DORA Recommends Do NOT Regulate Home Inspectors in Colorado

On October 15, 2019, the Department of Regulatory Agencies (DORA) submitted a report to the Colorado General Assembly, summarizing the results of a Sunrise Review Application proposing licensing of home inspectors.

The report’s conclusion from DORA recommends: Do not regulate home inspectors in Colorado.

Statutes in Colorado require that individuals or groups proposing legislation to regulate a profession first submit information to DORA to conduct a sunrise review.  The individual or group must outline whether the unregulated profession harms or endangers the public, and submit justification for the regulation.

The sunrise application was submitted by a licensed Colorado real estate broker in conjunction with the Colorado Association of Realtors.  The full report can be read here.

Home Inspectors of Colorado – time to celebrate!  Break out the bubbly and raise your glass!  Let the dancing in the streets begin…

…Or….is this really a time to celebrate, or a wake-up call to our profession?

Only Remaining Unregulated Profession

With the acceptance of the DORA report recommendation, Home Inspectors will be the only entity in the real estate process not subject to licensing or regulation.

Real estate agents, mortgage professionals, appraisers, and settlement companies are all licensed and regulated in Colorado.  This was one of the fundamental arguments of the sunrise applicants.  Home inspectors and the findings of the inspection can have a significant impact on the purchaser’s decision to move forward with the transaction.

What safeguards are present in our industry to ensure the competency and accuracy of a home inspection?  Most home inspectors rely, to some extent, on the referrals from real estate agents, as a significant source of new business.

If we ignore the fact that with this recommendation from DORA, our industry remains unregulated and celebrate, we risk further alienating the very people that raised the concerns to begin with – the Colorado Association of Realtors.

And while many of us in the home inspection profession in Colorado had strong concerns with the regulation of our profession, most of us took a neutral position and determined that if regulation were to come, then our best course of action was to help shape the legislation and be a part of the solution.

Hence efforts by ASHI, InterNACHI, and others were made to provide feedback and input to DORA throughout their review process.

The applicants state that the primary reason to consider the regulation of home inspectors is to protect consumers from harm.  And the report concluded that while harm does occur, the possibility is remote and the arguments for regulation were tenuous.

But we cannot ignore the warning to our industry and the wake-up call that this sunrise review provides to us, and take appropriate actions to answer the industry concerns.

Alternatives to Regulation

Since the verdict was to not regulate home inspectors in Colorado, we decided to outline alternatives to the plan. The DORA sunrise review report outlines industry trade associations that exist and are vibrant in Colorado.  These associations help to provide training, clear professional standards, a scope of practice to follow, and guidelines for ethical conduct.

To address the concerns of the groups that raised the need for regulation, there are actions that home inspection professionals and companies can take.  We would argue that as a voluntary set of actions all home inspectors consider the following 4 items;

1. Formal Training of New Inspectors

All new home inspectors entering the profession, no matter their knowledge of homes and construction, should participate in a formal home inspection training program.  This could be an in-person class, online class, or self-paced study program. One that provides the basic knowledge of home systems can help to establish a baseline to build on for all inspectors.

Currently, an individual can become a home inspector and have zero formal training and be forced to learn on the job.  Completion of an initial training program would at least establish a minimum set of criteria on the requirements of home inspectors.

We comply with this recommendation by having all of our home inspectors obtain an ASHI certification.

2. Membership in Trade Association

Whether a home inspector decides to pursue membership in the American Society of Home Inspectors (ASHI) or the International Association of Certified Home Inspectors (InterNACHI), both organizations provide significant tools to help an inspector succeed.

Both organizations have a Standard-of-Practice that outlines minimum features inspected on a home.  And, both organizations offer educational opportunities and resources to support an inspector’s growth.

We believe that anyone working in Colorado as a home inspector should be a member in good standing in one of these organizations.

3. Annual Continuing Education and Training

As members in good standing of either organization, continuing education is required on an annual basis to maintain your certification.  Each organization is continually releasing new classes that can be taken online.

Both organizations offer an annual trade-show where educational classes are offered.  At least 20 hours of CE credits are required for each group annually.  This requires even the most seasoned inspector to continually sharpen-the-saw in their knowledge.

4. Voluntary Background Checks

Home inspectors are often inside homes by themselves and have access to occupant’s personal property.

While the DORA report indicates that criminal conduct is not widespread in the home inspection industry at this time, we believe that voluntarily having a criminal history and background check performed on a home inspector could help to increase confidence in the integrity of the inspector and the overall inspection industry.

Going Above and Beyond

In addition to these 4 minimum actions home inspectors can take, we believe there are ways to go above and beyond, to ensure further confidence in the profession.

These are all actions our company current takes which increases our trustworthiness, protects buyers, and aids our real estate partners.

5. Professional and General Liability Insurance

Carrying a minimum level of both professional and general liability insurance shows to the consumer that in the event of a significant concern developing after an inspection, the inspector or inspection company has backup protection for themselves and the consumer.

6. Warranty Programs

Many home inspection companies offer some type of limited warranty on their inspections.  And while most of these warranties have a limit to coverage and restrictions on what is covered, there is an added layer of protection to consumers for post-inspection concerns.

We have set up our own internal warranty program because we did not find one suitable that actually covers our customer’s needs. That’s why we created our Shield Warranty Program.

7. After-Inspection Support Programs

Our support to consumers shouldn’t end when we walk out of the home and issue our inspection report.

Supporting both home buyers and real estate agents with their post-inspection questions, including move-in support and home maintenance support validates to the industry our long-term commitment to the life-cycle of home ownership.

On our Ask Your Inspector page, we offer many informational blogs and articles, the ability to ask follow up questions about a report, and provide a contractor referral list.

Conclusion

While DORA recommended not to regulate home inspectors in Colorado, at Scott Home Inspection, we believe that self-regulation is possible in the industry that will allow us to maintain or restore confidence with our real estate agent partners.

By holding ourselves to a standard-of-excellence and maintaining a minimum set of voluntary actions, including seeking initial formal training, maintaining association membership, achieving annual continuing education credits, and submitting to a voluntary criminal background check, we can validate to the real estate community that we can be a reputable and reliable partner.

Fellow home inspectors, go ahead and tip back that glass and celebrate that we avoided being subject to regulation and licensing for the time being.  But take heed in the strong message that was sent to us with this sunrise review, and elevate your game to meet the expectations of consumers and our real estate agent partners.