When Bill Redfern was a real estate broker in Canada, he often ran into delays and problems with home inspections, which put a damper on sales.
So, he started thinking about launching a home inspection company, and eventually opened the first franchise of A Buyer’s Choice Home Inspections in Halifax, Nova Scotia, in 2007.
“I saw a real need for professionalism, standardization and uniformity in the home inspection industry,” said Redfern, 46, the company’s president and chief executive.
By the time A Buyer’s Choice celebrated its second anniversary, it had become the largest home inspection franchisor in Canada, Redfern said, with double-digit increases in the number of franchises and revenue, each year.
Then, the real estate downturn hit, and Redfern decided the time was right to enter the U.S. market — particularly Florida, where mounting foreclosures translated into a need for inspections.
He moved A Buyer’s Choice’s corporate office to Pompano Beach in October 2011 and created a training center for franchisees.
Today, A Buyer’s Choice has 30 franchises in the United States, including 16 in Florida, plus 130 in Canada and 30 more spread out among the Czech Republic, New Zealand, Chile and Slovakia, said Redfern, who lives in Fort Lauderdale.
Hank Lobdell bought a franchise in Tampa last August, after working in property management for 20 years.
“I wanted to be my own boss again, and everything I saw that they offered, and the value in the company, as well as the procedures they had in place, it just seemed logical,” said Lobdell, 46.
He did 15 home inspections in March, and is on target to do 20 to 25 this month, charging $270 for a condo, and up to $500 for a home, as well as $150 for four-point wind mitigation reports.
Lobdell is trying to add five inspections each month, and when he reaches his goal of 50 a month, he figures he can take home $140,000 to $160,000 a year after taxes.
“It’s been great,” he said. “Tampa is a market that’s pretty strong right now, a market that’s coming back, and in certain price ranges, homes are getting multiple offers. I’m developing relationships with Realtors, and the Realtors using me say they love the service and love the reports I submit.”
A Buyer’s Choice has seen its revenue rise with its franchise volume, from $800,000 in 2007 to $2 million in 2012.
Overall, the home inspection industry is largely fragmented, with most inspectors operating as independent business men and women, said Bill Jacques, president of the Des Plaines, Ill.-based American Society of Home Inspectors. Other large franchisors include AmeriSpec and Pillar to Post, said Jacques, who runs his own home inspection business in Charleston, S.C.
Home inspectors are now reaping the benefits of the upswing in the housing market, he said.
“All the inspectors I know are all very busy, so it looks like the market is really on the rebound,” Jacques said.
A Buyer’s Choice franchise costs about $35,000 to open, including the $29,900 franchise fee — which includes marketing materials — plus the costs of tools and equipment, Redfern said. The company offers a 10 percent discount for veterans. Additional royalties on revenues start at $15 per inspection.
Most franchisees earn $75,000 to $80,000 in revenue the first year, which can go as high as $300,000 a year by the third or fourth year, he said.
For prospective franchisees, Redfern said he prefers men and women who have a customer service background.
“If they know how to deal with people, we can teach them the technical,” he said. Franchisees get two weeks of “boot camp” training in South Florida, including a week of field training, after extensive home study.
Helen Senis bought A Buyer’s Choice Home Inspections franchise in Kingston, Ontario, last June, and jumped at the chance to buy the first South Florida franchise four months ago, covering Miami Beach, Fisher Island, North Bay Village, Surfside and Bal Harbour.
“I felt that the South Beach-Miami area would hold its own in terms of real estate activity, even if the real estate market fluctuated, and it would have a strong recovery,” said Senis, a single mother who has been involved in real estate since 1989, and wanted the flexibility and financial security of owning her own business.
She had planned to hire inspectors here but has since realized she needs to concentrate on her Canadian franchise, and is looking to sell the Miami Beach territory.
Overall, Redfern is hoping to open 15 to 18 new franchises in Florida each year, including six by the end of this year in South Florida, a market he considers ripe with potential.
“If you look at the number of real estate agents and transactions, there’s a huge need for home inspections,” said Redfern, adding that each franchise can do as many as 300 to 500 inspections a year.
Inspections are usually required by home buyers who want to make sure there is nothing structurally wrong with a home, that it’s free of safety hazards, and so they can budget for any fixes. Lenders also often require an inspection report before they provide financing.
Foreclosed homes need to be checked, even more so than others, because of deteriorating conditions, said Hossein Kasmai, chief executive of Doral-based Franchise Creator, who is working with A Buyer’s Choice to sell franchises.
Among the key items inspectors check are the roof, windows and doors, plumbing, electrical, cooling and heating systems and insulation.
“What we are really looking for is major electrical, mechanical or structural problems,” said Jacques of the American Society of Home Inspectors, who has found original wiring dating back more than 100 years. “We’re always going to find doors that don’t open and close properly or screens missing, but what we are really looking for is: does it need a new roof? What kind of condition is the electrical system?”
Earlier this month, Zach Wetendorf had his 1926, three-bedroom, two-bath bungalow in the Seminole Heights area of Tampa inspected by Lobdell, before listing it on the market
“We’re trying to sell it ‘For Sale by Owner,’ so we thought it would be a good way to see if there is anything in the home we need to work on or anything we couldn’t fix, so he could list it as something he found and put it in our disclosures so it reduces our liability,” said Wetendorf, 27.
On average, A Buyer’s Choice home inspectors charge $400 for each inspection. In Florida, inspections must be performed by a licensed inspector. Other states vary in their requirements.
“If you’re spending $200,000 or $600,000 or $800,000 on a home or condo, you’re really almost insane not to spend $400 to have the peace of mind and put the onus on someone else,” Redfern said.
For him, the business has been a continuation of a lifetime involvement in real estate.
Born in Saint John, New Brunswick, Redfern grew up with an entrepreneurial father who had a real estate development and construction business.
Redfern worked the cranes and other equipment on job sites during summers and holidays, and he bought his first property at 18.
He had been familiar with South Florida since the 1970s, because his grandfather had wintered in West Palm Beach.
Moving the company here was an easy choice, he said, with good weather and excellent air connections for franchisees to fly in for training. Redfern enjoys boating and is currently training for a triathlon.
Next, he is looking to expand franchises worldwide, including in Latin America. He will be traveling to Panama and Costa Rica later this week, and Mexico City two weeks after that.
“We’re in Chile and we expect Latin America to develop further in the next year; and we expect Europe to develop significantly over the next two to three years,” Redfern said. “But our primary focus is the U.S. right now.”