Building Inspection Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 7,100 building inspection service providers in the US evaluate all aspects of building structure and component systems and prepare reports on the physical condition of a property. In addition to inspection services, firms may provide expert witness testimony in court cases. Some building inspectors, especially home inspectors, are self-employed and may work part time.

Liability for Errors

Building inspectors expose themselves to liability related to errors or omissions when performing an inspection.

Dependence on Referrals

Referrals from real estate agents are in important source of business for home inspectors.

Industry size & Structure

The average building inspection services provider operates out of a single location, employs about 3 workers, and generates $563,000 annually.

    • The building inspection services industry consists of about 7,100 firms that employ about 23,400 workers and generate about $4 billion annually.
    • The industry is fragmented; the top 50 companies account for about 25% of industry revenue.
    • Large firms may offer a wide range of testing, inspection, and certification services, including building inspection services. National Field Representatives offers property inspection service throughout the US. National Property Inspections is a large franchise operator. Most firms operate regionally.
    • Some building inspectors, especially home inspectors, are self-employed and may work part time.
                              Industry Forecast
                              Building Inspection Services Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Mar 19, 2024 - Homebuilder Confidence Improves
                              • Home builder confidence improved in March amid a lack of existing homes on the market and moderating mortgage rates that remained below 7%, according to the National Association of Home Builders (NAHB). Home builder sentiment, as measured by the NAHB/Wells Fargo Housing Market Index (HMI), rose three points to 51 in March 2024, which marked the highest HMI reading since July 2023 and the fourth consecutive month of strengthening confidence. Any HMI reading over 50 indicates that more builders see conditions as good than poor. The NAHB said that while lower interest rates have improved affordability and drawn more buyers back to the market, 2024 could bring supply-side headwinds, including shortages of workers, materials, and available lots.
                              • In mid-March, the National Association of Realtors (NAR) reached a nationwide settlement of claims that the home sales industry artificially inflated agent commissions, according to The Wall Street Journal. The deal follows an October federal jury verdict in Missouri, which found that several large residential brokerages and the NAR conspired to keep home sale commissions artificially high. The jury awarded the plaintiffs – home buyers in several Midwestern states – about $1.8 billion in damages. As part of the $418 million settlement, the NAR agreed to abandon decades-old industry rules requiring most home-sale listings to include an upfront offer detailing buyer agent compensation. Pending approval in federal court, listings in most of the country will no longer include the upfront offers to buyers’ agents, freeing buyers to negotiate compensation details with their agents. The $418 million in settlement money will be distributed nationwide to consumers who’ve recently sold a home. Industry watchers suggest the ruling could reshape the industry, paring down Realtor ranks by half. A significant reduction in the number of Realtors could impact home inspectors’ referral networks.
                              • Home sizes increased during the pandemic as families sought more space, and interest rates were near record lows. As interest rates have risen and homes have become less affordable, the trend is reversing, and homes are getting smaller, according to National Association of Home Builders (NAHB) analysis of Census Bureau data. In the fourth quarter of 2023, the median single-family home square footage was 2,156, which is the lowest since 2010. The NAHB suggests that smaller home sizes will likely persist amid continued affordability issues.
                              • The Dodge Momentum Index (DMI) decreased by 1.4% in February 2024 to 180.5 (2000=100), down from the revised January reading of 180.5. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. On a monthly basis, the commercial planning component dropped by 2.3%, and institutional rose by 0.1%. Dodge’s associate director of forecasting, Sarah Martin, said, “Weaker office and healthcare planning constrained nonresidential planning in February. However, the Index remains 25% higher than where it was just two years ago. Most other categories showed growth over the month and Dodge remains optimistic that nonresidential planning will stay elevated throughout 2024 alongside rising confidence in 2025 market conditions.”
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