Welcome to the Inspection Insider. Here, seasoned home inspectors share their technical expertise and experience to help you improve your own inspections.
In this post, Jonathan Hallmark of Hallmark Inspections, LLC in Texas shares how a client’s desire for electrical upgrades turned into a claim. He then utilizes his 10 years of teaching and 20 years of construction experience to help you avoid similar electrical home inspection claims. Follow Jon Hallmark on Instagram to see how he educates his current and future clients with finds in the field.
Now, here’s Hallmark with his article on electrical-upgrades-turned-claims.
“Hey Jon, my clients are pissed and want your insurance information. I think they are planning to sue you.”
These are the worst words you can hear from a real estate agent, especially one you’ve worked with for years. Sadly, this happened to me after a client experienced electric vehicle (EV) charging challenges.
After moving in and doing some remodeling, our shared clients had an electrician out to install a Tesla charger. The electrician said the main panel, sub panel, and service drop all needed to be replaced to accommodate home EV charging. The electrician also said I should have pointed out these electrical issues during my home inspection. (My favorite!)
With the sticker shock of around $15,000 for the labor and replacement parts, the clients agreed with the electrician: It was my responsibility to pay for these electrical system upgrades. What a headache!
Unfortunately, lots about this scenario is common: Angry, finger-pointing clients. Tradesman telling clients “the inspector should have caught that.” But there’s something else that’s becoming more prevalent: clients with old electrical wiring or higher electrical consumption needing electrical upgrades.
Why are such complaints becoming more frequent? And how can you cater your electrical home inspection to circumvent those gripes?
Since 1950, residential electricity consumption has exploded 1,400 percent, from 0.1 trillion kilowatt-hours (kWh) of usage to 1.5 trillion kWh. Electricity has become an essential part of modern life, with homes operating light fixtures, heating and cooling systems, appliances, and electronics daily—if not constantly. More homeowners are investing in power-hungry technology, like cold plunge, sauna, and hot tub power consumption. And with federal, environmental, and financial incentives to switch to electric and hybrid vehicles, the International Energy Agency (IEA) expects home EV charging to continue to grow in popularity.
It’s surprising that individual household consumption has remained flat due to increased electrical efficiencies in appliances and homes in general. But as housing numbers increase, and as demand for higher power appliances and amenities increase, overall consumption is predicted to go up, too. That’s why analysts are declaring, “The era of flat power demand is over.” People across the nation will be using more power, and seasonality will see sharper spikes in load.
While there’s a lot of variation by state, the average age of houses in the United States is 40 years. Older homes do not have adequate electrical upgrades or service amperage for all our modern conveniences, let alone adequate outlets for modern consumers. (This past fall, I was in a three-bedroom home with seven TVs, two of which had over eight-foot screens!) Most clients that purchase older homes want that home to be able to adapt to their growth as they have kids or want to expand their amenities, too. So while the home you’re inspecting may have the electrical capacity of the ‘80s, your clients are expecting it to accommodate the electrical needs of the 2020s.
When faced with outdated electrical wiring and a demand for electrical upgrades, what should inspectors do? How do we avoid getting caught in the quagmire of rapidly changing consumer wants? Here are my four tips.
Whether you follow the standards of practice (SOPs) from your state or an association, stay up-to-date. Your SOPs outline your minimum standard. Make sure you review and take note of any changes that occur when new SOPs are published.
Also, your clients may not realize what is involved in a home electrical inspection. Make sure your clients know which SOPs you’re using by referring to it in your pre-inspection agreement and report. Sharing your SOPs helps set expectations and protect you if your clients decide to file an electrical home inspection claim later.
We home inspectors are not code inspectors, so we’re not required to determine electrical compliance to past and present requirements and guidelines. Here in Texas, the Texas Real Estate Commission’s (TREC) Standards of Practice explicitly state we’re not required to “determine present or future sufficiency of service capacity, amperage, voltage, or the capacity of the electrical system” (535.229(a)(2)(A)).
Although we aren’t code inspectors, we still need to be knowledgeable about the changing building standards so that we can be the best advocate for our clients. I suggest keeping up with the major changes of the National Electrical Code (NEC) and International Residential Code (IRC).
Clear communication creates satisfied clients, and it starts with asking lots of questions. Discuss your clients’ potential electrical needs to help them gauge potential electrical upgrades for their home. Consider asking questions like:
Having a conversation about their electrical needs and wants helps me understand their expectations for the home. It also gives me the opportunity to say that, although the old electrical wiring is functioning “as is,” it may not be adequate for their future needs. I like to say that verbally and put it in my report’s comments as a note or notice so they don’t miss it.
With our limited scope and potentially limited electrical knowledge, it’s not appropriate for us to be prescriptive about their electrical needs. However, we can refer them to someone who can be.
If I’ve established that my clients have big electrical plans for a property, and I gather from my inspection that the home may not be equipped for those plans, I tell them to talk to an electrician. By discussing their intentions with an electrician, they can see what’s possible and how much their electrical upgrades will cost.
I also encourage clients to have this conversation while they’re still in their option period so that they don’t get locked into buying a property that can’t deliver their electrical dreams. Again, I have the conversation about hiring an electrician verbally and I write the recommendation down in the report, for good measure.
What ended up happening with me and the upset clients with the Tesla charger? I emailed the agent and the client another copy of the report and invited them to review it with me.
Sure enough, I had made a comment about the panel being older and not up to home EV charging standards. I had written that, if they intended to make any electrical upgrades, they should get an evaluation by a licensed electrician before the end of their option period. Also, I reported a handful of deficiencies about the panels with another recommendation to talk to an electrician. I had covered my bases, and when we reviewed the report together, the client decided they didn’t want to move forward with their complaint.
By knowing your SOPs, familiarizing yourself with electrical code, getting to know your clients, and encouraging them to talk to an electrician about new electrical panels or old wiring, you can keep your clients happy and avoid unnecessary shocks.
So don’t let trends in electrical upgrades worry you. Let knowledge be your power.
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