A property inspection can be divided into one of two basic categories:
- Residential inspection
- Commercial inspection
While these two types of inspections are similar in many ways, they also have a number of differences in how they are conducted and what they’re expected to reveal. Most inspectors specialize in either residential or commercial inspections, although some are able to do both. Both types of inspection are meant to provide the client with a report outlining the general condition of the property being inspected, including all deficiencies. Guidelines for each type of inspection are different, as follows:
- Residential property inspectors follow accepted industry Standards of Practice such as those put forth by The International Association of Certified Home Inspectors (InterNACHI®). Following these Standards is not required, but strictly voluntary. When hiring a residential inspector, however, such as you might do as an underwriter for an insurance company, you’ll want your inspector to be familiar with these industry Standards of Practice.
- Commercial property inspectors conduct Property Condition Assessments (PCAs) in accordance with the ASTM E2018-15 Standard for baseline PCAs, which is published by ASTM, International, formerly known as the American Society for Testing and Materials. This is the industry standard for conducting commercial inspections and anyone you hire to conduct a commercial inspection should do so in accordance with this Standard.
Primary Differences Between Commercial and Residential Property Inspections
Typically, property inspectors start out doing residential inspections and then branch out into the commercial side of the industry once they learn the ropes and understand the difference between the two. Inspectors could earn more income doing commercial inspections since they are often more complicated, more time-consuming, and deal with more expensive properties. The fact is, however, that several residential inspections can be completed in the time it takes to complete one single inspection on a commercial property. Residential inspectors can also usually do an inspection solo, without the need to call in any sub-contractors, which isn’t necessarily the case with commercial inspectors. These additional contractors increase the cost of an inspection.
Some other differences between these two types of inspections include:
- Variety of Properties – While every home is different to a certain degree, they also share many similarities, which makes inspecting them also similar from one to the other. Commercial properties, on the other hand, come in hundreds or thousands of different formats, whether you’re looking at a retail space, a restaurant, multi-family housing, a factory, a shopping center, an office building, or any of hundreds of other types of commercial properties.
- Standards of Practice – Residential inspectors are expected to follow industry standards for residential inspections such as those put forth by InterNACHI®. Commercial inspectors voluntarily refer to ASTM 2018-15 as industry-standard guidance when conducting inspections.
- Liability Risks – Commercial inspectors assume a great deal more risk as a result of their insurance findings and typically face greater challenges than residential inspectors. Commercial transactions, which may involve many millions of dollars, will often cause commercial inspectors to face tighter deadlines and be confronted by much more demanding clients. An example of the heightened risk could be an issue with a home’s HVAC system a residential inspector misses which later requires the homeowner to replace the system, which may cost $10,000 or more. Overlooking a problem with a commercial HVAC system that later requires replacement may cost hundreds of thousands of dollars.
ASTM E2018-15 Standard
The ASTM E2018-15 Standard, fully known as the “ASTM E2018-15 Standard Guide for Property Condition Assessments: Baseline Property Condition Assessment Process,” is a 21-page document that outlines both the purpose and the scope of the Property Condition Assessment (PCA) made as a result of a commercial property inspection and the Property Condition Report (PCR) that follows the inspection, delivered to the client.
Included in the ASTM E2018-15 Standard are three sections:
- How to conduct the walk-through survey
- What’s involved in the documents review and interviews
- What to include in the final PCR after the inspection has been completed
The stated purpose of the PCA is to identify any physical deficiencies of the property being inspected and to communicate these deficiencies in the PCR. Standards for Property Condition Assessments are published by the ASTM and, while following this Standard is not required of commercial inspectors, it has become the accepted industry standard for commercial inspections. If you’re an individual responsible for hiring a commercial inspector, you should be well served to hire someone who is not only familiar with the ASTM E2018-15 Standard but makes it a practice to follow the guidance found in this 21-page document.
Hiring a company such as Insurance Risk Services will ensure you obtain quality inspection services that meet the highest industry standards.
