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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Updated on May 16, 2023
Investment range
$3,550 - $7,600
Revenue potential
$100,000 - $250,000 p.a.
Time to build
1 – 3 months
Profit potential
$90,000 - $225,000 p.a.
Industry trend
Growing
Commitment
Flexible
Home inspectors protect home buyers by thoroughly inspecting their prospective home for defects and necessary repairs. The US building inspectors industry is valued at an impressive $5 billion. Home inspectors take in about $400 per inspection, so clearly there is money to be made with a home inspection business. You just need a home inspector’s certification and a few tools to get started.
This does not mean, however, that starting a home inspection business is easy. You’ll have to put in some hours of preparation and research before you launch. Fortunately, you’ve found a handy resource, as this step-by-step has all the facts, tips, and insight that you need to work your way into the home inspection business.
Looking to register your business? A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple.
Form your business immediately using ZenBusiness LLC formation service or hire one of the Best LLC Services.
Starting a home inspection business has pros and cons that you should consider before deciding if it’s right for you.
The home inspection industry is heavily impacted by the housing market and flourishes when the real estate market does well.
Trends in the home inspection industry include:
The home inspection industry is also facing some challenges including:
Startup costs for a home inspection business range from $3,500 to $7,500. The largest expenses are for a website set up, education and certification, and tools. States generally have approved education providers which you can find on your state’s website, and you will have to pass an exam to receive your certification.
You’ll need a handful of items to successfully launch your home inspection business. Here’s a list to get you started:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corportation | $150 - $200 | $175 |
| Licenses and permits | $100 - $300 | $200 |
| Insurance | $100 - $300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Education and certification | $1,500 - $2,500 | $2,000 |
| Tools such as moisture detectors and ladders | $500 - $1,000 | $750 |
| Total | $3,550 - $7,600 | $5,575 |
The average price for a home inspection is $400. Your ongoing expenses should be limited to fuel and marketing costs so your profit margin should be about 90%.
In your first year or two, you could work from home and do 5 inspections per week, bringing in over $100,000 in annual revenue. This would mean more than $90,000 in profit, assuming that 90% margin. As your brand gains recognition, sales could climb to 12 inspections per week. With expected annual revenue of almost a quarter-million dollars, you would make about $225,000.
There are only a few barriers to entry for a home inspection business. Your biggest challenges will be:
Now that you know what’s involved in starting a home inspection business, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research home inspection businesses in your area to examine their services, price points, and customer reviews. You’re looking for a market gap to fill. For instance, maybe the local market is missing a home inspector that offers virtual inspections.
You might consider targeting a niche market by specializing in a certain aspect of your industry such as new construction inspections.
This could jumpstart your word-of-mouth marketing and attract clients right away.
In addition to basic home inspection services you could become certified to do add-on types of inspections such as radon gas testing and termite inspections.
Home inspection prices range from $300 to $450, but generally cost about $400. Your ongoing expenses will be low so you should aim for a profit margin of at least 90%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price point. Remember, the price you use at launch should be subject to change if warranted by the market.
Real estate agents usually recommend home inspectors to their buyer clients so your main target market will be realtors. Calling real estate agents personally to build relationships with them is the best way to get business. You can also find them on LinkedIn.
You probably can always run your business from home, but if you do decide to get an office you can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.
When choosing a commercial space, you may want to follow these rules of thumb:
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your business name:
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Every business needs a plan. This will function as a guidebook to take your startup through the launch process and maintain focus on your key goals. A business plan also enables potential partners and investors to better understand your company and its vision:
If you’ve never created a business plan yourself before, it can be an intimidating task. Consider hiring an experienced business plan writer to create a professional business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to home inspection businesses.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your home inspection business will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Personal funds or family and friends funding are probably the best way to finance your startup costs since the costs are relatively low.
Starting a home inspection business requires obtaining a number of licenses and permits from local, state, and federal governments. You will need a home inspector’s license or certification from your state. Education and other requirements vary by state, so check with your state government to find out what you need.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your home inspection business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You can use industry-specific software, such as Buildium, 3D Inspection, or Spectora, to manage your scheduling, pricing, billing, relationships, and inspection reports.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using services like WordPress, Wix, or Squarespace. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Some of your business will come from online visitors, but still, you should invest in digital marketing! Getting the word out is especially important for new businesses, as it’ll boost customer and brand awareness.
Once your website is up and running, link it to your social media accounts and vice versa. Social media is a great tool for promoting your business because you can create engaging posts that advertise your products:
Take advantage of your website, social media presence, and real-life activities to increase awareness of your offerings and build your brand. Some suggestions include:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your home inspection business meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your home inspection business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a home inspection business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in home inspection for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in home inspection. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees, and you may just continue to do business that way. If your business grows to a large level though, you may want to hire employees. Potential positions for a home inspection business would include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Home inspection companies perform valuable services for customers that can save them thousands of dollars in repair costs. Home inspection is a huge industry valued at a remarkable $5 billion in the US, and as the real estate market booms, it will continue to grow.
A home inspection business can provide you with an excellent steady income and, at the same time, allow you to help home buyers with the largest purchases of their lives. Now that you’ve started your educational process and know what is required, you’re on your way to becoming a home inspection entrepreneur!
Realtors usually recommend home inspectors to their home buyer clients, so you should try to build relationships with real estate agents to get referrals. You can call them directly, go to places where you can network with realtors, or connect with them on LinkedIn.
There is no one “best” state to be a home inspector, as the demand for home inspections varies by location and is affected by factors such as the local real estate market and population density. However, states with high populations and a strong housing market, such as California, Texas, and Florida, may offer more opportunities for home inspectors.
According to data from the American Society of Home Inspectors, the state with the most home inspectors is Texas, followed by Florida, California, North Carolina, and Ohio. However, it is important to note that the number of home inspectors in a state does not necessarily correspond with the demand for home inspections in that state.
The most common types of home inspections include pre-purchase inspections, which are conducted before a home is sold to identify any potential issues or hazards; new construction inspections, which ensure that a newly built home meets quality standards and building codes; and annual maintenance inspections, which help homeowners identify and address issues before they become major problems.
Yes, it is possible to start a home inspection business on the side, especially if you have the necessary training and experience in the field. However, it is important to be aware of any legal or regulatory requirements for starting a business in your area and to ensure that you have the necessary insurance and liability coverage.
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