What's Changing In Our Industry

Learn where the inspection industry is headed and what needs to change with our guest, Nathan Thornberry. From his teenage house-flipping ventures to navigating the choppy waters of today's industry, Nathan's wealth of experience offers a treasure trove of insights for anyone with a stake in property. As the real estate seas grow turbulent with rising interest rates and shrinking inventories, we dissect the decline in inspection volumes and the strategic evolution from solo operations to larger multi-inspector firms. 

Tune in for an episode on overcoming the industry's challenges—a must-listen for home inspectors and others looking to broaden their horizons. We compare the resilience of diversified businesses like McDonald's to the adaptability required in the home inspection sphere, as inspectors cast wider nets with ancillary services. The conversation reveals how such innovation can not just buffer against economic downturns but also position businesses at the forefront of the industry, even as the floodgates open for new entrants.

As we wrap up our dialogue with Nathan, we scrutinize the effects of foreclosures on the industry's pulse, reflecting on the 2008 financial crisis and the distinctive market dynamics of homestead states. This episode peels back the layers of market complexities, offering a glimpse into the cyclical nature of real estate and the potential for a resurgence in the home inspection sector. For professionals eager to understand and harness the ebbs and flows of the market, this episode is an invaluable compass.

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*The views and opinions expressed in this podcast, and the guests on it, do not necessarily reflect the views and opinions of Inspector Toolbelt and its associates.

Transcript

Ian R
Welcome back to the show everyone. Today we have on Nathan Thornberry again. How are you, Nathan?

Nathan Thornberry
Awesome. How are you, Ian?

Ian R
Hey, I’m doing fantastic. I really do appreciate you taking time out of your schedule. I know you’re a busy guy, you have multiple ventures going on out there. So to take your time out and be on the show with us, I do appreciate it. And anybody who’s listening, if you hear a cough or me pass out in the middle of the show, I have a, have a cold, I assume. So we’ll see how it goes on my end. But Nathan, before we get going, I gotta tell you, I actually read one of your books. I want to say like 16, 17 years ago, it wasn’t far into my career. I was probably two or three years in, and I read one of your books about, when you talked about how you grew up in the inspection industry. Like your parents owned an inspection company over in Indiana, I believe, right?

Nathan Thornberry
Yes, they do. They still do, they own it to this day.

Ian R
Yeah. So you kind of grew up in the industry. And I remember something weird that always stuck out to me when I was reading your book was you sold your first house, like you flipped a house when you were still in high school?

Nathan Thornberry
I did. I did. I didn’t actually, I didn’t sell it before I was done with high school. I bought, I bought a condo, a two bedroom condo, partway into my senior year. And before the end of my senior year, I had a house and I rented out the condo. And then within six months or eight months after graduating, I bought a second house. So I was up to three properties. And I had this crazy idea that I would buy like property after property. And that was my, my path to wealth. And then, and then within one year of graduating high school, I got a letter from a personal injury attorney for the older lady that was was renting that first condo, because she slipped and fell and they wanted to sue me for it. They wanted my insurance information. I told him to, you know, to go pound sand. I didn’t even hire a lawyer. I just, I just sent a letter back to this lawyer. I said, you know, prove it.

Ian R
No, well, so you, you have a long business history. Like I always thought like, I was pretty cool. Like right after high school, or well my version of high school like, I quit high school, in the ninth gradeish. So that’s not even high school. But I’m like, okay, I started my first business, you’re out there buying and selling houses. So you know a thing or two about business, you know, a thing or two about the inspection industry. Not that I need to repeat this for most of our audience. But I will say, I’ve always liked you. I’ve always gotten along with you. But you do have a polarizing effect sometimes. And I like that for this podcast, because I don’t like to have everybody on who has the same opinions as me. And I’d like to hear all sides of every, of every issue and every thought, because I think it gives us a more complete, more complete image of what’s actually going on. So today we’re going to talk about two aspects of the home inspection industry, and these were brought up by you. And I thought they were great subjects, the state of real estate and its effect on inspections. And also the rapid transition away from single inspector firms, two things that we, if you listen to the show, we talk about quite extensively, and I really want to get your thoughts on that. So tell me, Nathan, what are your thoughts on the state of the real estate market as a whole, and its effect on us as an industry?

Nathan Thornberry
Well, we have big problems in real estate right now. And I don’t think I’ve heard anybody talk about it in these terms. So a lot of people talk about, you know, high interest rates, which has an obvious effect, you know, historically they’re not particularly high, but they’re, you know, they’re high for recent years, and what the market was used to, and that, that in itself has an effect of, of creating less inventory, because I don’t know about you, but I have some mortgages that are sub 3%. You know, it’s really a challenge to get me to let go of that, you know, when, when I have other options and, and other people feel the same. So, you know, we see that lack of inventory, but then nobody talks about the other side of that, which is that you know, in Q3 which is, you know, the latest we can really look at and see numbers and go okay, here’s, here’s what officially happened. You know, we had a rental vacancy rate that was fairly low in the 6s, mid 6s. And we had a a total sales nationwide in the US that was down 21% year over year, and yet we still had an increase in inventory, we were up to three, almost three and a half months of inventory in this country, even though people aren’t selling their homes, even though the inventory is down, we still had three and a half months worth of inventory. And that was a huge increase. Now, you know, some states, were, were down below two months worth of inventory, and that’s good. But the volume still sucked. And, you know, so overall, we’re looking at inspection volume, that is, is down, you know, probably over 5% right now, and an inspection industry that is bloated by about 7% net, that’s net, probably 11% new inspectors and 4% gone for a net seven. So that’s, that’s shaping up to be a difficulty for a lot of inspectors, particularly those that, you know, that didn’t build their businesses way big. And, and this is where if you’re not a multi inspector firm, and you’re doing this as a hobby, great, but if you’re a multi inspector firm, then you get to do this really magical thing and the downmarket, you get to let people go, you can reduce your your inventory very easily. Now, of course, there’s a downside, they can become competitors, but usually, they’re not as good at marketing and running a business as you are.

Ian R
Yeah. And there’s a lot of that going on. And it is kind of sad to see, but it is a, it’s also, unfortunately, a business decision. One of the largest inspection firms in the country, I was just talking to a couple of guys that actually got laid off by that company, starting their own inspection businesses, and they were talking about how many people got let go. I’m like, oh, wow, okay. That’s that’s quite a bit. But it’s the whole addition by subtraction, the way you make your numbers balanced at the end of the year is the easiest way, unfortunately, is to let people go. And it’s harder to do when you’re a smaller multi inspector firm. Like, if you have five guys and you let two guys go. I mean, that’s, that’s hard to make up. That’s hard to, you’ve just lost 40% of your, your staff. But now, if you’re 20, 30, 50 inspectors, 100 inspectors, you lay off 10 guys, and it’s only 10%. And you can kind of fill in a little bit easier.

Nathan Thornberry
It’s only perception. By scale, it’s the same thing. If you need to lose 40% of your staff in order to not lose money in your business and be healthy for the next, the next phase, then find the bottom 40% and fire them immediately. You know, don’t wait, they’ll find other things to do in their lives.

Ian R
Yeah, I guess that’s a hard thing for me. And I probably have too much emotion put in it. But it bothers me to see that. But at the same time, it is a business decision, unfortunately.

Nathan Thornberry
Well, but look, look at what’s going on right now in the market beyond home inspection, you know, we have record sales, and we have over 75%, over 75% of the s&p has already reported during this, this earning seasons, over three quarters of them beat expectations, wild growth. And yet, the theme on Wall Street right now is, who’s letting some people go. And even the Magnificent Seven, as they call them, are laying people off. People are getting, you know, more selective about employees. And that’s actually where we get into the cure for inflation. It’s not, you know, charge more interest to people, make their rates go up, make it so they have to make more in order to you know, buy things and just become a snow, snowball compounding of inflation, but rather to actually reduce the amount of income earners, our employment rates are too high. And so we’re fixing that, and eventually it comes out in the wash, do your part, if you have somebody that’s working for you that is not productive, don’t be behind this curve. Let them go.

Ian R
You know, it is kind of funny, thinking about interest rates, and we watch that so heavily. We watch. It’s one of the main things that we watch, but it’s really just an old trope. It’s a really reductive method to try to regulate the economy as a whole, raise interest rates and slow things down, lower them, speed things up, when it’s so much more complex than that. But it does have an effect. Like I was, like you were just talking about, you have sub 3% mortgages out there. I was just talking to my accountant about a property that I have that’s at like 3.3%. And I’m like, why would I ever sell this or pay it off? Every year that I pay a little bit more, I pay them with money that’s worth less because of inflation. I’m making money off of that mortgage, because now I have that money free to do other things.

Nathan Thornberry
You know, we’re, we’re trying very hard to reduce inflation where you know, we were never in hyperinflation mode. And you know that the levels of inflation at three and a half or even 5% are actually not such a bad thing, they really do reduce debt for people, it’s the great debt eliminator. And if you’re, if you’re of high net worth, or you, you know, have money in the market, you should have some debt too, because debt is the best way to hedge against inflation.

Ian R
That’s true. So now, thinking back to the home inspection market, I had a thought, I wonder what, what you thought about this, home inspection prices kind of crawl up very slowly, and we keep losing work quarter over quarter, at least by my anecdotal measurements of things. You know, if you have this low inventory, this number of inspections hypothetically will get skipped, and all that other stuff. And I’ve seen a large percentage of home inspection companies go into quote, unquote, forced retirement, or just go out of the business or never make it. But at the same token, I see. So like a house in some areas used to be $200,000, on average, in some areas, and now the average is about $400,000. So an agent walks in and does half as many houses but makes the same amount of money, or sells the same number of houses and makes double the money. Appraisers still have to have to get out there. And even though it’s down, do you think home inspectors are getting the brunt of the problems in the market? Or do you think we’re just kind of big, the most whiny about it? So that analogy really speaks to me, because that’s very true. We need to build our own runway or get on somebody else’s runway that’s already there. So commercial inspections if we’re a home inspector and we’re good at what we do, we should be able to transition into commercial inspections. We’ve talked about that a lot this season. Environmental testing 100%. I’ve always said anyways, even when there wasn’t a lot of bloat in the home inspection industry, and I say bloat like, there’s just a lot of home inspectors and not a lot of work comparatively. But it’s, even then ancillary inspections are where we made our money. And people hate it when I say this, but I’ve often viewed the home inspection business wise, just number wise, as the loss leader almost, that gets me on site. That’s where, that covers all of my expenses. And I make a little bit of money, but where I make my money is septic inspection, sewer scopes, all the additional stuff that people need, and that’s what makes my business.

Nathan Thornberry
The biggest problem is that it’s so easy to become a home inspector. And the barrier to entry is nothing. The qualifications are very, very low. And when, when we have a down market, you know, especially in the trades, you look at, you know, nationwide, quarter three, we were down over 13% in permits for single family residential, that’s an awful lot of people that are in, you know, on that level of the trades, that then, you know, switch over to the repair level and the service level, and then that becomes overpopulated. And then now we have, you know, more people in home inspection than ever, which accounts for the boom in home inspectors lately, well that, you got home inspectors would like to think that they’re exempt from supply and demand, but they are not, not even close. So, you know, they just end up kind of eating each other alive. And the smart ones do things like getting into environmental testing, there’s a reason we’re, you know, investing in that so rapidly here at breeze and priority lab, because that’s where the money is to be made. If you’re not testing for mold and asbestos and radon and, and water test, then you know, you’re missing out on the revenue, you’re going to do less inspections, you’re going to do them for less money than you’d want to, that’s fact of life, you can’t change it. You know, everybody that you hear that says, oh, I’m so valuable. And you know, I don’t leave the house for less than $900 or whatever it is. They don’t leave their house very often. Don’t, don’t look at them and go, Oh, that guy’s successful. He’s confident. No, he’s an idiot, you know, you have, you are not exempt from supply and demand. You just have to make up for it in other ways, you know, do it like real businesses. What, what does McDonald’s do when they run out of, when they run out of runway, they, they add coffee, like they add a whole coffee bar and they go to compete with Starbucks, or they add the fish sandwich, you know, inspectors need to do the same thing. And if you’re not doing that, you’re missing out. Absolutely. And this and this relates very directly to the other topic of the day, which is that, you know, that transition to multi inspector firms and, you know, what, how we’re transitioning to the future of home inspection, and why we’re not transitioning as fast as we should be. This is the, this is the holy grail of home inspection. Right? So we see it, we know there’s a lot more multi inspector firms, there’s a lot of people that are bringing real business know how, and you know, they’re eating everybody else’s lunch, but they still get affected when the market turns like this because the barrier to entry is so low. And if they lay people off, they just become competition. That is not the case at UPS and FedEx, right? That’s the case in home inspection, because we don’t really have anything proprietary at these multi inspector firms. And there’s nothing wrong with that, by the way, you know, for, for those of you that don’t know, we invest in a lot of different businesses here at my company, and one of them is a business that we are not very proprietary at all, admittedly, you know, we have good flavors and whatnot. But, you know, that’s hard to describe in marketing at Blue Moon hemp, you know, we sell a lot of drugs. That’s right. But, you know, what makes us better than the other guys? Why are we one of the biggest in the industry, and in under 10 months, in the biz? Well, because we deliver, and most of our competition are a bunch of, you know, hippies that don’t know how to run a business. So you know, when, after a store gets shipments consistently from us, they tend to buy again, so if you’re delivering well for your client, you’re gonna be above that, you know, that median line. But there’s still something missing from this industry. And it’s that proprietary aspect that can’t just come from size, like UPS and FedEx does, it has to come from something different, something that your competitors with, you know, $10,000 to invest and a little bit of time, can’t keep up with. And there’s not too many things out there I’ve seen that really accomplish that, at least it hasn’t happened yet. There’s room for an innovation in this industry. And it definitely doesn’t have to do with, you know, with making a, you know, home maintenance, you know, online digital binder or whatever, you know, there’s something else missing. And I don’t know what it is, but we’ll figure it out, it’s probably going to be something along the lines of a machine that you can’t replicate for less than 25 or $50,000, that ends up being utilized in the inspection process. As soon as someone does that and it has a meaningful result for the client., good night, it’ll be only for the people that can finance that or have the wherewithal to spend that kind of money.

Ian R
Yeah, and I guess just to kind of take an opposing view of that, I think about you use FedEx and UPS as an example. There’s nothing proprietary that somebody with a van and a driver’s license can’t get into, he can start a courier service. What makes them, what makes them great is their size. And it gives everybody a warm, fuzzy feeling. I don’t use a white van courier service, because I’m like, who is this dude? You know, like, I’m gonna use FedEx, because they pick it up from my house. And when I feel warm and fuzzy, even McDonald’s, to use that illustration, nothing proprietary about a burger and some coffee, I can go to Burger King and get basically the same thing. Maybe not everybody’s preference. But with home inspections, I personally see no innovation that could come that can make a difference that hasn’t been already tried. So the 3d home model with like, Matterport, guys have said, oh, well I’m gonna break into the high end market. Sellers didn’t really like the whole Matterport walkthrough. And it took you, you know, seven hours to do it on the 6000 square foot house. And everybody’s like, what are you doing here, dude, or, you know, just even the reporting, ways of reporting, ancillary services, there’s not much that you can’t get into. Like, even for a while, we were the only ones who did septic inspections in our market. And that made us very novel. But then give it three, four or five years and then everybody else is doing septic inspections.

Nathan Thornberry
Well, let me, let me give you a potential because, you know, you’re, you’re right, you can use the local guide to be a courier, but you have a trust issue. Well, inspectors would like to think that they overcome the trust issue, and some of their competitors don’t, but it’s just simply not true. You know, there’s no real difference between between inspectors in the initial marketing and a long term relationship. Sure, but that takes time and money and effort with UPS and FedEx, you know, it’s just that scale. All they need to do is scale to be proprietary. And now, you know, you and I could could wake up tomorrow, find $100 billion in a bag in our living room. And, and we could not compete with UPS and FedEx, right? Just couldn’t do it. They’re, they’re too big. They’re too massive. It would be like competing with Royal Caribbean cruise lines or with McDonald’s or Coca Cola. You know, you just, you can’t do it. And we don’t have that in home inspection. But let me give you an idea or an example of something that that could be an innovation and proprietary. And let’s just say it’s a $50,000 machine that goes into your sewer line and actually, like, cleans it out, makes it all new and inspects it, and you know, and coats it in something or whatever, you know, something along those lines where we’re delivering something to the real estate transaction that’s an undeniable value. Because right now, what do we really deliver to the real estate transaction, finding the $20,000 issue, very seldom, very, very seldom, finding $2,000 worth of issues, often, they get negotiated to, you know, 1000 or 2000 bucks, maybe. And we’re doing that in exchange for 500 bucks. So there’s our price problem. It’s not just supply and demand, it’s the results. And real estate agents and buyers aren’t so stupid, that by the time they’ve done it three or four times they don’t know what the results likely to be. And so they’re not willing to pay, you know, in elastically, a huge amount of money for something that has a minimal return, you know, the number of people that have been saved from a 20 or $50,000 issue that nobody would have noticed without the home inspector being there. Those, that’s a pretty rare group.

Ian R
Yeah, I mean, it does, it does happen. I mean, it happens for us, usually, because you go the extra mile, or you’re adding an additional service, you find the $20,000 sewer drain issue, because you have equipment for that, and you find it going back to your ancillary point. But I do agree that part of it is, and I may get a couple of pitchforks on this, it is too easy to enter the industry. And I’ll give an example in New York, we actually passed a law in New York saying that you needed to pass the National inspection exam, you had to pass that to become a home inspector, they actually got the law reverted so that you can pass either that or the New York state one, which was a stupid sentence, because the New York State one is like 100 questions, that if you just close your eyes and start circling things, you can basically pass, it’s not a test of somebody’s competency. So what we actually do is, instead of finding out if somebody can, if somebody can actually perform a task is we shove them in there, watch them perform the task, as they get caught in the equipment and die, then you shove the next guy in there. And it’s just not a really effective way. We don’t do that with any other industry. We don’t stick a doctor in surgery after taking a test and say, hey, figure this out, this is life affecting, we don’t do that with a plumber, you know, you don’t say, hey, start fixing these pipes, and see if you can fix it. We let them prove it in other ways, and then work up to it. So I’ve never agreed with as a whole how we go about it in the industry. I liked the before licensing, my uncle was a surveyor. And he would do home inspections, although he’d never liked that word. He’s like, I’m not doing home inspections, I’m doing an as built or whatever you would call it at the time. But he had to be really, really good. Because there was no licensing. So you had to be awesome at your job so that people were like, you gotta hire this guy. Now it’s like somebody gets his license, and they say, hey, look, I have the same qualifications as this guy. And you know what, they do. Guy entering the field right now, gets his license, he has a license, I have a license, what’s the difference between him and me in the eyes of the consumer? It’s really…

Nathan Thornberry
So here’s the good news, is that for those that have been around a while, and you have your referral sources, or you have a bigger company, and you’re able to, you know, flexibly change the size of your company to the market, you make it through, and hopefully, we keep, you know, excelling, if that, if as an industry, we don’t see that massive innovation all at once, at least we can see little ones along the way, that add up to a lot. So as you’re adding features into your business, think about how much they cost and what the permanence of them is. So let me give you just an example of something very selfishly, that exists in the market today. If you are testing for radon, which, you know, happens in roughly half of the country pretty frequently and you utilize the breeze radon monitor, we’re pushing out predictive radon test results in under 10 hours a lot of the time, and that’s having the net effect in some markets of agents going to their guy and going well, you know, why are, why am I waiting 48 hours for a test result from you when this guy’s doing that and you know then that guy has to look into it, has to find us, you know finds, finds me appalling online or whatever. And so he doesn’t want to buy anything or he’s some part time entry level guy that can’t afford a breeze radon monitor, even though you know long term, it costs half as much as any monitor out there. But he can’t sign a contract for the long term. And so the bigger and even smaller but more established companies, the ones that listen to this and, you know, know who I am and know who you are, those guys win just by having these features, and being able to commit to those features, because there’s, you know, there’s ongoing cost to these things. Whereas if you’re a new guy, and you just get a couple of radon canisters, or outsource nothing proprietary about that, right. So we need to, in everything you do, you need to be asking about the features and going okay, is this feature great for the client? Does it have a high return on investment? And certainly, fast rate on results do? But also, does it cost enough? Like what’s the most expensive way to do it with the most features that are different to the client, that, that dissuade your entry level competitors from just going into the business and going at it alone? They should be working for you. But have you given them a reason why your business is different than them just going into business? And, you know, most people don’t. Even the franchises fall flat on their face very often, when they say, oh, we have all these systems, by the way, they’re the same systems that are on every home inspection company’s radar, you know.

Ian R
Yeah, we actually had a podcast on basically, how to sell yourself over the same person who has the same exact selling points, because that’s really what it comes down to in the market right now, who sells the same exact selling points. It was funny because we were working on a couple of websites for a couple of different guys. And all of them sent us their bios on what services they offer and what sets them apart, we usually ask those things. And at one point one of my people goes, which one is this one? I’m like, I don’t know, let me look. And they all said basically the same exact thing. And I’m like, I don’t, I don’t know, it comes down to who can sell the same thing most, or the best rather. So I have construction experience. I use modern inspection software, I do this, I do that, and I use infrared. But so does everybody else, it comes down to who sells it better. But I do agree with you, we do need something to basically knock that guy out of our market that we’re trying to compete with, saying he can’t, he can’t do this. Not that I do this and he doesn’t because then he can always just change that. Actually I had a thought as you were talking too, with our changing industry. Interestingly enough, the CEO of one of the major inspection companies that’s kind of buying up a lot of other inspection companies across the country, called me and just wanted to chat. Because he knows my opinion on that, I’m not a huge fan of that. But I don’t see companies like Inspectify, and he was a really great guy, I’m not saying from either of these companies, Inspectify or Launchpad. And there’s a couple others out there that buy up all the small inspection companies, or smaller, you know, five to 10 guys, and then they reach out into multiple markets that way. They don’t seem to be doing that well, overall. So they have the size, a UPS kind of model that they’re going after. Why is it not working for them? Is it because they don’t have a unique selling point?

Nathan Thornberry
Well, they haven’t figured out a way to to make it appear to be something that you should do. Like it is definitely perceptive to both you and I that if we want, you know, a quick bite cheap, and to get in and out of there and not be inconvenienced, to not be food poisoned, you know, that it’s really easy to spend 60 seconds in the drive thru line at McDonald’s. But if you, you know, if you look at these companies, even the big ones that are in multiple markets, you know, what is the, what’s the thing that naturally makes everybody in that market want to go with them? Not much. The thing that makes them appealing is that they’re consistent, and they answer their phones, and their marketing’s good. And you know, they take advantage of every feature that they can. And if you’re talking about who I, I think you’re talking about, they use, you know, all of our stuff. And, you know, they do the best they can to be ahead of the curve. Some of them have been investing in some technology, which was a great thing to do a long time ago. I’m not sure that that today, you know, technology has the same effect as it once did. I think it’s still good to come up with a proprietary thing but I think if you’re a large company in home inspection and you’re creating something proprietary which is really just built on, you know, a box of somebody else’s right, you know, a sequel back end or a FileMaker database or something along those lines. Don’t build it with the idea that you’re going to sell it to a lot of people, that used to be the thing, you know, inspectors would go out, they’d spend, you know, 100 grand on their system, and then they’d sell it to their buddies. But that ship sailed. You know, there’s just, it’s too easy to make some software these days.

Ian R
So let me ask you then, we talked about the effect that real estate has on the inspection industry, and it is still not a great market for the home inspection industry. I think we’re out of the nosedive personally, last year was a huge nosedive. I think we’re on the pull up part of it, of the curve. Personally, I don’t know if you agree with that. But what do you think’s going to happen this next year? And what do you think needs to happen, is a better question?

Nathan Thornberry
Well, the number one thing that can happen, that would change everything would be foreclosures going up, that’s, that’s a major stick in the mud on real estate right now. Because at least you know, when we, you can’t, you go down over 20% in real estate sales, and in q3 of 2023. You know, sound familiar, you know, it sounds almost precisely like, ’08, the difference was in ’08, that there was a lot happening in terms of repos. And then that creates an opportunity for people to go out and flip. And then, you know, we get to criticize their flipping skills, of course, in our little inspection groups, but at least there is, you know, someone taking ugly houses and turning them into something that is, you know, good, affordable housing for somebody, it serves a purpose. Some people make some money in the process, everything’s hunky dory. What happened in, you know, in the COVID era, is we basically said, everybody lives in a homestead state, suddenly, we just let them give their houses. And you know, you look at the foreclosure rate in q3 of 2023, it was like half a percent. That’s, that’s nuts. There’s no way that it should be half a percent in that environment. And so we’re artificially keeping inventory on the sidelines, unleash that inventory, and it’s go time. As far as the interest rates are concerned, you know, yeah, of course, it’d be nice for interest rates to go down. But in order for them to go down, you have to take that with, you know, the slightly larger, tougher to swallow pill of some sort of economic indicator that makes it so that Jerome Powell wants to reduce interest rates somewhat aggressively, so that it would have the net effect on mortgage rates. And in order for that to happen, he has to be concerned for his physical safety. I mean, that’s how far it has to go for him. It would It would appear.

Ian R
So just rolling back, you said something about homestead state, because I was hoping you would talk about basically foreclosures because I think that’s a big thing that we’re missing in the market. A homestead state. It, maybe I’ll let you explain that to the audience in case they don’t know what the homestead state is.

Nathan Thornberry
Oh, well, I think, I think there’s only two of them if I’m not mistaken, Texas and Florida.

Ian R
New York is one.

Nathan Thornberry
New York is one too? Okay. Well, I didn’t know. So you caught me. You tripped me up. You’re the first one in history. Congratulations.

Ian R
No. Well, thank you. Well, it depends on the circumstance. Most states are a homestead state, in certain circumstances, basically means you can’t take somebody’s primary home or their vehicle. Yeah.

Nathan Thornberry
It looks like there’s quite a few actually. But I think when I, when I’m talking about homestead states, I’m talking about the ones where it’s nearly impossible to take somebody’s primary home. And it’s, I believe it’s most difficult in Florida and Texas. If New York, this is a homestead state as well. I hadn’t heard about it, because it must be a little bit easier to overcome it than Texas and Florida, I would imagine. Right?

Ian R
I think mortgages may have certain exemptions, because it does happen. It’s not. It’s not rare here. But it’s also not very common.

Nathan Thornberry
I figured out the mystery where I got that. So there are variations on the homestead protections. There are a few states that are known to have the broadest. Florida and Texas are right at the top of the list, than Iowa, South Dakota, Kansas and Oklahoma. So New York isn’t even on the top five or six. And, and, and nobody cares about Oklahoma. Just kidding.

Ian R
New York tends to be more for civil action. It’s a little bit easier, but I don’t want to get too hung up on that because I want everybody know what Nathan meant by homestead state. And it it does, it does kind of change the dynamics. Texas right now is one of the busier markets in the country. Yes, they’re not hurting as much as certain other markets. Like, interestingly, I’ve seen a pretty big downturn in California. It’s hard to keep track of it because they don’t, you know, publish a lot of stuff that other states do. But do you think that foreclosures is the only thing that we’re, we’re waiting for? Because I wait for a down market, not a down real estate market, but a down market as a whole. When the US is in recession, that’s typically when I make the most gains in my business. And we’ve said that on the show before, it’s a sad truth. But once the markets down, foreclosures go up, people tend to buy more, but be more cautious. And then they tend to get a better inspection and more ancillaries and things like that. Do you think there’s something else missing in the market because we don’t want another year or two of basically getting kicked in the head with the market the way it is.

Nathan Thornberry
Well, California did a good job of replacing Miami and Scottsdale from last time around when it comes to real estate depreciation. You look at 2023 versus 2022, I think California Association of Realtors, which does put out some pretty substantial numbers to follow, they were tracking over a 7% decline in real estate values. So, you know, California has been notably hurt. But you know, it goes back to ’08, ’09, when I was a big real estate vendor, I guess we still are. But when I was a bigger one, you know, you walk into a bank and you tell them you’re in real estate, and they look for a window to throw you out of, and then you have to remind them, you know, I’m paid by the transaction, it doesn’t matter if their prices went up or down. We just need to track transactions. And that’s why the foreclosure issue is a big issue. And, you know, we’re letting people stay in their homes that aren’t paying. And that’s not healthy. You know, it’s not like people are going to, you know, go homeless and in die of starvation all of a sudden, we have lots of programs to help. But right now we’re kind of giving away something that is a main economic vehicle, you know, property, so it shouldn’t be.

Ian R
So I guess my main takeaway from our discussion so far is, it sounds like foreclosures is probably one of the biggest markers that we’re missing for a good or a better home inspection market, which I had that in my own equation, but maybe not as heavily as, as I do now, after talking with you. Because I was reading, I was reading an article in Forbes about foreclosures recently. I’m like, man, you’re right, there really isn’t a lot of them out there. And we should have them. But we don’t.

Nathan Thornberry
We totally should. And I think I know the one that you’re talking about, I’m going to have to pull that up real quick. But yes, I agree. This is the number one, the number one thing by far.

Ian R
Interesting. So I was, I was counting, it was like number five.

Nathan Thornberry
It was the one from five days ago. Yeah, I know, the one that you’re talking about. Yeah, they, they, they nailed it. And moreover, you know, we have a bigger problem right now with real estate, which is that you don’t have the number of transactions, your way down a number of transactions. And yes, we’re down a number of real estate agents. But we still have, you know, way too many targets to hit for that marketing, even if selling is the thing that that, you know, differentiates you from the other guy, you know, who do you sell to? And there’s just nothing you can do about that other than, here’s your punch line folks, in 39 minutes and 12 seconds as to not go over the 40 minutes that Ian suggested, you would stop watching, you ninnies, you, you have to be ahead of the market no matter what it is. And this market sucks. There’s nothing you can do about that. So do whatever you have to do to get ahead. If we can help you in any way at at discoverbreeze.com and prioritylab.com, we’ll do it. We have several tools available. But you got to find it, you got to find the energy to make it through this. Because we are coming out of it. There’s no doubt about that, we always do. And you want to be very well situated when we do, do not count on it happening, happening on any particular day. Don’t keep people around that are not valuable to you and your customers, and just do the best.

Ian R
And we can go a couple minutes over here because I actually want to, that’s a really great point that you brought out. So I want to just go back to one question, though. What needs to happen, in your opinion, is foreclosures. Do you think that will happen in this next year, or anytime in the next couple of years? Because you said we’re coming out of it, we always do. And that’s what we say a lot because that’s when we do well because half our competition is gone. Now the market’s better, and we’re just grabbing work left and right. Do you think that will happen in the next year?

Nathan Thornberry
Unfortunately, there’s no way to answer that without getting slightly political, which is one of my least favorite things to be. But, you know, you look at what we’re doing from our executive branch right now. Right? Lots of hey, don’t worry about paying those student loan bills at all, we’ll just you know, we’ll get rid of those. And these are the kinds of things that are, are leading people to winning elections and leading people to being in positions of leadership. There is a much tougher path to, you know, the grand old party, suggesting personal responsibility and accountability, when so many people are getting ingrained in that. And I think that there’s a risk right now, especially if we continue on with the, with the current administration, that people get very used to these policies of, yeah, don’t worry about paying your mortgage or your student loan bill, don’t even work, we’ll send you a check. These things have a lasting effect. And they can go on for a while. But eventually it all comes home to roost, eventually, we have to get our productivity back up, it will be forced, regardless of which political party is in power, when the day of reckoning comes, it gets forced. And when it gets forced, everything comes screaming back. So I’m not worried about it. It’s a matter of timing. And, you know, close your eyes, click your heels, you’ll, you’ll get back to Kansas.

Ian R
Yeah, I think that last statement is, is the best. Basically just close your eyes. And it’ll just happen. And we need to be ready for when it does happen, whether we’re multi inspector, or single inspector, but I do, I do agree with a lot of your points about the transitions that we’re making in the market, and what we need to do to stay out of it, or to stay above it, rather, ahead of it. Nathan, you’re awesome to have on, thank you so much. It was a great discussion. And there’s some stats and some deeper stuff going on in here. But thank you for bringing it down a nice streamlined level for us and helping us to appreciate it a bit better.

Nathan Thornberry
Anytime, and thank you for doing this for home inspectors, you know you and got Preston Sandlin does a good job with it, a Pair Payments folks, they do a good job with this. I’ve seen a couple couple other personalities lately. Even Mike Crow’s making a comeback. The amount of communication in this, in this industry that happens every single day, even though, you know Nick Gromicko’s busy with a great grandchild/child number five or whatever is incredible. You know? Wow.

Ian Robertson
Well, that was a fun episode with you and Nick, I had a ball. We’ll have to have you guys both on again. Just to ramble.

Nathan Thornberry
Yeah, absolutely. Well, we’ll see you later.

Ian R
Thank you very much, Nathan, talk soon.

Outro: On behalf of myself, Ian, and the entire ITB team, thank you for listening to this episode of Inspector Toolbelt Talk. We also love hearing your feedback, so please drop us a line at info@inspectortoolbelt.com.

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