What Do Home Inspectors Need to Know About Commercial Inspections?

May 11, 2021 | 
commercial inspections

Performing home inspections can be an extremely lucrative business, and many home inspectors are more than satisfied performing residential inspections throughout their entire career. 

But have you ever seen a shopping center or office building under construction and thought to yourself, “I wonder what it would be like to inspect one of those”?

You’ve come to the right place! 

Commercial inspection is a large, separate market that’s mostly untapped. If it’s the right fit for you, you could see a rewarding, diverse experience inspecting a variety of building types—not to mention see vastly increased profits.

In this post, we’ll cover the basics of commercial inspections, what kinds of clients hire commercial inspectors, and answer your questions, such as can residential inspectors do commercial inspections? And if not, how can you become certified to perform commercial inspections in your area? 

What is a commercial inspection?

Most inspectors specialize in residential properties. But there are many other building types out there besides that single-family dwelling, right? They also need to be inspected.

A commercial inspection is an in-depth review of a commercial building’s components. A commercial building is a structure whose purpose is to generate profit (as opposed to a residential building, the purpose of which is to give people a place to live). 

Of course, sometimes these purposes overlap, as in the case of an apartment building. People may live there, but the owners are making a profit from rental income.

Commercial properties are generally divided into eight types:

  • Industrial—Includes manufacturing facilities and warehouses
  • Retail—Includes standalone stores, malls, and shopping centers
  • Office—Includes office buildings, office suites, and medical/dental offices 
  • Multi-dwelling unit (MDU)—Includes condominiums, townhomes, and apartment buildings
  • Hotel and lodging—Similar to MDUs, but designed for temporary rather than long-term residence
  • Restaurants—Similar to retail spaces, but include a large kitchen with commercial appliances
  • Luxury home or estate—These properties may technically be residential, but inspections are still often classified as a commercial inspection. This is because luxury homes are usually designed with commercial features such as large square footage, commercial kitchen appliances, and multiple HVAC systems.
  • Miscellaneous/special-purpose buildings—Includes churches, schools, airports, and casinos

Much like a typical home inspection, the purpose of a commercial inspection is to provide as much information as possible about the state and safety of building systems, such as HVAC, electrical, roofing, windows and doors, and any other component or attached system. 

The inspector’s client (usually a commercial investor) can then use that information when negotiating the purchase of the building and to make decisions about which components need to be repaired or replaced.

What happens during a commercial building inspection?

Often, the process of commercial inspections includes a preliminary inspection by the inspector himself or herself, along with inspections by the inspector’s subcontractors who have specializations (such as HVAC, commercial kitchens, or electrical engineering). The building’s maintenance team may also be involved in the inspection process. 

A certified commercial inspector will follow the industry-accepted guidelines, or the International Standards of Practice for Inspecting Commercial Properties (ComSOP). These standards were developed by the International Association of Certified Home Inspectors (InterNACHI) and the Certified Commercial Property Inspectors Association (CCPIA).

A standard commercial building inspection starts with a walk-through visual examination of the physical condition of the property. The inspector looks for any noteworthy issues with the critical components of the building, such as:

  • Electrical systems
  • Heating, cooling, and ventilation systems
  • Kitchen and connected appliances
  • Plumbing systems
  • Roof surface and drainage
  • Basement and foundation
  • Parking lots and sidewalks
  • Decks, balconies, and any other exterior elements
  • Safety and accessibility components
  • Any other area specified under the agreed-upon scope of work  

Next, the commercial inspector will request records and documents related to the property and its construction. These documents might include maintenance records, building and fire code violation records, lease agreements, blueprints, and Certificates of Occupancy. The inspector will also interview people associated with the building to get a more well-rounded picture of the property’s condition.

Finally, as in any standard home inspection, the inspector will provide an inspection report to his or her client. This report will detail the inspector’s findings and provide an evaluation of the building’s current condition.  

Who hires commercial inspectors?

Most commercial inspection clients are businesspeople and investors who are considering investing in or purchasing the property in question. These commercial investors have likely been through this process before and have an expectation of how the purchase process (including the inspection stage) will go.

As opposed to residential inspection clients, who are looking for a comfortable and safe place to live, these clients’ main concern is normally whether the commercial property will be able to maintain the same stream of revenue that it did in the past. 

One caveat, however: just as in a residential inspection, a commercial home inspector’s job is not to determine the worth of the building. This job should be left to an appraiser. Instead, the inspector will give the client a good idea of the condition of the property, which can help the client come to a conclusion about its potential for income.

Can residential inspectors do commercial inspections?

Residential and commercial inspections have many commonalities and require many of the same skills. However, an inspector who doesn’t have the experience or training in commercial property inspection can’t simply take a one-off job inspecting a factory or office building and assume everything will go smoothly. 

Let’s take a look at the differences in process and pricing between the two types of inspections. 

What makes a commercial inspection different from a residential home inspection?

In a residential home inspection, the inspector evaluates the home’s condition for—in most instances—the potential buyer. The purpose of the visual inspection is to uncover any repair needs or problems that might affect the safety or comfort of its residents. The client can then use the inspection report to negotiate repairs or a lower purchase price (or back out of the sale entirely).

A commercial building inspection holds many similarities to a residential home inspection. In many aspects, the process is the same; the inspector does a walk-through examination of the property, then documents their findings for the client. The inspector looks for any health and safety issues, items in need of repair, or any component that seems to be in less-than-ideal condition.

But the commercial inspection can quickly become more complicated and can take longer than a standard home inspection. For example:

  • Most commercial buildings have a much larger square footage
  • The inspector will need to inspect a greater variety of areas, such as parking lots, elevators, and commercial kitchens
  • Commercial properties also often have multiple HVAC and electrical systems working in tandem

Also, a commercial inspection will likely require more members in the inspecting team to get the job done.

Pricing for residential vs. commercial inspections

Residential inspection pricing is fairly straightforward. A home inspection typically costs $300-$600 (or more) and lasts 2-4 hours, depending on the size and condition of the home. 

For commercial inspections, the pricing model is usually more complex, following one of these three structures:

  • Flat fee—Common when inspectors have many similar projects or a commercial niche. For instance, if the inspector gets a lot of referrals for medical office buildings in the area, they likely charge a standard fee or a series of flat fees for similar medical office suites.
  • Percentage of sales price—Common in extremely large projects (such as shopping centers and manufacturing facilities). For example, if the sale price were $2 million and the inspection contract was 1.5% of sales, the inspector would receive $30,000. This income would then likely need to be further distributed to any subcontractors that the inspector brought in.
  • Price per square foot—In this pricing model, the inspector charges a set price per square foot. There may be varying sub-fees based on the space type (such as $0.12 for office space and $0.08 for warehouse space).

While residential inspections are usually simple to set up, with the inspector quoting a price and then scheduling a visit, commercial inspections take a bit more planning. Commercial inspectors typically submit formal proposals along with the scope of work, both of which need to be approved by the client before an examination date is scheduled. 

How can I become licensed to conduct commercial inspections?

Just as with residential home inspectors, there is no universal licensing standard across the United States. Each state has different requirements, from types and lengths of training programs, to whether an inspector even needs a license at all.

However, commercial investors most likely want to see verifiable proof that the inspector knows what they’re doing—which means that some sort of certification is almost always a must.

If you’re already a home inspector who’s interested in pivoting to commercial inspections, a great place to start is with InterNACHI. The professional association, which developed the only comprehensive Commercial Standards of Practice in the inspection industry, has a free online Commercial Property Inspection Prerequisite Course for members. 

Once you’ve taken the course, you’ll be able to download and use InterNACHI’s certification logos and begin performing commercial inspections—although we recommend starting with the assistance or supervision of an experienced commercial inspector in your area. 

InterNACHI also offers continuing education courses. Active InterNACHI members are required to take at least 24 hours of online continuing education courses annually and pass the InterNACHI online inspector exam every three years.

If you are a CCPIA member, another certification option is to take their three courses in the commercial inspection standards of practice, code of ethics, and technical training. These courses are free to members and provide a thorough overview of the commercial inspection process and requirements.

Of course, there are several other inspection training courses out there that offer online, in-person or hybrid classes to fit your needs. 

Takeaway

The commercial inspection business is varied and always interesting, with property inspections ranging from office buildings, to retail and restaurant spaces, to industrial spaces and beyond. And commercial clients are often less emotionally invested in the process and are willing and able to pay higher prices for your services.

If you’re a home inspector who’s looking to find a lucrative niche, commercial inspections could be a good choice for you!