. Here's why:
Over the past decade, the real estate industry has experienced a significant price surge. From the fourth quarter of 2013 to the fourth quarter of 2022, the average cost of a home has increased by 60%.
Likewise, the annual inflation rate has witnessed a dramatic upswing, rising from a modest 1.5% in 2013 to a substantial 6.0% in early 2023 (a 300% increase). When you factor in other rising costs that aren't real estate specific — such as the price of gas — it's clear that if your prices have remained static over the last decade, you're not making close to what your services are worth.
Additionally, big players in the real estate industry are starting to realize how valuable a home inspection is, as evidenced by investment from insurance companies and home service businesses.
As more money comes into the industry, it's important that home inspectors understand the true value they bring to the real estate ecosystem as a whole.
You know better than anyone, but your value as a home inspector is often under-appreciated — just look at the many homebuyers who waived inspections at the height of home sales in 2021-2022.
A home inspection can save buyers thousands of dollars (and much more, depending on the potential defects in the home). With the average price of a home inspection clocking in at just $483 nationwide, the value you get might not match the overall value you provide.
While it may seem counterintuitive to consider raising prices, the answer to communicating value isn't to simply cut the cost for buyers and hope they choose to get their future home inspected because it's cheap. The answer is to realize your own value and set your price accordingly.
By raising prices, we don't necessarily mean simply increasing the price of your base inspection — Howard Burch walks inspectors through how to tactfully and confidently raise your prices based on your offerings, your market, and your experience.
While new home inspectors entering the industry might have an advantage by being the cheapest in the market, experienced home inspectors can actually lose with lower prices.
While not everyone needs to (or should) go by this philosophy, there's value in being the more expensive option. If you brand yourself as a high-quality home inspector and provide a home inspection (and add-ons) that match your price, chances are you'll attract higher-quality clients.
Alternatively, if you want to remain the cheapest in your market and use that to your advantage, by all means, do. However, as the U.S. housing market changes, and as the costs you face in your business rise, it's important to keep up and evaluate your pricing year after year.