How to Start a Home Inspection Business: The Complete Guide

How to Start a Home Inspection Business

People often think real estate agents are the only professionals when it comes to pairing homebuyers with their dream homes. However, home inspectors are just as vital during the homebuying process. 

As a home inspector, you make sure prospective homebuyers are aware of everything going on in their home—both the highly visible and more hidden—so they can make an informed (and safe) decision. Thus, if you love health and safety standards and are ready to do a little sleuthing, starting a business in home inspection could be the way to go.  

To learn how to do just that, keep reading for a step-by-step process for starting a home inspection business.

Step 1: Write a Business Plan

Sitting down to write your business plan is one of the first steps for starting a home inspection business. This critical document helps you start, manage, and grow your business by exploring the following topics:

  • Target market: Your target market defines who you will offer your home inspection services to. For most home inspection businesses, your target market includes homebuyers, real estate agents, and lenders.
  • Competitors: When starting your business, research your competitors. How are their businesses similar or different from yours? How will you set your business apart?
  • Marketing: What is your unique value proposition? How will you package it in a way that attracts more customers to your business?
  • Profitability: Your initial startup investment will affect your profitability during the early stages of starting a home inspection business. How long will it take to repay your loan while meeting your recurring expenses? Creating a revenue forecast that extends three or more years in the future will help you understand your financial situation.

Step 2: Register Your Business

With the bulk of your planning out of the way, it’s time to start legally setting up your business. To register your business in the state in which you’ll operate, follow these steps.

Choose a Business Entity

Each business operates as some type of business entity or business structure. Many “solopreneurs” operate under a sole proprietorship. This basic business structure often requires no paperwork and is easiest to form. However, sole proprietorships offer zero liability protection—your personal assets are vulnerable in a legal dispute.

The next most common business structure is a limited liability company (LLC). Home inspection business owners who operate as LLCs choose whether they’re taxed as sole proprietors or corporations. Unlike a sole proprietorship, you enjoy personal liability protection, should you find yourself in a legal situation. Moreover, LLCs tend to pay lower annual fees than other business structures.

Of course, there are many other business entity types to choose from, each with their own degree of legal protection, tax implications, regulations, and more. Consider meeting with a business attorney or tax advisor to decide which entity is best for your business.

Register for Taxes

If you plan on hiring employees, you’ll need to obtain an employer identification number (EIN). However, even if you’re the only employee of your business, it’s still a good idea to apply for this nine-digit number that identifies your business much like a social security number identifies individuals. An EIN will simplify tax filing and will also be necessary when opening a business bank account or applying for a loan.

Fortunately, applying for an EIN is a simple process. You can apply online with the IRS, and you should receive your EIN within minutes of applying.

Choose a Business Name

When it comes to starting a home inspection business, your business name is a step worth careful consideration. You want to ensure that your business name is unique and won’t be confused with another company. Also, a business name that reflects your brand is best—it is often potential customers’ first impression of your business.

After settling on a business name, conduct a quick search with your state’s Secretary of State business search and the U.S. Patent and Trademark Office. Also, be sure to check if the domain name is open, using sites like Name.com, so you can secure your business website.

With your name and entity type chosen, you’re ready to register your business with the state. Unless you opt for a sole proprietorship, this will involve filing some paperwork and paying a nominal fee.

Step 3: Obtain Business Licenses, Permits, and Insurance

Securing the proper business licenses and permits is essential to operate a legal home inspection business. Requirements will vary by your city and state, so be sure to consult your local city hall and state licensing board. 

American Home Inspectors Training has created a list of requirements by state. For example, the state of Wisconsin enforces the following requirements when starting a home inspection businesses:[1]

  • Pass the NHIE and WI State Exam
  • Pay a $150 application fee
  • Renew your home inspection license every two years
  • Continuing education (40 hours every two years)

Operating as a home inspector exposes you to several liabilities and potential lawsuits. To protect their businesses, many home inspectors have the following insurance policies:

  • General liability: Coverage for general liabilities or mistakes that occur while on the job. For example, an employee may trip and break a piece of furniture.
  • Errors and omissions:  Protects your business against claims of negligence. For example, failing to note a damaged chimney could result in the homeowner paying additional costs for repairs, which could have been negotiated during the buying process.
  • Crime/fidelity: Coverage against claims of embezzling, wire fraud, false invoices, and theft of private property.
  • Inspection equipment: Coverage for when your equipment is damaged or stolen from a locked home during an inspection.
  • Workers compensation: Coverage for employees injured while working on the job (this is required).

Step 4: Price Your Services

The U.S. Department of Housing and Urban Development says the typical fee for a home inspection ranges from $300 to $500.[2] However, it will vary by job and location. For example, you may add an additional charge to inspect items not included in your base services, such as swimming pools, hot tubs, and guesthouses. You’ll also want to consider what other home inspection companies in your area charge so that you’re competitively priced.

Be sure to outline your agreement in a home inspector contract to avoid any confusion—or legal repercussions—during and after the inspection.

Step 5: Open a Business Bank Account and Credit Card

Separating your business and personal finances is a best practice for any small business owner and is necessary when operating an LLC or corporation. The following steps will help make separating your personal and business assets and expenses more manageable.

Open a Business Bank Account

Opening a business checking account is useful for drawing a clear line between your personal and business finances. Use this dedicated account to deposit any payments collected from your home inspection gigs. The same applies to your business expenses—you should only withdraw funds from this account to pay business expenditures.

Open a Business Credit Card

There’s no need to sift through multiple credit card statements for business expenditures if you have a dedicated card. A business credit card isolates all your business-related expenses on a single statement, which makes tax filing so much more convenient.

Many business owners may not know that you have a separate credit score for your business. Using a dedicated business credit card builds your credit history and improves your financial health over time. You will rely on a healthy business credit score, should you ever apply for a business loan in the future.

Step 6: Secure Startup Funding

So, how much does it cost to start a home inspection business? A sample business plan by BPlans estimates startup costs at $6,000.[3] However, this figure may vary by your location and unique business needs.

To help you calculate startup costs, be sure to factor the following expenses into your small business budget:

  • Equipment (ladder, lighting, electrical and plumbing tools)
  • Accounting software
  • Marketing and advertising
  • Rent, if opening a physical office
  • Salary if employing multiple home inspectors
  • Transportation, when traveling to various jobs

Again, the total initial investment for starting a home inspection business depends on your unique business. For example, if you’re a one-person operation, you won’t pay employee salaries. Or if you’re a home-based business, you save money by not renting an office.

Even after saving where you can, you might still need startup funding. Here are startup financing solutions you can consider:

  • SBA loans: Partially guaranteed by the SBA, these loans have low interest rates and long repayment terms but they are competitive and have a long application process.
  • Term loans: Often used for funding one-off, specific purchases. Term loans typically offer a set repayment date, fixed number of payments, and a fixed or variable interest rate.
  • Business line of credit: This flexible funding solution is often great for recurring expenses, like software subscriptions and transportation costs. Still, you can use it to fund a wide variety of business expenditures.
  • Bootstrapping: Bootstrapping is using your personal cash reserves to fund your business. By stretching your dollar to its fullest, you can run a lean enterprise while maximizing your profit margins—beneficial during a startup’s early stages.

There are a variety of ways to secure the funding for starting a home inspection business. Settling on the right financial solution will depend on your unique financial needs.

Step 7: Invest in Home Inspection Software

Just as you would have dedicated software for accounting or customer relationship management, home inspectors also use web-based software. Home inspection software makes it easy to generate home and property-related inspection reports and manage appointments. Popular home inspection software includes:

  • Home Inspector Pro
  • HomeGauge
  • EZ Inspection Software
  • Inspection Manager
  • American Home Inspectors Training (AHIT)
  • Property Inspect

Step 8: Market Your Business

To ensure your business is successful, you’ll need to let people know you’re open. Here are some ways to market your new business.

Network With Real Estate Agents

Naturally, homebuyers are within your target market but don’t forget to include local real estate agents in your network. If you do a great job and offer competitive pricing, you can create a mutual partnership with these professionals. Being an agent’s dedicated home inspector means repeat business and regular cash flow throughout the year.

Word-of-Mouth Marketing

While the results aren’t as easily measurable as a Facebook ad campaign, word-of-mouth marketing is still a powerful tool. As a service-based business, customers are more likely to return with repeat business—or recommend you to someone they know—if you deliver exceptional service.

With enough patience, you can build an extensive network of repeat clients that solicit your services each time they work with a new client.

Leverage Social Media

Social media is no longer just for connecting with your high school pals. Now, businesses are using it to build their web presence, connect with their target market, and grow their brand.

For example, you can join various Facebook groups within the real estate or homeowner’s communities. Regularly posting helpful content, answering questions, and engaging real estate professionals will grow your network. You never know how one contact you make today could result in a business opportunity in the future.

The Bottom Line

This guide on how to start a home inspection business should give you the tools you need to get your business off the ground. Don’t hesitate to seek out professional guidance from a business attorney or tax professional when navigating some of the more intricate processes. It can take time to start a business, but doing so thoughtfully and legally will help set you up for future success.

Article Sources:

  1. AHIT.com. “Home Inspection License Requirements.”
  2. HUD.gov. “Ten Important Questions to Ask Your Home Inspector.”
  3. BPlans.com. “Home Real Estate Inspection Business Plan.”

Dan Marticio

Dan Marticio is a small business owner and contributing writer at JustBusiness, specializing in business finance and entrepreneurship. He’s written on a broad range of topics from stocks and net worth to productivity hacks. He helps SMBs scale and profit through compelling content.

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