The Collapse of the National Association of Home Inspectors
Published Mar. 23, 2017
By: Mitra Rai
On August 1, 2016 the National Association of Home Inspectors (NAHI) ceased operations after 29 years spent pursuing "excellence and professionalism" among home inspectors. While the available evidence points to a decade-long decline in NAHI’s strength as a membership organization the non-profit’s collapse was abrupt.
NAHI's Early YearsEstablished in 1987, NAHI was created to promote and develop the home inspection industry in the U.S. According to archives of NAHI.org, the organization’s website, NAHI had 1300 members in 2003. They quickly grew to 1900 in 2004, 2300 in 2005 and 2400 in 2006.
In 2006, NAHI sued another organization of home inspectors, the National Association of Certified Home Inspectors (NACHI). They objected to NACHI’s use of the term "certified" and complained that NACHI was trying to encourage home inspectors to confuse NACHI for NAHI. They claimed that NACHI had tried to convince search engines to show NACHI’s website when users searched for NAHI, and that the organization had mined their website for home inspectors to contact.
After a 14-month lawsuit and counter suit, the two organizations agreed to an out of court settlement, which included an agreement that NACHI would change its name to InterNACHI, or the International Association of Certified Home Inspectors.
In an email interview Nick Gromicko, founder and executive director of InterNACHI, said that NACHI had actually formed InterNACHI a year before NAHI sued them. However, they didn’t inform the NAHI of that: "We hid that from them so that they would spend hundreds of thousands in court. The plan worked. They wasted nearly $300K trying to get us to do something we were not only willing to do, but had actually done. We did this to help assure their demise," said Gromicko.
NAHI from 2006 to 2016
NAHI stopped publishing the size of its membership on its website in 2006, so there’s no way to know exactly how many home inspectors paid dues over the next ten years. But, there are indications that they lost roughly half of their members by 2015 / 2016.
Unlike the number of members, the organization continued to publish numbers on the local NAHI chapters around the US. In July of 2006 the site claimed 28 local chapters in 20 states — several states had multiple chapters. By April of 2016 there appeared to be 18 chapters in 14 states. (And three of the chapters in California did not list a president, which suggests that the actual number of active chapters might have been only 15.)
William Squitieri was the president of NAHI’s local chapter in Pennsylvania and a member of NAHI since 2006. He is also a member of InterNACHI. In an interview he was clear that he was not impressed with NAHI’s national leadership. However, he enjoyed the members of the local chapter.
"NAHI was a flawed organization for a lot of different reasons," said Squitieri. "They never policed continuing education credits for any of the members. Each year they would send you your application for renewal, only looking for a check and not doing their due diligence to maintain the quality of their membership."
Home inspection organizations typically require that their members attend continuing education (CE) classes each year. These courses keep old skills sharp and introduce inspectors to new techniques and specialties. For example, a third organization of home inspectors, the American Society of Home Inspectors (ASHI) requires its members to fulfill CE 20 credits each year. These credits can be earned through in-person and online courses.
In addition to the requirements set by membership organizations, some states also set continuing education requirements for home inspectors. Pennsylvania, for example, requires that home inspectors complete 16 credits annually.
Production of continuing education materials, whether online or at conferences is an important reason that home inspectors join these organizations. On average, NAHI members paid $375 - $400 in dues each year. NAHI organized an annual educational conference that would fulfill members’ CE credits, but Squitieri said the quality of the conference diminished over time, and that fewer and fewer members attended.
The other benefit that NAHI members received was six bi-monthly issues of NAHI Magazine. Squitieri was not impressed with this magazine, which he described as a "plagiarized publication".
Gromicko believes one of the main reasons NAHI collapsed was the lack of benefits it offered its members. He described the business model of an association as a kind of feedback loop: more benefits attract more members, and the dues from those members can be invested back into the business to create more benefits.
The reverse is also true: "The less money you have, the less membership benefits you can offer, and so you can’t attract or hold onto new members, and so you end up with less money." said Gromicko.
How many members did NAHI have by 2016? One source of information is IRS Form 990, which all US non-profit organizations are required to file annually. These forms are available to the public, and we examined NAHI’s forms from 2013, 2014 and 2015. In a brief introduction to the 990, NAHI reported in all three years that they had approximately 1,000 members.
There is a line item in Section VIII of Form 990 called "Membership Dues". If we assume that annual membership dues are the only component of that line item, we can get an estimate of NAHI’s membership size each year by dividing the total Membership Dues by the price of the dues. (Remember that the Pennsylvania NAHI chapter president reported that NAHI members paid between $375 - $400 in dues).
|Number of Members||896-955||1389-1481||927-989|
If we average these three years we get an estimate of about 1,100 members from 2013-2015.
Frank Lesh, executive director of ASHI speculates that the small size of NAHI’s operation and emerging competition from groups like ASHI and others may have been the reason for their fate.
"They had a small group of guys they had as members. It’s a little harder for a smaller organization to maintain [the] quality of service that they wanted to give," said Lesh.
When NAHI decided to close its doors, Executive Director Claude McGavic called Lesh and asked if ASHI would accept NAHI members as ASHI members. ASHI honored the dues NAHI members had paid and enrolled them into the association at no charge for the remainder of their annual subscription. NAHI members were given access to ASHI’s monthly magazine and were added to the listing of home inspectors on ASHI’s website. According to Lesh, no money changed hands between the two organizations.
NAHI members were notified by email and by a notice on NAHI’s website that said "NAHI is going out of business. All current NAHI members have become ASHI members."
This arrangement did not sit well with InterNACHI, and in September, InterNACHI sued NAHI on several grounds:
- Deceptive trade practices;
- That NAHI had failed to disclose the terms of their agreement with ASHI;
- That the agreement had damaged InterNACHI’s ability to market to NAHI members;
A Colorado District Court granted a judgement in favor of InterNACHI in early December of 2016, giving them control of the NAHI.org domain. InterNACHI re-formed NAHI as a Colorado non-profit. Mr. Gromicko said "Yes, we reformed NAHI but are unsure what to do with it…. So maybe we’ll just let the dead dog lie."
InterNACHI is pursuing nearly $3 million in damages against NAHI.
Squitieri plans to join ASHI in June this year and will enroll as member in the local ASHI chapter next January. "Everybody is better served that they (NAHI) are gone," Squitieri said. "The quality of home inspections are going to be better since NAHI doesn’t exist anymore."
mandores.com requested an interview with Forrest Lines as part of this article. Mr. Lines was listed in NAHI’s IRS Form 990 as the President of NAHI in 2013 and a Director in 2014. However, Mr. Lines declined to be interviewed for this story.