Builders Warranty Versus Home Inspection

By: Eric Badgely

Many home builders will convince a buyer that there is no need for a home inspection at a new home. The builder

will even dangle a carrot in front of the buyer - who is likely to be feeling a cash crunch -- by offering a

one-year warranty on the home. Now, stop and think about it. If the builder is so sure that the home is properly

built, and the project is completed, why is he or she so worried about having an independent home inspector go

through the property? In my experience, the answer is simple: The builder knows there will be problems found and,

almost always, these issues will require the builder's crew to come back on site to make modifications or repairs.

That costs the builder time and money.

Understand this: The builder makes a living by moving his crew to new jobs, finishing and selling those houses. The

builder does not benefit financially if it is necessary to linger at any one job. Therefore, a home inspector's

findings and repair recommendations are likely to slow down the builder by making it necessary to send a crew back

to a previously completed project. Obviously, the builder does not like that! I always keep forefront in my mind

that my client is the buyer, not the builder. Realizing that, I always recommend that my clients get an independent

home inspection by a competent residential home inspector who is also a licensed structural pest inspector. I want

problems identified, and or repaired, prior to closing in both older homes and new homes.

Without going into too much detail, here are some of the complications involved if one is counting on a builder's

warranty as a substitute for a proper home inspection. In my market, a large number of the problems found at new

homes are concealed and will not manifest themselves as issues until some time down the road - likely more than a

year away. For example, people do not go into their crawl spaces and significant standing water in the crawl space

is one of the most common problems with new construction. From day one, as this water evaporates up, it will lead

to excess moisture in the structural wood, insulation and up inside the home. Over time, this is likely to attract

wood destroying organisms such as rot, or even wood destroying insects that favor moist environs. Excess moisture

is a prime contributor to eventual mold growth in the crawl space or even up inside the house or walls. Yet, unless

there is a musty odor, or some obvious clue at some point, this problem would not be identified or even noticed by

the average homeowner. Make no mistake about it, the problem will make itself known, but it could be a few years

down the road. Many of the other more serious problems found at new houses are also typically down in the crawl

space: dirt packed around posts and other structural wood that will rot; plumbing pipes that leak or drains that

are not hooked into the system, which can be nasty.

One thing you can count on is that, one year later, unless the buyer finds and reports problems, the builder is not

going to drive out to the house and seek out trouble. As a safeguard, some people will, eleven months after they

move in, hire a home inspector to find issues to report to the builder at the eleventh hour. The problem with that

has to do with 'clout.' The buyer has lots of power prior to closing -- when he or she has control over hundreds of

thousands of dollars that the builder wants. After closing, the circumstances change and the builder has the money,

and the clout. In fact, I know of a situation where the buyer, a year later, was completely ignored by the builder,

despite having valid worries. That particular builder knew that, even though there were legitimate problems that

were aggravating, it was not likely that the buyer would spend the money to file a lawsuit. In one case I know of,

a buyer had been told before closing that he was being provided with a one-year builder's warranty. Eleven months

later, when a home inspector reported significant standing water in the crawl space, the homeowner could not find

anything in writing to support his understanding that there was a builder's warranty. The builder was unresponsive

to repair requests. This scenario might lead to lawsuits that draw into the mess parties that should have little or

no blame in the dispute, such as realtors or title companies.

It is, because of complications like this, that I recommend the simplest and the correct path: I urge all of my

buyers to have an independent home inspection prior to closing. That advice applies to those purchasing brand new

homes or older homes. I believe that, in all cases, my clients are better off negotiating solutions to problems

prior to their closing the deal and moving in. That scenario is preferable for the clients, the realtors involved

and everyone -- except maybe some of the builders. I like to see all of the problems put on the table early in the

negotiations so I do not have upset, angry or discouraged clients down the road. If you enjoy repeat business and

happy clients, it is just good business - that creates goodwill -- to protect your clients by seeing to it that

they know the benefits of having a competent inspector do an independent home inspection prior to buying any home.

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