Property inspections can be roughly broken down into two types: the residential inspection and the commercial inspection. While both of these inspection types share similarities of purpose, they’re also distinctly different in a number of ways. Both are meant to provide documentation outlining the current condition of the property being inspected and to identify any problem issues observed by you, the inspector, during the inspection process. They also both are concerned with putting an accurate valuation of a property as well as determining if the amount of the insurance policy protecting each is accurate, too high, or too low. These are just a few of the many similarities these two types of property inspections share.
The Residential Versus The Commercial Inspection
There are numerous ways that a residential property inspection differs from a commercial inspection. While many homes have their own unique character, making one different from the next, homes tend to share similar aspects that generally make inspecting one similar to inspecting another. Commercial properties, on the other hand, come in hundreds of varieties, each of which may require a unique skill set for you as an inspector. In fact, while a residential inspection can typically be completed by a single inspector, it’s not unusual for a commercial inspection to require input from multiple inspectors.
Some of the various commercial structures that may require a specific sub-specialty inspector include:
- Grocery or retail outlets
- Shopping malls
- Factories and other manufacturing facilities
- Office buildings
- Apartment buildings
- Hotels and motels
- Hospitals
- Restaurants
- Warehouses
- Sports facilities
- Auto dealerships and more
Many of these occupancies may require particular specialized knowledge and it would be difficult for one single inspector to have the expertise to properly inspect every type of commercial occupancy out there. This is where sub-specialist inspectors come in.
For residential inspectors, it’s not uncommon for you, as an inspector, to be able to handle the entire job on your own in most cases. If you use a drone for inspecting large properties or rooftops, you may need to bring in a drone operator. Other inspectors are learning to fly their own drones to streamline the inspection process.
Inspecting a residential kitchen is probably no big deal and pretty straightforward for you as an inspector. Inspecting a large commercial kitchen, however, is another matter and may require hiring an inspector who specializes in this area. Many commercial kitchen exhausts and fire suppression systems have been found to be improperly installed and maintained, which may significantly add to an establishment’s fire risk danger. There’s a great deal to understand about proper installation and maintenance of a commercial kitchen and sometimes an inspector specializing in this area could be needed to conduct a thorough inspection.
Inspector Liability
Another difference between a residential inspection and a commercial inspection is the amount of liability risk facing each type of inspector. Commercial buildings are generally larger and more challenging to inspect, requiring more time and an extensive skill set. Buying or selling a commercial building may represent a transaction worth hundreds of millions of dollars, so it’s no surprise that, as an inspector, you may be faced with tight deadlines and demanding clients not often seen by residential inspectors.
An example of the difference of liability risk can be in the inspection of one of a property’s main systems, the HVAC (heating, ventilation, and air conditioning) system. If something is overlooked in the inspection of a residential HVAC system that later causes the homeowner to unexpectedly have to replace the system it may cost several thousand dollars. If it’s a problem with a large commercial HVAC system, a replacement could run into hundreds of thousands of dollars. It’s important that you, as a commercial property inspector, be covered by a sufficient amount of General Liability insurance coverage as well as Errors and Omissions insurance coverage.
Practice Standards
The International Association of Certified Home Inspectors, or InterNACHI®, is the world’s largest home and commercial property inspector’s trade organization. Their teaching operations are provided in nine different languages and in 65 countries. They have practice standards for both commercial and residential property inspectors that are recognized and accredited by more than 100 government, NGO, and state agencies.
Standards of practice put forth by organizations such as InterNACHI® are strictly voluntary for residential and commercial inspectors to follow, although, as a commercial inspector, you’re required to adhere to the regulations set out in ASTM E2018-15 Standards Guide for Property Condition Assessments: Baseline Property Condition Assessment Process. This document outlines the requirements for conducting commercial inspections.
Industry-Accepted Commercial Property Inspection Guidelines
The typical commercial property inspection consists of three parts: collecting research regarding the property, conducting a walk-through of the property for visual observation, and producing a detailed report based on these observations and research.
The client is responsible for providing requested property documents such as:
- Building plans
- Floor plans
- Appraisals
- Certificates of occupancy
- Safety inspection records
- Construction plans and permits
- Floor plans
- Records of maintenance, repairs, and modifications
- Environmental studies
- Fire safety maintenance, testing, and repair records
- Fire history records
- Any records pertaining to a commercial kitchen, if applicable
The walk-through survey of the property for observational purposes is a thorough examination of the physical condition of the property. This is an assessment of the property’s critical systems, including:
- HVAC system
- Plumbing system
- Mechanical systems
- Electrical systems
- Roof system, including drainage and roof penetrations
- Basic topography of the site
- Exterior elements and fixtures
- Sidewalks and parking areas
- Decks and balconies
- Foundation, basement, and crawlspace
- Windows, doors, and interior surfaces
- Life safety equipment
- Kitchen
- Storage areas
Specialty consultants you may want to include during the walk-through include:
- A professional engineer
- An HVAC contractor
- A plumber
- An electrician
- A commercial kitchen specialist
Step Three of the Inspection Process
The final step of your commercial property inspection is the production of a written report. This will be a detailed document containing information gleaned from the documents gathered, from any interviews conducted, and any pertinent details learned while on the walk-through survey.
The report will provide the client with a detailed summary of your findings, including an inventory of the property’s major components and systems and an evaluation of their condition, both physical and functional. The report will highlight the building’s strengths as well as potential deficiencies plus any outstanding maintenance issues. The report can be used to help understand the issues impacting the building from:
- A physical standpoint
- A financial perspective
- Safety and health of the building’s occupants and visitors
While residential and commercial inspections share many similarities, they also have numerous differences in size, scope and skill set needed. Sending in a residential inspector to do a commercial inspector’s job may be less expensive but, as the old saying goes, “you get what you pay for.” Insurance Risk Services (IRS) has been in the business for nearly four decades and is equipped and certified to provide both types of inspectors anywhere across the US. Contact IRS to see what they have to offer to you.