Welcome back to Trust the Process, podcast where
we talk about new home construction, the housing
market, and everything in between. Today we're
going to dive into the topic of third party inspections.
Michael will go into a lot more detail, but I
kind of wanted to just give a quick reference
for what that means so that we have sort of a
starting point or a place that we can pivot.
rest of the discussion. So we've got first party
inspections, which is typically the builder.
So that in our case is a trust GC. Second party
inspections would often be the buyer. Most of
our homes start without a buyer. So that buyer
then is our owner. And so then that inspection
is done by our owner. At some point the buyer
comes into play. We'll do on a true custom, one
of our built to suit homes, obviously there's
a buyer in place. And then third party is the
one we're going to talk about today. So third
party inspections really are the big one. They're
the ones that we are relying on a third party
entity. So it's not anybody who's affiliated
with us as a builder or any builder. They don't
have any monetary ties to the company or any
bias. They're simply grading the work that's
being done based on code. And they're measuring
the quality of the work against building standards.
So it's completely unbiased, just compliant.
So there are different points throughout the
build process, and Michael's going to touch on
this a little more, but where everything kind
of comes to a screeching halt until we get that
inspection. So we can't build any further until
that inspection is completed. And it's often
a municipality, be it the city, the county, the
state, maybe it's a utility company, or maybe
an independent agency. But whatever it is, Yeah.
Ways that this is used on our bills. Yeah Yeah,
I love the way that you broke it down I think
it is important to talk about primary and secondary
You know first what happened to first and second.
It's a good point I actually never stopped to
consider that that we are the first party inspection
So yeah, our GC is out there walking the projects
and that happens daily We've hired a subcontractor,
even the electrician, they come in, they send,
and then their foreman, they're supposed to inspect
it. We still go behind them and do our own first
party inspection on behalf of Trust Home Builders
to confirm that we know what went right, how
well it was done. And that's kind of daily. Yeah,
that's the threshold of do they want to get paid
and do we want to pay them? So if it's good work
and it's what we agreed upon, then we're good.
Let's go ahead and cut the check. and move on
to the next stage. And also many times it's,
can we send in the next stage? The installation
company said they're done, they want to get paid,
and the drywallers are right behind them. Usually
there's another inspection in between the installation
and the drywall in most jurisdictions. But let's
say, all right, well, is it time to send the
drywallers in? Can we send the third party inspector
in? Which I want to talk about a distinction
between the third party and a special inspection.
These are two different things, but they're both
third party. So I love the idea of us, you know,
Trust Home Builders being, you know, first party
inspection. That's great. Yeah. Then I'm the
buyer. Yeah, because I'm the one. Yeah. Right.
Right, I'm still the owner, and I'm the one with
the purse strings, so I'm the first party and
the second party. But I agree with you, the GC
and the project manager's kind of more of the
first party, and I would come in as the second
party inspector, you know, technically. And now
if we have a buyer, then of course, throughout
the course of the transaction slash build, they're
gonna be in there and trying to micromanage us.
It's a tale as old as time. They're always gonna
be in there trying to micromanage you as a builder,
even though you're the expert. Yes, exactly.
Unless it's your custom where they go to contract
and they're a slab or whatever, if they're far
upstream. Yeah, we try to keep them kind of more
downstream. And then also when we sell the house,
there is a second party buyer who's, are they
going to purchase the home? And they're kind
of inspecting it when they view it with one of
our salespeople. So that's kind of... And then
once it's in, they make sure that it's laid the
way they want it or that it isn't. Yeah, exactly.
All of that stuff. Right, right. Yeah. Again,
we don't always have a buyer when we start, but
at some point, once they get looped in, then
obviously they may have to pay as well. Right.
In many cases, the buyer is a tougher, they're
a tougher inspector because they have their own
sense of what should and shouldn't be. And we
know industry standards and we know what's in
the contract and we know, I mean, we do our best
to try to meet people's expectations, but ultimately,
They'll keep sending the food back to the kitchen
if you let them. You have to at some point say,
okay, these are industry standards. Okay, this
is not a piano. This is a house that was built
by hand with natural materials. Right? Right.
They're not classically trained. They're necessarily
the most valued and they don't know industry
standard and they don't know code compliance
and they haven't been trained. So it's, you can
take it with a grain of salt. As a builder, especially
most of our product luxury custom, not super
$15 million luxury, but you know, 1 .8 to 2 .8,
somewhere in that range. That's pretty custom,
you know, that's pretty pretty luxury in most
markets. And we're talking four or five times
the median sales price. Yeah. So and there's
a certain expectation that comes along with that.
So even though industry standards might govern
anywhere, anything from an apartment building
to a 20 million dollar house, it kind of has
that gray area to say, well, what kind of builder
do you want to be? So we always, you know, build
above industry standards. So that being said,
that kind of parlays us into the third party.
So a third party inspector, I love the way you
said that, they have no financial ties, they're
not a principle of the contract between buyer
and seller, builder, client, whatever. Third
party is generally like a city jurisdiction,
Department of Building and Safety, and they're
kind of there to enforce and to prevent you from
going on to the next step. So I mentioned briefly,
you know, a minute ago that they will come by
and look at the installation. before they let
us drywall. You get permission to drywall at
certain steps. You get permission to wrap, meaning
wrap the house on the outside. Permission to
pour, permission to insulate, that is one of
them. So there's quite a few thresholds throughout
the, I would say in general, the Department of
Building Safety will come to our sites. If we
don't have a pool also going in concurrently,
probably come to our sites around... around 15
times if we were to pass every single inspection,
you know, on the first try. There's roughly about
15 if you count the final certificate of occupancy
inspection. There's some QA that the city sends
where they're checking for things like addresses,
or the address is the same. That's not a building
inspector, that's QA. A lot of times it's a third
party company that's been hired. Some of these
are, as you can imagine, as I'm listing them
off, cash grabs, right? I mean, they really are.
Some of them are just... okay well this that
keeps a qa company in business because they have
to check every single rooftop are the addresses
right is the driveway in is the pitch of the
driveway those types of things gate returns so
third party is there to enforce code and building
standards kind of that are concurrent with where
the state is but generally they're looking at
what are the codes that the city follows so if
they follow international residential code 2021
and what's on the plans They're checking for
that. Go farther upstream. The plan checker is
checking all of your architectures and engineering
to make sure you're compliant with zoning, make
sure that you're following and calling out for
international building code standards or the
city building overlays. We talked about how many
pages of code in an earlier episode of staggering
them on a code. So the plan checker is checking
those things to make sure that you're going to
build a decode so that when they fail you in
the field, you can't say, well, you approve these
plans and they're letting me build up for these
plans. they're preventing that because then technically
the city can't enforce you if they've stamped
the plans and said yeah these are good to build
off of and you follow those plans you're pretty
much good to go right so there's a lot that falls
on the plan checker now if it came down to something
about safety or whatever they're going to of
course say this is obvious you know an obvious
oversight by the plan checker or everything else
i mean it's pretty much we build to the plans
there's not much you can say so when if we don't
pass an inspection it's either a really particular
building inspector like oh your seismic tie downs
are every 18 inches and they're supposed to be
over 16 inches or whatever on this particular
wall or your sheer wall has to have supposed
to have you know sheeting to this point and you
stopped it here so he's kind of number one checking
what's being called out on the plans and number
two also just using his own cognitive ability
and you're not going to fight with him even if
it wasn't called out of the plans because you're
not going to win that fight. a retro Tidon seismic
strap tied on right here, then you're gonna go
ahead and do it, right? So that's the biggest
thorn in my side, those third party inspections.
Then there's something called a special inspection,
which is also a third party. So you'll retain
a third party company because either the structural
engineer, the civil engineer, the department
of building and safety at plan check called out
a special inspector. So they're saying you're
moving too much earth. to adequately compact
this. We don't trust you to compact it. So we
want you to retain a third -party company to
test the compaction. Let's say you're going to
add five feet of compaction. We want to test
it every foot. So every time you do it and compact
it, we have to come out and you just have to,
let's say it's Southwest Geo or whoever geotech,
they're going to come out and they're going to
have that on file to say, we checked it. We checked
lift one, lift two, lift three, lift four, lift
five. And they were all good. They were all compacted.
And then that kind of takes its way into the
file for the perm. They're not on site the whole
time. They come in between. So we work for the
day, they come, they check, or we work for the
week, whatever it is. Yeah, whatever it takes
to your next threshold. There are some special
inspections that they will watch you do it. Something
that's really kind of really intense. Maybe if
it's some sort of... Usually it would be probably
with grading compaction. That's what I can think
of most where they might... You might have to
hire an engineer to watch you. You know what's
a good example? Screening. Screening fill. So
if you have a bunch of native soil, they're going
to want to watch you screen that fill through
those little filter looking things, a big metal,
yep. They're going to want to watch you screen
out all the spoils. So there's certain things
where you might have to have that. We have a
utility issue at Serene where the utility's kind
of intersected. We have to pay... for a special
inspector to watch them do the six hours worth
of work connecting the sewer because they have
to make sure they get to turn the water off in
the middle of the night. The crew has to work
from midnight to six a .m. we have to pay the
special inspector to be there during that time
to watch them do it and to sign off on it in
real time because we have to turn off water to
the street. So we're gonna do it at midnight
and turn it off, do the valves, make sure all
the valves, make sure all the joints are good
because this is controlling the entire street.
So if we mess up, if our vendor messes up, the
whole street loses water and for who knows how
long because they gotta turn it off. Now you
gotta troubleshoot it, find where it is. Because
in 10 years, I'm not going to remember that we
did that little elbow. There's a lot of other
elbows maybe in the area. So they're going to
have to know that it was done 100 % correct.
We do. Yeah, we do usually give them like a 48
-hour notice of a little postcard mailer. I think
we have to mail it and post it on their house.
So we're already so popular in that area, so
I'm sure they're going to love us after that.
I hope so, until then. They do, we're always
the bad guy. So those are good examples. Yeah,
so let's say for instance that was a condition
of our building permit. Let's say that we have
a large home in South Shore that has spans that
are so great that the structural engineer called
out structural steel. So we have a massive four
by four steel pylon that is anchored into the
foundation. It goes 24 inches to earth, basically
to bedrock, because we've compacted it to more
or less bedrock. So it compacts it and it sits
down there in a template and it's bolted down
like it would be in a high rise. So it's pretty
crazy. That requires obviously special inspections
or a call out for the steel. So that's really...
kind of the majority of where you'll see those
third party, it's almost always something structural,
right? Where they're gonna want some sort of
sign off. And then another special that you're
always gonna have would be your pad certs. So
your pad... elevation and compaction. So did
we put it where we said we were going to put
it? They come out and we call it shoot our elevations.
They shoot it to say it had to be 2 ,663 feet
above sea level. It's 2 ,363 feet above sea level.
They're good to pour. So that's one of the things.
So the third party inspector, I call special
inspections third parties, but you're right.
Jurisdictional inspections are third party inspections.
So the special inspector will shoot the pad for
pad elevations. the city inspector will be checking
rebar, will be checking footer depths, will be
checking rough plumbing to make sure all the
plumbing that runs through the slab is done correctly,
and then you get permission to pour. So that's
a great example of a special inspector and a
jurisdictional inspector coming together, and
those two nuclear keys need to turn before you
can pour the slab. And then, you know, Beyond
the build process we'll have sometimes special
inspectors like special inspections for energy
star Air air tightness. So like duct blower,
so they'll kind of mask everything off and make
sure that Not too much air is escaping the house
So are there holes in the duct work in the attic?
Are the sliding glass door sealed or the windows
sealed and that's called a duct blower test and
that's also a third party special inspection
that required It's a it's a third party company.
Yeah, it's part of the Department of you know,
there's a lot of energy What? No, there's a lot
of energy codes. So it's just part of that, you
know Yeah, somebody maybe Department of Energy
lobbied the state the city to mandate duct blower
test But ultimately it's a city code that you
have to pass a duct blower test before you can
get a certificate of occupancy To make sure the
house is tight enough And now houses are so tight,
they have exhaust fans running in the laundry
rooms to get some sort of air movement because
they're so tight now. If you were to, God forbid,
have a gas leak or something, it will fill up
quickly because the house is hermetically sealed,
right? So there's - And the attic has no ventilation
in the attic. They've cut a lot of that out in
New Zealand. Which is a great, I mean, you've
got less exchange of controlled air versus extra
air, but at the same time, you're - It can be
and an anecdotal story is I just happened to
decide to have my whole HVAC system replaced
in my house in the winter because I didn't want
to be part of the spring and summer rush with
the HVAC companies and when he was up there I
had natural gas leaking from my furnace into
my attic. Now my house is built 2004 I didn't
build it. So the attic is is seepy. It's loose,
right? So is able to that natural gas is able
to kind of escape But if that were a cocoon insulation,
I don't know it would have Because drywall and
insulation is not gas resistant, right? It's
heat resistant. So gas can seep through those
areas. I mean, it would take a lot, but you'd
have to fill the volume of the attic. But it
was kind of alarming because I was about three
weeks into the heating season, right? So my furnace
had been running for about three weeks. Usually
in Las Vegas, it only kind of kicks on at night.
But it was a little scary. Yeah, like, oh, OK.
Carbon monoxide detector might have picked it
up, though. It would, and I would probably smell
the natural gas. but what if i weren't home what
if yeah i mean it's just not so slow you know
kind of the frog in boiling water right if it's
exactly you're just you know taking it in because
it's you know slow see right exactly just nose
blind to it or something yeah it's just yeah
so just interesting how important this kind of
stuff is but um and it's when it's control too
so For instance, I just did an inspection and
they found that the vent fan out of the laundry
room wasn't connected to the exterior port. So,
whenever that home was built, it's a resale.
So, whenever it was built years ago, the builder
just didn't ever connect that. Well, we live
in Las Vegas. There's never been a condensation
issue. It's plenty warm. Everything evaporates.
But, you take that so home, they save conditions
to, you know, East Coast where it's way out.
It is moist, it is humid, and there isn't any
escape for that. It's a really hard time, a condition
that could be created. Right, it is, yeah. In
some ways it's forgiving, right? Because, right,
in other ways not, right? So we don't really
have to worry about moisture here because it's
so forgiving. It dries out even if there is something.
Florida, different story. I mean, given enough
time, I'm sure every house has mold, right? So,
yeah, these things are important. There's just
a good anecdotal thing to say, you know, there's
sometimes a downside to having everything so
tight and sealed off, so. So those are our main
special inspections. We don't, we don't do Energy
Star at, you know, in our company. That's not
something that I value. I know we build a tight
home. We do great insulation. We do great duct
work. We do Sear 16 HVAC, and our windows are
low -E, and I don't need Energy Star to come
in and say, yeah, you did everything right for
another fee. And it's something that the Energy
Star looks really good on a production builder's
model home, right? But we don't have, that's
not gonna give our homes any more value to tell
us that we built a great home when we already
know we built a good home, so. But that's another
example. Almost everywhere, yeah, exactly. It's
kind of, it is. Right Right It is they're not
doing anything special really Right 20 years
ago 10 years ago even that would have mattered
more and that's why you're seeing a lot of builders
dropping the Energy Star and the LEED certification
because Codes have gotten so robust that it's
no longer market driven, and it's no longer individual
builders saying, this is our edge, this is our
competitive advantage. They're just, they have
to do it. It's part of code. And now there's
third party inspectors anyway. If you have a
duck blower test, that's basically all Energy
Star did anyway. They looked at your specs, right?
So your model could be Energy Star on spec, and
as long as you build to those specs, and then
they came in and tested for the air seepage,
and that was it. It was quite a racket, and it
mattered 10 years ago, 15 years ago, even 20
years ago, so. And I think it matters less to
buyers. Yes. I think buyers understand that it
doesn't really change their energy bill at the
end of the month. No, it doesn't, and it's assumed
that when you're buying new construction, you're
getting it anyway, so. Yeah, other than that,
that's pretty much it for third party. I... personally
like having third -party inspectors, because
as a builder, it does shift liability. Not that
I'm trying to skirt liability, but it is nice
to know that, okay, well, I don't have to make
sure my vendor, I mean, obviously we would, but
I don't have any way of testing compaction. I
don't have a lab. I have all the documentation
to say, here's our past inspection, you know,
past, past, past, past, and that's now on Southwest
Geotech, or whoever did it, right? Whoever did
your structural steel inspections or whatever
so And honestly, I mean even a little deeper
than just the liability because obviously that's
a big piece of it But just the second set of
eyes. Yeah, do we do something? Simple where
where you've looked at it for so long. You just
can't see it anymore. And then Hey, did you mean
to spell that this yeah, exactly It's just verifying
that not that anybody's being sloppy or careless,
but we're all human, and when it's built by human
hands in a human environment with other external
things, the weather, the time. Distractions,
yeah, right. It's always good to have another
set of checks. Yeah, I agree. Overall, I like
it. The third party, I mean the special inspections,
you're pushing off all the liability. The city.
You don't really get to push off a ton of liability
unless it was something really gross negligence.
But it's kind of nice if we have a dispute. I
don't like to say that we do, but we have them
with our home buyers and our homeowners every
now and then because people have different expectations.
We can lean on and say, look. city inspectors
were in here 15 times they said it was okay you
saw it when you bought the home you said it was
okay uh the engineer said it was okay we have
a home uh from a few months ago where he's insistent
that the hva system system is not correct and
multiple people have been in there and said okay
well the engineer designed it this way the builder
built it this way the third party inspector signed
off on everything. Everything's right. And it's
built to industry standards. So unfortunately,
I'm not buying you a new HVAC. I'm not re -engineering
your HVAC system because... Exactly. That's right.
Exactly. So I like having that. It's kind of
nice to say, look, I don't fly by the seat of
my ass here. I... follow plans and I lean on
engineers, I lean on Department of Building and
Safety, I lean on our special inspectors, I lean
on those things and the professions and trades
themselves. You know, they are professionals
and I lean on those guys as well. So there's
very little when they say, is that a good builder?
It's really built by an amalgamation of a lot
of people and then checked by other people and
then signed off, right? So it's kind of, kind
of, you know, hard to label what makes you a
good builder, but so. I think that's all I have
for you for special inspections and third -party
inspections. Right. Any general home inspector
that sees seven houses a day. That'd be a good
thing to maybe put up on the screen. You could
clip in a PDF of that inspection matrix. It'd
be cool for people to see that, oh, this is at
least what we do when we're verifying everything.
yeah and it's on our website so if you ever wanted
to know that it's one of the references on our
website if you go to the bottom under the resource
tab you can go there and look at that and it's
got you know a place for us as a team to fill
in which inspection was done on which station
so as we get to the end of that homeowner can
now see back and know what we did over time and
the journey of their home specifically good all
right well thank you we appreciate your insights
and thank you of course Hope you learned something
and we will look forward to seeing you next time
on trust the process