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| October 2009 Inspector eNews |
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October 2009 | Archives
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Ethics- Maintaining Good Ethics in a Lousy Economy I began my inspection career in the early 90’s during an economic downturn. I didn’t know that at the time. I must admit I did not watch much news on TV and the purpose of the newspaper was to keep up with the 49ers (sorry Raiders fans) and to line our birdcage. Somehow, I did not get the memo that there was an economic downturn. I just knew I had a wife and two kids and failure was not an option. My concept of marketing was little more than driving a shopping cart in Safeway. Market was someplace you go to…so marketing must be something you do at the market. Okay, so I wasn’t the sharpest crayon in the box. Over the last couple of years marketing (the for real kind) has become a subject I have become quite interested in. Part out of necessity (I got the memo this time around.), and part as kind of a hobby. As I have traveled to different parts of the country and interacted with other home inspectors I have discovered that there is a tension between business and marketing. Some of the tension is due to the location of your business. For example there are marketing practices inspectors use in some other states that California inspectors can’t use. There are states where inspectors can give gifts to Realtors® in the hope of getting business. There are states where inspectors can receive third party compensation for the referral of business to Realtors®. Practices such as these violate the California Business and Professions Code as well as the CREIA Code of Ethics. In California, practices such as these are viewed as creating conflicts of interest. The CREIA Code of Ethics states, “Home inspectors shall not…offer or deliver any compensation, inducement or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company, or for inclusion on a list of recommended inspectors, preferred providers, or similar arrangements. “ Simply put you can’t give stuff to the owner, broker or agent for the referral of business. That is considered to create a “conflict of interest” or activity that will “compromise, or appear to compromise, professional independence, objectivity, or inspection integrity”. On occasion I am asked, “Can I give stuff to clients?” A marketing practice which is becoming popular across the country is the use of coupons. All kinds of coupons….. gas coupons, grocery coupons, airline coupons, travel coupons and restaurant coupons. Generally, the inspector buys the coupons in bulk at a steep discount and offers them to the client as a thank you for the clients business. Let’s take the restaurant coupon as an example. The inspector buys a block of coupons for a particular restaurant. The inspector gives a coupon to the client. The client has a dinner at the restaurant. The client enjoys his or her dinner and is likely to eat there in the future and refer the restaurant to his friends. If everything goes well, the client is happy, the restaurant is happy. Everyone is happy :-). Does that practice violate the Code of Ethics? It would clearly violate the Code of Ethics to give the coupon to the owner of the inspected property, broker or Realtor®. That would be delivering compensation or reward for the referral of business. But, what about the client? Would it be a violation to give the coupon to the client? Yes and no (spoken like a true home inspector.) What does the Code of Ethics say? “Home inspectors shall not…..Accept compensation, directly or indirectly, for recommending contractors, services, or products to inspection clients.” It would violate the Code of Ethics for the inspector to sell the coupon to the client. The inspector cannot receive any compensation for the coupon. The coupon would have to be a gift, a thank you to the client. If the inspector receives any compensation it would violate the Code of Ethics. If the inspector gives the coupon to the client it would not violate the Code of Ethics. Lest you think I am suggesting we all get in the coupon business, there is another factor to consider…the business side of equation. An inspector needs to strike a balance between his business needs and his marketing needs. The obvious example is inspection pricing. Jerry McCarthy recently sent me an email about an inspector who was charging a very low price for inspections. That is great marketing, but it is a few crayons short of a full box on the business side of the equation. The inspector may be doing a lot of inspections but will likely be unable to keep the business going in the long term. (I would suggest that an exorbitant price may not make good business sense either. The law of supply and demand applies to the home inspection industry as well.) The inspector needs to ask two questions before embarking on any marketing campaign. First, is it ethical? Does this marketing campaign follow the letter and the spirit of the CREIA Code of Ethics? Second, does this marketing campaign make business sense? An inspector must always hold his marketing dollars accountable. What is the return on the investment? If an inspector spends a dollar on marketing how many dollars (plural) will the inspector earn from that dollar investment? If it is ethical and makes business sense, I wish you well. Submitted byDavid Pace, CREIA MCI, Ethics Chair
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Congratulations! New Candidates Kevin S Smith New CCIs Tom Fasold (6/2009)
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October 2009 | Archives
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Ethics- Maintaining Good Ethics in a Lousy Economy I began my inspection career in the early 90’s during an economic downturn. I didn’t know that at the time. I must admit I did not watch much news on TV and the purpose of the newspaper was to keep up with the 49ers (sorry Raiders fans) and to line our birdcage. Somehow, I did not get the memo that there was an economic downturn. I just knew I had a wife and two kids and failure was not an option. My concept of marketing was little more than driving a shopping cart in Safeway. Market was someplace you go to…so marketing must be something you do at the market. Okay, so I wasn’t the sharpest crayon in the box. Over the last couple of years marketing (the for real kind) has become a subject I have become quite interested in. Part out of necessity (I got the memo this time around.), and part as kind of a hobby. As I have traveled to different parts of the country and interacted with other home inspectors I have discovered that there is a tension between business and marketing. Some of the tension is due to the location of your business. For example there are marketing practices inspectors use in some other states that California inspectors can’t use. There are states where inspectors can give gifts to Realtors® in the hope of getting business. There are states where inspectors can receive third party compensation for the referral of business to Realtors®. Practices such as these violate the California Business and Professions Code as well as the CREIA Code of Ethics. In California, practices such as these are viewed as creating conflicts of interest. The CREIA Code of Ethics states, “Home inspectors shall not…offer or deliver any compensation, inducement or reward to the owner of the inspected property, the broker, or agent, for the referral of any business to the inspector or the inspection company, or for inclusion on a list of recommended inspectors, preferred providers, or similar arrangements. “ Simply put you can’t give stuff to the owner, broker or agent for the referral of business. That is considered to create a “conflict of interest” or activity that will “compromise, or appear to compromise, professional independence, objectivity, or inspection integrity”. On occasion I am asked, “Can I give stuff to clients?” A marketing practice which is becoming popular across the country is the use of coupons. All kinds of coupons….. gas coupons, grocery coupons, airline coupons, travel coupons and restaurant coupons. Generally, the inspector buys the coupons in bulk at a steep discount and offers them to the client as a thank you for the clients business. Let’s take the restaurant coupon as an example. The inspector buys a block of coupons for a particular restaurant. The inspector gives a coupon to the client. The client has a dinner at the restaurant. The client enjoys his or her dinner and is likely to eat there in the future and refer the restaurant to his friends. If everything goes well, the client is happy, the restaurant is happy. Everyone is happy :-). Does that practice violate the Code of Ethics? It would clearly violate the Code of Ethics to give the coupon to the owner of the inspected property, broker or Realtor®. That would be delivering compensation or reward for the referral of business. But, what about the client? Would it be a violation to give the coupon to the client? Yes and no (spoken like a true home inspector.) What does the Code of Ethics say? “Home inspectors shall not…..Accept compensation, directly or indirectly, for recommending contractors, services, or products to inspection clients.” It would violate the Code of Ethics for the inspector to sell the coupon to the client. The inspector cannot receive any compensation for the coupon. The coupon would have to be a gift, a thank you to the client. If the inspector receives any compensation it would violate the Code of Ethics. If the inspector gives the coupon to the client it would not violate the Code of Ethics. Lest you think I am suggesting we all get in the coupon business, there is another factor to consider…the business side of equation. An inspector needs to strike a balance between his business needs and his marketing needs. The obvious example is inspection pricing. Jerry McCarthy recently sent me an email about an inspector who was charging a very low price for inspections. That is great marketing, but it is a few crayons short of a full box on the business side of the equation. The inspector may be doing a lot of inspections but will likely be unable to keep the business going in the long term. (I would suggest that an exorbitant price may not make good business sense either. The law of supply and demand applies to the home inspection industry as well.) The inspector needs to ask two questions before embarking on any marketing campaign. First, is it ethical? Does this marketing campaign follow the letter and the spirit of the CREIA Code of Ethics? Second, does this marketing campaign make business sense? An inspector must always hold his marketing dollars accountable. What is the return on the investment? If an inspector spends a dollar on marketing how many dollars (plural) will the inspector earn from that dollar investment? If it is ethical and makes business sense, I wish you well. Submitted byDavid Pace, CREIA MCI, Ethics Chair
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Congratulations! New Candidates Kevin S Smith New CCIs Tom Fasold (6/2009)
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