Deck 3: Business Operations

Question 1

A home inspection contract or agreement must include which of the following elements?

A)Limits of the inspection
B)Dispute resolution process
C)General exclusions
D)Scope of the inspection
E)All of the above

Answer 1

All of the above

Question 2

After delivering the inspection report to the client, you receive a call from the seller who wants a copy of the report. How do you handle this situation?

A)You discuss your findings over the phone and mail a copy of the report to him.
B)You discuss your findings over the phone but do not mail a copy of the report to him.
C)You discuss nothing with him over the phone but mail a copy of the report to him.
D)You discuss nothing with him over the phone and do not mail a copy of the report to him.

Answer 2

You discuss nothing with him over the phone and do not mail a copy of the report to him.

Question 3

A real estate agent contacts you and proposes a partnership so she can include your home inspection services in her marketing materials. In accordance with professional standards and the code of ethics for home inspectors, you

A)Thank her and send her your home inspection services description to include in brochures.
B)Thank her and offer to reciprocate by including her services in your business promotions.
C)Thank her but refuse because you do not want to compromise your integrity.
D)Thank her but refuse because you already have an established marketing plan.

Answer 3

Thank her but refuse because you do not want to compromise your integrity.

Question 4

Home inspectors are not required to test for mold or identify mold that is found during an inspection as stated under which section of the home inspection agreement?

A)General exclusions
B)Terms and conditions
C)Scope of the inspection
D)Limits of the inspection

Question 5

A client can file a dispute related to the home inspection agreement for which of the following reasons?

A)Breach of contract
B)Negligence
C)Deliberate misrepresentation
D)All of the above
E)None of the above

Question 6

A home inspector may test for which of the following?

A)Mold
B)Radon
C)Animal infestation
D)Insect infestation
E)None of the above

Question 7

During an inspection, you notice a ceiling fan does not work when the switch is turned on. Which of the following actions should you take?

A)Determine the cause of the problem.
B)Recommend an electrician who can repair the problem.
C)Make the repair yourself and bill the client.
D)Note the problem in the inspection report.

Question 8

When reviewing home inspection findings with a client, which of the following actions should you avoid?

A)Suggesting specific repairs or improvements
B)Recommending to the client to buy or sell the property
C)Sharing your opinion about the property's value
D)All of the above

Question 9

While inspecting the electrical system, you forget to close the door on the breaker box located in the basement. During an overnight storm, water gets in and short-circuits the electrical system, which requires repairs because it is an older home. Which type of insurance is used to cover the damages?

A)General liability
B)Professional liability
C)Errors and omissions
D)General warranty

Question 10

Which of the following individuals is NOT a good candidate for home inspectors to establish a strategic partnership with?

A)Insurance agent
B)Real estate attorney
C)Home renovator
D)Carpet cleaning company

Question 11

It is acceptable to partner with a real estate agent under certain circumstances. Which of the following circumstances is NOT acceptable?

A)Paying a finder's fee
B)Paying the agent's commission if deal falls through
C)Paying no marketing fees
D)All of the above

Question 12

While performing an inspection of the basement, it appears there is not sufficient insulation between the wood stairs and piping from the furnace. You cannot adequately determine if this poses a potential fire hazard throughout the home unless walls are removed. What do you tell the client?

A)"It appears there is not sufficient insulation between the wood stairs and piping from the furnace."
B)"It appears there is not sufficient insulation between the wood stairs and piping from the furnace. I believe the lack of insulation poses a fire hazard."
C)"It appears there is not sufficient insulation between the wood stairs and piping from the furnace. Walls will need to be removed to determine if this poses a potential fire hazard."
D)"It appears there is not sufficient insulation between the wood stairs and piping from the furnace. You should not purchase this home."

Question 13

When you first meet with a client, you should NOT disclose which of the following?

A)That you have errors and omissions insurance
B)That you have an inspection contract they must sign
C)That you will provide a final written inspection report
D)That you will not be conducting a "technically exhaustive" inspection

Question 14

There are several purposes of a home inspection contract. Which is the PRIMARY purpose of the contract?

A)To provide protection for the home inspector and minimize liability
B)To provide information to your client regarding what you will and will not be inspecting
C)To provide details about the property being inspected
D)To provide documentation of the intended inspection

Question 15

As a housing inspector, you do not want people wandering around while you are reviewing the property. Should the client be present during the home inspection?

A)No, it is not necessary for the client to be present.
B)Only if the client wants to be present
C)Yes, the client should always be present.
D)Only if the homeowner permits the client to be present

Question 16

It is not uncommon for clients to have complaints about inspections, especially after they have purchased a home and realized the cost of certain repairs. If you get a complaint from a client, how should you handle it?

A)Call the client to discuss the matter.
B)Send a written response to the client.
C)Offer to refund their money.
D)Do nothing and hope the complaint will go away.

Question 17

With so many players involved in a home inspection, it can be confusing to know where to place your loyalties. The home inspector has the greatest responsibility to which entity?

A)The seller
B)The buyer
C)The real estate agent
D)The home

Question 18

There are times when you may need to return to a property for a follow-up inspection. What is required of you during a re-inspection?

A)A final recommendation for the client
B)A complete walk-through similar to an initial inspection
C)An update of the inspection report
D)None of the above

Question 19

When resolving complaints that involve refunds of inspection fees or other compensation, what action should you always take when dealing with clients?

A)Have clients sign a release
B)Refer clients to your insurance agent
C)Ignore complaints from clients
D)Offer to conduct another inspection

Question 20

Attending a seminar for first-time homebuyers is a good idea for several reasons. Which of the following is NOT a reason to attend such a seminar?

A)You can introduce yourself to prospective buyers.
B)You can establish business relationships with real estate agents.
C)You can network with home improvement contractors.
D)You can meet real estate bankers.

Question 21

When you initially draft a pre-inspection contract, who should you have review it before you begin to use it with clients?

A)Attorney
B)Insurance agent
C)Neither
D)Both

Question 22

While conducting an inspection, you notice a problem with the furnace but forget to include it in the inspection report. After purchasing the home, your client files a complaint against you. Which type of insurance protects you in this situation?

A)General liability insurance
B)Errors and omissions insurance
C)Homeowners insurance
D)Property insurance

Question 23

Is it true or false that you do not need to include the inspection fee in the pre-inspection contract if you charge a flat fee for all inspections you perform?

A)It is true if your fees are listed in your brochure.
B)It is true if your fees are posted on your website.
C)It is false regardless of where you include information about your fees.
D)It is false unless you verbally shared your fees with the client.

Question 24

Home inspectors need to understand the Standards of Practice. What is the purpose of these Standards?

A)To provide detailed guidance to inspectors
B)To establish minimum inspection guidelines
C)To create uniform inspection and reporting outcomes
D)All of the above

Question 25

Upon conclusion of the inspection, your client wants your opinion on whether or not you would purchase the home. How do you respond to your client?

A)"The home is in great shape - I would make an offer today."
B)"It is not appropriate for me to recommend purchasing or not purchasing the home."
C)"I believe I could find a better home for the amount of money the seller wants."
D)"The home is a disaster - I would start looking for another property today."

Question 26

A real estate agent asks you to inspect a home. She offers to double your fee if the home inspection report is favorable. You should respond by:

A)Reporting her to the proper authorities for trying to bribe you
B)Agreeing to her request and scheduling the inspection immediately
C)Declining her offer on the grounds that it violates ethical standards
D)Telling her to never call you again unless she is willing to triple your fee

Question 27

Your client is the prospective buyer of a home. The seller offers to pay you the same fee for the same inspection. How should you handle this situation?

A)Accept the offer and provide inspection reports to your client and the seller.
B)Accept the offer but only provide an inspection report to your client.
C)Do not accept the offer but still provide an inspection report to the seller.
D)Do not accept the offer and only provide an inspection report to your client.

Question 28

You have a relationship with a real estate agent who offers to refer additional clients your way if your findings for a particular site are favorable to the prospective buyer. How do you handle this offer?

A)You thank the real estate agent and agree to the terms.
B)You tell the real estate agent that accepting the offer would not be ethical.
C)You report the real estate agent to the authorities for breaking the law.
D)You notify all parties and appropriate authorities of the offer.

Question 29

How long are you required to wait before you can be paid to make repairs on a home you previously inspected?

A)Three months
B)Six months
C)Nine months
D)12 months

Question 30

Although you have passed the National Home Inspector Examination and are a licensed inspector, you have limited experience with certain types of furnaces. How should this influence your actions during an inspection?

A)Since you are licensed, you need to act as though you are an expert in furnaces.
B)Given that you are licensed, you should know about every type of furnace.
C)Even though you are licensed, you should be honest and inform your client.
D)Because you are licensed, you can get an expert to inspect the furnace.

Question 31

While conducting an inspection, you notice the roof is missing several shingles. Is it okay to tell your client that the roofing needs to be replaced?

A)No, you would be overstating the condition of the roof.
B)No, you should only state the roofing has been compromised.
C)Yes, you can recommend replacing the roof.
D)Yes, you can recommend replacing the roof as long as refer your client to a good contractor.

Question 32

The real estate agent working with your client asks to see the inspection report. What is your response?

A)You respond by giving her a copy of the report.
B)You respond by getting permission from your client first.
C)You respond by ignoring her request altogether.
D)You respond by providing a verbal summary of your report.

Question 33

Which of the following statements should you NOT include when marketing your services?

A)"Contact me for a free consultation."
B)"I am a licensed home inspector."
C)"Get affordable inspections here."
D)"Ask me about free inspection services."

Question 34

Is it true or false that you should not inspect any component or system that is not specifically included in the Standards of Practice for home inspectors?

A)It is true because your insurance company will not protect you if something happens.
B)It is true because there is no reason to go above and beyond what is expected.
C)It is false because the Standards of Practice simply establish the minimum requirements.
D)It is false because you can earn more money by inspecting more components and systems.

Question 35

The buyer and seller offer to split the inspection fee. Can you accept payment from both parties in this situation?

A)No, this is against the law.
B)No, this is a conflict of interest.
C)Yes, this is acceptable as long as the split is 50/50.
D)Yes, this is acceptable as long as both parties agree upfront.

Question 36

Home inspectors should not build relationships with which of the following types of technician?

A)Plumber
B)Electrician
C)HVAC specialist
D)All of the above

Question 37

Why do home inspectors require vehicle insurance that is separate from their personal car insurance?

A)Most personal policies do not cover damages that occur when you use your car for business.
B)Most business policies provide better coverage options than personal policies.
C)It is an easier way to track costs associated with your home inspection business.
D)It is just sound business practice to have more than one policy.

Question 38

Which of the following actions is an example of your fiduciary responsibilities?

A)Acting in accordance with industry ethical standards
B)Avoiding real and apparent conflicts of interest
C)Making sure all transactions are legal
D)All of the above

Question 39

Which of the following statements is true about home inspectors?

A)Home inspectors are legally required to offer guarantees.
B)Home inspectors are legally required to offer warranties.
C)Home inspectors are legally required to offer guarantees and warranties.
D)Home inspectors are not legally required to offer guarantees or warranties.

Question 40

Which of the following descriptions is BEST representative of contractual responsibility?

A)Identification of who is responsible for what during the home inspection
B)Identification of the individual conducting the home inspection
C)Identification of the individual who contracted the home inspection
D)Identification of the individual who owns the property being inspected

Question 41

There are many reasons to join industry associations. Which is the BEST reason for home inspectors to join industry associations?

A)To learn about inspecting
B)To gain credibility
C)To meet other inspectors
D)To discover new inspecting techniques

Question 42

Which of the following acronyms does NOT represent a leading industry association that home inspectors should join?

A)NAHI
B)ASHI
C)NACHI
D)NLIHC

Question 43

Which of the following should be included in your pre-inspection contract?

A)Insurance policy number
B)ASHI certification number
C)Property phone number
D)Complaint hotline number

Question 44

Home inspectors should be prepared to have which of the following documents before conducting their first inspection?

A)General liability insurance
B)Home inspector license
C)General business license
D)All of the above

Question 45

Which of the following is the most common type of business structure for home inspectors?

A)Sole proprietorship
B)Limited liability corporation
C)Limited liability partnership
D)Corporation

Question 46

What is a good rule of thumb when it comes to scheduling inspections?

A)Allow one hour per inspection
B)Allow 2-3 hours per inspection
C)Schedule one inspection per day
D)Schedule 2-3 inspections per day

Question 47

Many states and municipalities allow home inspectors to offer ancillary services in conjunction with the home inspection. Which of the following examples is NOT a recommended service?

A)Lawn care services
B)Radon gas testing
C)Water purity testing
D)Pest inspection

Question 48

How should you respond if a client asks about your professional objectivity?

A)Tell the client to find another home inspector.
B)Get offended and tell other home inspectors to avoid the client.
C)Explain that you have no vested interest in the inspection outcomes.
D)Refer the client to another home inspector for questioning your ethics.

Question 49

After accepting compensation from your client, the seller approaches you and offers you $100 to "soft sell" deficiencies you identify during the inspection. What is the appropriate response to this situation?

A)Accept the offer since you will still be sharing findings with your client.
B)Ask for an additional $100 for your efforts if you find major defects.
C)Tell your client what has transpired and get her opinion.
D)Decline the offer and suggest your client get a technically exhaustive inspection.

Question 50

When you get to the home that is to be inspected, you realize it is your cousin's home. What do you do?

A)Greet your cousin and conduct the inspection.
B)Inform your client of the situation and refund their money.
C)Ignore your cousin and conduct the inspection.
D)Inform your client of the situation and conduct the inspection.

Question 51

While conducting an inspection, you notice that the furnace needs to be repaired. Your client asks about the costs of the needed repairs. Which of the following responses is appropriate?

A)Call a contractor you know to get a quick estimate.
B)Give the client an estimate based on your experience.
C)Explain to the client you cannot give estimates for repairs you will not be making.
D)Tell the client that you cannot give estimates until you research the cost of parts.

Question 52

Your best friend is a remodeling contractor. The two of you agree to refer clients to one another for a $25 referral fee. Which of the following statements is true about this situation?

A)You are violating ethical and professional standards.
B)You are violating ethical but not professional standards.
C)You are not violating ethical standards.
D)You are not violating professional standards.

Question 53

A popular real estate agent contacts you and offers to include you on a "recommended services list" she gives to her clients. While there is no charge to be included on the list, she asks that you simply tell your friends and family members about her real estate services. What do you tell her?

A)"Thanks! That would be great, and I am happy to send business your way."
B)"Thanks, but I do not know anyone in the market for a home."
C)"No thanks. I prefer to do my own marketing and recruitment of clients."
D)"No thanks. It would be unethical of me to enter into such a relationship."

Question 54

Which of the following activities should home inspectors engage in to build their reputations?

A)Buy a franchise business
B)Establish a partnership
C)Participate in continuing education
D)Offer cheap inspection fees

Question 55

Which of the following statements is the most important one you need to make sure your client understands?

A)Standard inspections can take several hours to complete.
B)Inspections determine the condition of the home on a particular day.
C)Technically exhaustive inspections cost more than standard inspections.
D)It is impossible to identify every observable defect during an inspection.

Question 56

Your client asks for the name of a good pest control specialist. You want to recommend your brother, who is well known and has an excellent reputation in the community. What is the BEST way to refer your client to your brother?

A)There is no ethical way to do this so you should recommend another contractor.
B)It is best not to recommend specific contractors to clients for any reason.
C)Offer to make the recommendation for a small fee from the client.
D)Make the recommendation but disclose your relationship to the specialist.

Question 57

Why might it be viewed as misleading to market yourself as the "best" home inspector in your community?

A)It can confuse clients who might believe the designation is based on certification scores.
B)It is impossible to make that claim without knowing every inspector in the community.
C)It suggests there has been some type of formal evaluation of all inspectors.
D)All of the above

Question 58

Why is important to have a business plan even if you are an independent contractor?

A)Because you want to market your services on the Internet
B)Because you hope to buy a franchise business in the future
C)Because you need to manage expenses and revenue
D)Because you require guidance for day-to-day business decisions

Question 59

You are interested in buying a home when a client contacts you to inspect that exact home for them. How should you handle this situation?

A)Take advantage of the opportunity to see the inside of the home.
B)Conduct the inspection for your client but keep your needs in mind.
C)Disclose your interest in the property upfront to your client.
D)Turn down the client and suggest they get another inspector.

Question 60

Your pre-inspection contract clearly states that you are only conducting a standard inspection and details all exclusions and limitations. Several months after purchasing the home, your client sues you because of a defect that was not included on your report that cost them $3,000 to repair. Which of the following statements is true about this situation?

A)Clients can sue you any time for any reason, but it does not mean you are liable for damages.
B)Your client can only get back the amount they paid for the inspection, not $3,000.
C)You will likely lose your general liability insurance if you are found guilty of negligence.
D)None of the above

Question 61

You learn that another inspector is working with a real estate broker to illegally speed up the purchase of vacant homes. As an independent contractor, you know it is impossible for a single inspector to conduct the number of inspections reportedly completed in the identified time period. What should you do with this information?

A)Do nothing since it is none of your business.
B)Report your suspicions to the American Society of Home Inspectors (ASHI).
C)Contact local authorities about your suspicions.
D)Notify the inspector and the real estate broker that you are aware of their scheme.

Question 62

What do you need to tell your client about the inspection fee?

A)Inspection fees increase every few months.
B)You charge for travel costs in addition to the inspection fee.
C)You offer the lowest inspection fees in your community.
D)Inspection fees are set per visit to a home.

Question 63

What is the best way to collect the inspection fee from clients?

A)Over the phone, at the time they schedule the inspection
B)Online, at the time they schedule the inspection
C)In person, right before you begin the inspection
D)In person, upon conclusion of the inspection
E)Either C or D

Question 64

Which of the four elements is NOT associated with a claim of negligence against a home inspector?

A)Breach
B)Impunity
C)Duty
D)Causation

Question 65

A home inspection is part of which of the following processes?

A)Due diligence
B)Discovery
C)Disclosure
D)Declaration