PERFORMING COMMERCIAL INSPECTIONS
Who’s doing commercial inspections now?
A huge, largely untouched commercial inspection market exists which is completely separate from the residential inspection market! Google “commercial building inspections” and what you’ll find is a small number of inspection companies across North America who perform commercial inspections in addition to residential inspection. Look through their sites, and you’ll find that most approach commercial inspection they way they would a home inspection… the language they use is based on residential inspection… their websites look like those of residential home inspectors… 95% have a residential inspection mindset.
What’s the nature of this market?
Not only is this commercial market huge, but on the average the commercial clients
are less emotional and more reasonable to de
al with and they have deeper pockets. Compared to residential clients, what they
require from an inspector is fewer babysitting skills and more professionalism.
That’s why the International Association of Certified Home Inspectors (InterNACHI), the world’s largest professional home inspection organization has developed the first comprehensive Commercial Standards of Practice in the inspection industry. “Standards” is a key word. For the first time, a professional home inspection has developed wide-reaching Standards which will act as guidelines in steering inspectors through the commercial inspection process.
How are Commercial Clients Different from Residential?
Who hires commercial inspectors and why? As an inspector interested in performing commercial building inspections, you should understand just what it is that differentiates commercial property investors from residential. When inspecting commercial and industrial properties, your clients will consist of business men and women who, in their consideration of most properties, will follow an established procedure in evaluating properties. This procedure is much more defined than the comp/appraisal process used for residential transactions, although not necessarily simpler.
As opposed to residential processes, primary in the purchase consideration of a commercial building is the continuity and stability of the stream of income it has generated in the past and which it may generate in the future.
Determining a building’s potential future income stream is complicated and involves examining many physical and business aspects of the building offered for sale. This process of examination is called “due diligence”. Remember that term, because as a commercial inspector, a portion of their due diligence is the service you actually provide to your client.
What is a Commercial Inspection?
Just as a land developer may hire a general contractor to oversee a variety of subcontractors who actually perform the construction work, A commercial investor often hires an inspector who’s responsibilities typically involve overseeing a variety of subcontractors. These subcontractors provide specialty inspection reports on building systems such as HVAC, electrical, roofing, structure… or whatever else is called for in the Client/Inspector contract.
Although the Standards are available and extremely useful, the goal of a commercial inspection is to provide the client with the information they need to enter transaction negotiation with as much power in their possession as possible. In negotiation, knowledge and documentation are power. Gathering them is the process of due diligence.
The due diligence provided by commercial inspectors will vary, sometimes substantially, with the nature of the transaction. Variables may include building age, type, use or location. Although the client must make the final decision on what services will be supplied, the expertise of the inspector in providing advice and insight may be crucial. Background for providing this advice may require a preliminary inspection by the inspector, the inspector’s sub-contractors and sometimes the building’s maintenance personnel.
