1.Goal and Value Proposition
The main goal of home and commercial building inspectors is to help their clients make informed decisions about their pending property purchase.
However, the extent of information of their assistance differ greatly in a way that home inspectors only identify problems and provide recommendations for repair, but commercial building inspectors provide recommendations for further inspections, and opinions of the likely cost of the future capital project.
Furthermore, the report generated by commercial property inspector can also be used for different purposes, such as:
- Negotiating the purchase price of a property (buyer)
- Capital or strategic planning (an owner)
- Loan approval (a lender)
- Triple Net Lease (NNN) (lessee/lessor)
- Predictive/Preventive Maintenance
- Insurance evaluations (an owner, insurance agency)
- Motivation of the Buyer
The primary reason for a buyer to undertake residential and commercial building inspection is to know the condition of a property or real estate they may be purchasing, leasing, financing or simply maintaining. However, aside from this, a home buyer and a commercial property investor have two different motive for hiring property inspectors.
A purchase of residential property deals to a large degree on emotion. Often, a property buyer develops a special attachment to the house, its rooms, and its immediate surroundings upon first sight. Home buyers usually hire residential inspectors because they really love the property and they want to ensure that it can stand the test of time, aside from ensuring that it is safe and sound for them to live in.
Conversely, commercial property purchases deal in money (revenue), thus requiring a great deal of thinking and study. The basic question is “How much?” “How much can I make on this investment?”. A property owner will often hire the expertise of a commercial property inspector to make sure that their investment is safe.
- Standards of Practice
Both commercial building inspectors and residential inspectors follow industry accepted guidelines during an inspection process.
The “Standards of Practice” – created and enforced by American Society of Home Inspectors – serves as minimum guidelines that describe what is and is not required to be inspected by the various associations mentioned during a general home inspection. Many inspectors exceed these standards (permissible) and may also offer ancillary services such as inspecting pools, sprinkler systems, etc.
On the other hand, commercial building Inspectors generally follow industry accepted guidelines of ASTM E2018, the only recognized standard of major lenders. These commercial inspection standards help both the commercial building inspector and the client to understand the scope agreed to for the inspection including the systems or areas to be inspected and is used as a guide to develop said scopes and procedures.
- Scope of Inspection
Both residential and commercial property inspection process include assessment of various aspects of the property, such as topography, drainage, windows and walls, structure, interior elements, roofing systems, mechanical systems, plumbing, and electrical system. They also look for improper building practices, as well as some fire and safety issues.
However, a home inspection is not technically exhaustive and does not imply that every defect will be discovered. Some inspection companies offer 90-day limited warranties to protect clients from unexpected mechanical and structural failures; otherwise, inspectors are not responsible for future failures, as stated in ASHI general limitations and exclusions list.
On the other hand, the commercial property inspection process is more complex and covers more areas than an ordinary residential inspection. More specifically, commercial property inspectors also cover areas such as Americans with Disabilities Act (ADA) and building code compliance, air quality, and conduct site-specific testing like infrared thermography for energy loss, air leakage, roofing, and building envelope moisture intrusion.
- Focus of Inspection
Residential home inspectors are constantly looking from a performance viewpoint. Does the water get hot in the bathroom in a reasonable amount of time? Do the windows open properly? Are there enough outlets? These sorts of questions are the usual focus.
In contrast, commercial real estate inspectors usually focus at the life expectancy of the building and its attachments, and what is going to have to be done in the next five years. This includes asking questions that concern five major systems: electrical, plumbing, heating and AC, roofing and structure.
“Does the roof look like it will last at least five more years with normal maintenance?” “Can the HVAC system get by?” “Does the electrical need to be upgraded due to the change in use of the building?” These series of questions are always tempered with consulting the owner/buyer to find out what it is they are looking for and what their particular concerns are.
- Time Frame
Most home inspections take approximately 2-3 hours, depending on many things, such as the size of the home, weather conditions, state requirements for a home inspection, etc.
A commercial inspection can take much longer – from 1-6 hours at the site, and days at the office to prepare a report that will include: A brief description of each component, an identification of deficiencies discovered, and table of costs to correct the deficiencies. From start to finish, the commercial property inspection process generally requires about three weeks, though it may be possible to complete faster, when necessary.
- Liability Risk and Responsibility
Both residential and commercial inspectors are liable if they overlook a single problem on the property they are assigned to examine. The buyer can look to the inspector for reimbursement if the inspector’s mistake will cause the buyer to invest in a new system.
However, the scope of the responsibility of a commercial property inspector is much broader than that of home inspectors, and they assume more risk and face greater challenges. Buildings are larger, sometimes to an intimidating degree for a novice commercial inspector. Clients may also be more demanding with tight deadlines and more money on the line.
A residential inspector who overlooks an HVAC defect could cost the customer $10K or more. But with commercial properties, $10K is pennies compared to tens or hundreds of thousands required to replace a new system.
To help streamline the inspection process and minimize the possibility of errors and lapses, commercial inspectors may work in teams. The larger the property, the more a team approach makes sense.
Contact Lockatong Engineering today for more information about our Residential and Commercial Property Inspection Services work. Call us at 609.397.4106 or visit our website www.lockatong.com
