Secrets of a 1,000 5-Star-Review Inspection Company - With Michael Conrad

The First Time Home Buyer Podcast - How To Buy A Home

Introduction

Michael Conrad is a building scientist and a serial entrepreneur that runs a company called, DILIGENT, a home inspection company based in Nashville, TN with over 1,000 5-Star Reviews. DILIGENT is the ultimate One-Stop Shop for inspection services in the mid-Tennessee area. You might have also seen Michael on his YouTube channel as “The Diligent Inspector”.

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Transcript

This is an automatic transcription (sorry for the typos in advance! 😅)

Laura Moreno: [00:00:00] First Time Home Buyer Nation, I am Laura Moreno and I am super excited to bring you our fantastic guest today, Michael Conrad.

Michael is a building scientist and a serial entrepreneur that runs a company called Diligent, a home inspection company based in Nashville, Tennessee, with over 1000 fivestar reviews. Diligent is the ultimate one stop shop for inspection services in the mid Tennessee. You might have also seen Michael on his YouTube channel as the diligent inspector.

Michael, are you ready to flow?

Michael Conrad: Yeah, let's do it.

Laura Moreno: Great. So you and our community, just a little insight. Please share more about you personally and then expand upon your

Michael Conrad: business. Yeah, I, I got into this business, uh, sort of accidentally. I mean, I'm not sure exactly who gets in on purpose, but I had someone tell me that they, uh, thought I might be good at it because of two things.

I loved to help people. I loved [00:01:00] construction. And I love talking. And ultimately, home inspection is the segue, uh, or the intersection between all those things where we understand the construction science world and we help break that down into bitesize pieces for home buyers of all sorts. So I got in it because I came from construction, but mostly because I love people.

That's

Laura Moreno: awesome. I mean, tell me more about your company and also want to know about your YouTube channel as well.

Michael Conrad: Yeah, so I, when I started being a home inspector, I realized, you know, if I. Not very good and I can't grow a company. I kind of still love everything about this job, but I had an idea from the beginning that it might be cool to try and help more people than what just one man can do.

And so I had a vision for the future that involved many people all working on, um, a buyer's transaction. Many hands make light work, and quite honestly, it can make a more quality experience. And so, yeah, I, I [00:02:00] started out small just like everyone does. I was sweeping the floors and, um, doing everything, but ultimately I tried to create a division of duties by bringing in people that were smarter than me or more skilled than me in various areas and empower.

To be helpful as a home inspector, as someone who's handling logistics or scheduling as someone who's making new relationships. And so we've built an exciting company over the last 11 years that we get to employ and feed about 18 families in this company, which is a really exciting thing that I'm proud about.

That's

Laura Moreno: really, really awesome. I mean, you started as a home inspector yourself, and then you expanded the.

Michael Conrad: That's right. Yeah. I, I, I get a lot of calls from folks who've seen me on our, my YouTube channel, the diligent inspector, and they say, Hey, I wanna do what you did. I want to grow a company. I want to be my own boss.

And I always say, Do you, because it's a lot of work, you know, you classically hear, ah, you trade [00:03:00] in the nine to five, 40 hour a week job working for the man so that you can work for yourself and work about 80 to a hundred hours a week. You know, So it's maybe not all it's cracked. Video all the time. But it does have its challenges, which personally I love.

I love to solve a problem. I love a puzzle, and really every day in business is about solving a puzzle. Maybe someone needs to learn something and you gotta figure out how to explain it to them. Maybe someone's not very happy and you gotta figure out how to find a way to meet each other. Maybe there's a house that has a complicated issue and you gotta figure out what's going on.

Every day is a.

Laura Moreno: Totally. Totally. That's amazing. So let's talk about a home inspection in a house. Uh, let's talk about Nashville, which kind of properties you have in that area, and do you know, what are the particularities of those properties? Are they more difficult to inspect or home buyers should be?

Were aware of like specific problems in those

Michael Conrad: houses. . Yeah, great question. Okay, so for any of your listeners here that are living in [00:04:00] maybe the lower southern part of the United States, maybe over here in kind of the deep south where we have a lot of humidity, a lot of rainfall, and a lot of groundwater, you're gonna need to be wary of the big number one enemy of the house, and that's.

Now up in different parts of the country, the north, the west, the planes, the Southwest, each of them has their own experience dealing with trying to keep water out of a home. But gosh darn it, Mother Nature is really giving us a run for our money. Down here in the south. We are constantly having to make sure that we're building houses that can survive the test of time.

Houses really don't have to be built nearly as well in other parts of the country because, Uh, moisture is not really trying to get in quite as intensely. And so for anyone listening that's buying in the south, one of the things that you wanna be wary of going into any home buying process is the enemy of moisture.

And that's gonna be probably the number one thing that your. Home inspector is gonna [00:05:00] be looking for sure they're doing a roof inspection or an exterior or a crawlspace inspection. But what they're really looking for is how is water trying to get in and what materials maybe got damaged along the way?

Laura Moreno: Wow. Number one enemy is water. That's, that's crazy. So what are the biggest damages that water can make in a.

Michael Conrad: Right. So in this part of the country, we don't have overly, particularly old housing stock. Really old homes to us are barely a hundred years old at the oldest when a lot of our friends maybe up in the northeast might be dealing homes that are hundreds and hundreds of years old.

And so when it comes down to the homes we deal with and the water intrusion we see we're dealing with mostly newer homes and newer homes. Building materials that are sometimes made more by man than they were a tree. You have particle boards and OSB and things that are very vulnerable to water. And so one of the [00:06:00] things you've gotta be mindful of is the newer the home, the more buttoned up it really has to be.

Or Mother Nature's gonna take her toll.

Laura Moreno: Wow. Okay. That's, that's, that's amazing. I mean, tell me more about diligence. So if someone is looking to schedule an inspection, how does the process work and, uh, how do they get in touch with you or with a home inspector, and how should they choose the best home inspector

Michael Conrad: as well?

Right. There's a reason why so many articles online are written about these basic ideas of how do you choose a home inspector, because it's so important at this portion of the process. Really, I want to be an encourager to all the home buyers listening here, that they need to be treating the home inspection process as an investment in inform.

Because that's really what it comes down to. A home inspection might help you understand the information of a home and help you avoid it all together if it's a big problem. Or better yet, if it's a home you still, like after the home inspection, [00:07:00] it gives you a great roadmap of what to do next. Now, when I first started out and really as much as maybe 20 plus or, or early or many years ago, Hmm.

Calling up a home inspector was just that you called someone on the phone and he was the guy. He might have been in a crawlspace or on a roof, but you were almost always guaranteed to get the man himself. And that still happens today a little bit, but more and more what you might encounter is speaking to a staff member who works for a home inspection company, not just a single owner operator home.

I. And so you're gonna find us online with our website or our social media and all the usual digital places that you might, You might book an inspection and never speak to a warm body. You might even send a text message because now texting is a big part of all of business practice. Either way, someone's gonna probably call you back and say, Hey, thanks for reaching out.

We love to get you scheduled. Can I make sure that you're. Of all that goes in to the home buying [00:08:00] process, did you know that there's other little bits of education that you can learn? Would you like to add those on and kind of simplify, but also create a greater depth of information so that you're most armed?

Cuz there's never any better time to know that in right now during the due diligence phase of your transaction, what's really going.

Laura Moreno: Wow. Yeah, I mean, we think about education in terms of buying a home, finding an agent, you know, coming up with the finances, talking to a lender. But we, I, I think like hardly we think about education when it comes to the home inspection.

Like with the home inspection, we are like, the home inspection will come and he will tell me if I should run away or not. , hopefully. But what are the patient Yeah, go.

Michael Conrad: It's actually more complex than that because what we all do, and I'm not immune from it any more than you are, we go into a home that we might like to buy, and we make these assumptions in our mind that this home is in [00:09:00] good shape because why would they be putting it on the market otherwise, and that the price that they're listing at is likely somewhere close to the right price, But in reality, The home inspector comes in and kind of upsets the balance.

He changes the balance of those scales. And no, the quality of the home and the price are not usually on balance. And so the home inspection isn't just about running away, it's about understanding am I getting a home that's actually worth the $300,000 that it's listed at, or am I getting a home that has $20,000 of repairs?

So it's really kind of like I'm buying a home that's 280. And what do I do about that? Now, your real estate agent might help you negotiate for repairs or negotiate for price change or maybe money at closing. There's many different options in

in which to reset those scales, but that's the role of the home inspector is to make sure that the buyer is fully [00:10:00] aware of the balance between the quality of the construction and the price.

Laura Moreno: Got it. Got it. So as a first time home buyer, I go to a home. We've imagined we've been putting offers for five house houses, and finally this one, the offer is accepted.

This one is the one. So now I have to schedule a home inspection. I go to the property, and now this is just the last check mark in my list. So my hopes are up. I don't think nothing wrong is going to happen because I've been fighting for three, six months to try to get a home. And now my home inspection tells me like something that I didn't want to hear.

I mean, how do we manage our emotions the correct way? Like how do we go to see that property with the right expectations?

Michael Conrad: Yeah. This is a tough case for anyone buying in 2022. I wanna be an encourager to say. I get it. I understand that it's an emotionally fraught process, but we find ourselves in a place where [00:11:00] we are negotiating for the first round for an overall price, but then we end up expecting to negotiate again.

It can lead to an emotional rollercoaster. So the best thing, the best advice I can give, You know, hold your breath a little bit before you get that inspection, but go in knowing that every home has issues. Let me say that again. For the people in the back, every home has issues, even the new ones. And because of that, you've got to go in expecting Some things might be fixed by the seller, but some things are gonna be my responsibility.

I don't know a lot of. Today that really know this, but I keep shouting from the rooftops. There is responsibility required in home ownership and we have to have our buyers mentally and emotionally equipped to go in knowing, yes, I might get some price reduction or I might get some things repaired, but I'm going into a home that's likely gonna have a need for [00:12:00] maintenance and I have to be a full participant in that kind of maintenance.

Laura Moreno: Yeah, that's something like many people take by surprise. You know, suddenly they have to fix a boiler. Like it happened to me, we had to fix a boiler. And then you come up with a bill that is like $20,000 and it's like, Oh my God, where do we get into? And you have to come with expectation that things are going to break.

That a house is a living being a living thing that is going to be evolving. And I actually love what you said about, um, every home has issues because we go with the mentality. I hope nothing's broken. I hope it doesn't have any issues, and there's going to be an issue. There's going to be something . So just like go with the right mindset.

Michael Conrad: Yes, and honestly to think that you can walk into a maintenance free home. It just doesn't represent reality for almost anyone. And anyone who has bought a home can probably safely say that that's true. But you know, there's a lot of first time home buyers these [00:13:00] days. They're probably listening to this podcast, and I hope that they can have a takeaway here that if you're not going in ready to be a full maintainer of a home, maybe it might be time to second guess home ownership for a second.

Laura Moreno: Tell me more about maintenance. So what happens if we buy a home and then we kind of like don't do the maintenance things break and we just let it be? Um, does that impact a lot, the house? Like what should we do regarding maintenance? When we own a property,

Michael Conrad: we have to start thinking about maintenance of a property, kind of like changing the oil on our car.

You can avoid changing the oil and go for a long time, and you're kind of rolling the dice, whether that car is gonna crap out on you, but we all know the stories. If you keep good records and actually do the maintenance and the oil change every three to 5,000 miles, you're gonna extend the life of that [00:14:00] car.

And so a house is the same way. There was a study a while back that said we should be spending about 1% of the value of our home every year. To maintain it, you means if you have a $300,000 home, you probably should be spending around $300,000, or at least budgeting for it and storing that money away in an envelope somewhere ready to spend it because maybe year one you don't have to spend it.

Maybe year two you don't. But year three, you gotta replace your H V A C and it's $8,000, but you are a good little boy or girl and you put that money in an envelope. If we're not doing that, we end up with big bills that are surprises and a lot of sellers, these. Feel surprised. I'm putting air quotes around that because they get a home inspection report served up to them by some unwitting buyer, and the buyer says, You need to do all this maintenance and repairs.

And the seller says, Well, I've never had any issues. But in reality, if they've done little bits along the way, they wouldn't [00:15:00] feel the pain of those large repair bills right then and there. And honestly, it doesn't feel fair to stick that with the. Unless the buyer is getting an absolutely fantastic price.

Laura Moreno: I hear that. So one other question for you is you have over 1005 star reviews, which is out of this world. I mean, what are you doing differently that other inspectors are not doing? I mean, why ? And I suppose, I hope other inspectors are not listening to this, but what are you doing better than anyone else and how are you creating such an amazing experie.

Michael Conrad: Sh don't tell the other inspectors. But I will tell you here, reviews recom, um, represent your level of human involvement and customer service. And don't really represent the quality of your product. Now, I'm not saying we have a bad quality product. In fact, I think we have a great quality product. But my secret at Diligent over the [00:16:00] last 11 years, how we've gotten to a thousand reviews and kind of blown away the competition a lot of ways, it really comes down to we know how to take care of.

We know how to do the basics. Answer our phone. Say, Yes, sir. No sir. Be kind to everyone around us. Show up when we're supposed to leave, when we're supposed to. The basics. Ultimately, we know that our review reputation online reflects our business practice, not necessarily our product.

Laura Moreno: Oh, that's amazing. So you are taking people like humans, you're treating them well with respect show.

Were you were saying like showing up, showing up to appointments, picking up the phone, ? Or were you saying all those basics that everyone should be doing? You are systematically doing

Michael Conrad: them? Yeah. Unfortunately in business today, common sense isn't super common and some of those old school ways, Acting in business can be surprisingly beneficial, uh, and help your business make steps forward.[00:17:00]

Oh, that's, that's great.

Laura Moreno: And last question for you, Mike. Um. as a first time home buyer, you know, 70% of home buyers we see they're having some regrets on their first time home purchase, which is kind of crazy for me. So seven out of 10 people that buy a home will have some regrets. So what are some ways that home buyers can avoid mistakes?

Um, do, can you tell us like the mosco mistakes that you see and how could home buyers avoid making that particular. ,

Michael Conrad: I would say there's a couple key things that they can start thinking about right now as they're prepping for their first time purchase. We've already talked about one of 'em, and that is go in with a good managed expectation that you're going to have to spend money to own a home.

Nobody gets a chance to live maintenance free or cost free in home. So number one, good personal managed expectations of what your level of financial participation is. [00:18:00] Number two, go in knowing that it's going to have a lot of sort of, Different steps in the process. Some of them might be a little bit emotional, and so I would say people who get into houses that are maybe a little too big for them because it feels exciting to have a big house might end up in a home that's maybe too much to maintain.

And so having more modest expectations of where you can live can also be another way to kind of avoid that regret. And then I would say the third and biggest thing to avoid. Is make sure that you are sparing no expense on investing in that information during the home inspection process. It's not just a fun step that you're checking a box for.

In fact, the home inspection fee may not even be the entire amount of money you pay out during the home inspection process. Your home inspector might recommend. [00:19:00] Another professional to do some further evaluation and my recommendation is to avoid that future regret, take every single one of those extra recommendations to heart.

Laura Moreno: I agree. And what do you think about the people that did avoid having a home inspection during the, during the past years? I mean, would you ever recommend someone to skip the home inspection? .

Michael Conrad: Unfortunately, there has been a trend of people wanting the home more than they wanted to run the processes, and they are facing now the difficulty of not ever really knowing what the roadmap was for maintaining and understanding their home.

They're flying blind without a guide, and so no, definitely not, and not in a self-serving way. This is about education, and honestly, we all need education because education empowers us. We all fear what we do not understand, and many folks in today's day and age just don't really understand homes all that [00:20:00] well, to be honest.

Homes are very complicated these days full of all sorts of technology and engineered materials. And so we have to make sure that we are bringing a guide along with us in this transaction who is equipping us with as much information as possible, or referring us into the right hands of another professional.

And so regret always comes from, uh, a lack of managed expectations and an inability to see the, the things that are coming ahead. And so it's best to bring along someone who will help you become educated and help you project.

Laura Moreno: Well that, that's a great advice and you've shared with us Michael, amazing information.

How can we get in touch with you?

Michael Conrad: Definitely look us up on all the traditional social media places that'll be linked here in the podcast description, and you can always find me if you're curious about some of my rantings and ravings, you can find me as the diligent inspector on YouTube. That's

Laura Moreno: amazing.

Well, thank [00:21:00] you so, so much for being in the first time Home Buyer podcast. I really appreciate it.

Michael Conrad: Yeah, great to talk with you. Thanks!