Home Buyer/Home Improvement Guide

Before You Buy Your New Home

Words cannot express what we have gone through in respect to our defective homes--the frustration, coupled with a sense of moral outrage, sense of loss, and total feelings of helplessness. Laws are stacked against the homeowner/buyer. We are not a disgruntled few, but hundreds of thousands whose lives have been destroyed by poorly built, unsafe housing. A multitude of homeowners, with nowhere to turn, is desperately ill from deficient homes that breed toxic molds.

So please heed our warning when we say "buying a new home and or remodeling can lead to your worst nightmares." The procedures in this self help-common sense manual will appear suspicious, untrusting, too detail intensive, and unnecessary. Take it from those who have been HADD, every suggestion is well worth the time, effort and expense.

Many in the building industry would like you to believe that consumer groups and the media are trying to sensationalize the issue and serve only to needlessly alarm prospective home buying consumers. Nothing could be further from the truth. We have firsthand knowledge of the crisis in defective housing, which includes deficient building materials being used nationwide. We are not attorneys, nor builders, but homeowners who are living and working out of our own deficient homes. Too much confidence is placed on the building industry. Residential contractors (builders), real estate agents and developers are in the business for a profit. Always remind yourself of that fact. The real estate agent will get a percentage of the sale as well as the builder.

So, who works for the homebuyer in this process? No one works for the home-buyer.

The situation is no longer just

Buyer Beware, but BUYER BE SCARED! Buying a home is the single most expensive investment most of us will ever make. However, most Americans are more cautious about how they spend a few dollars as compared to investing hundreds of thousands in a home. We Americans will clip coupons to save a few cents but dont think twice about inspecting a new or existing home!

Inspecting your home, whether it is an older home, new, manufactured, or from the ground up, may cost a few hundred dollars now versus tens of thousands of dollars in the long run.

Question: Who needs to have a home inspection?

Anyone who is buying or investing in real estate should have the home thoroughly inspected. Although HADD does not endorse particular home inspectors and or agencies, HADD recommends that you use a certified/qualified home inspector and or professional construction consultant firm (who are usually architects, engineers, or general contractors) that carry errors and omissions insurance.

Home inspectors should be well trained in new construction and affiliated with inspection agencies such as ASHI and/or NAHI or a state licensed inspector (e. g., CREIA in California and TAREI in Texas). Although not all states license their builders, an inspector who is also a licensed contractor is a big plus. Be certain that your inspector is well qualified in construction inspections, is familiar with all federal, state and local building codes/municipal ordinances, and works for you. Do not use an inspector recommended by your realtor and/or seller.

Remember also that "typical" home inspection services are different from Professional Construction Firms. Home inspections provide a routine inspection, usually prior to the closing of escrow, for the more obvious problems. Home inspection services cost less, but the depth of their inspection usually will not uncover hidden structural or geotechnical problems. Be thorough when hiring a home inspector and ask if they are experienced in new home construction and are capable and trained in phase inspections. Do not rely on VA and FHA inspections. The majority of distressed homeowners have VA and FHA loans.In your contract with the home inspector and or a professional construction firm, do not sign any arbitration clauses. If your inspector has been negligent, you will be signing away your rights to recourse in the courts. Also do not sign any clauses that releases your inspector from liabilities...that is what his errors and omissions insurance is for.

Inspection Inspection Inspection

FREQUENTLY ASKED QUESTIONS

Question: When should an inspection be done?

A thorough inspection should be done after an offer has been made and before closing. Ongoing inspections are recommended throughout the construction process for new homes. Additionally, many professionals are now encouraging homebuyers to have any prospective homes tested for molds.

Question: What does a home inspector do?

The home inspector will perform a non-destructive, objective overview of the building's structural, grading, electrical, plumbing, and mechanical conditions. Question: Is an inspection needed on new homes?
Yes. We have learned that cities are overwhelmed, understaffed, and immune to liabilities; therefore it is not in anyones best interest to rely on their citys building inspection department to conduct adequate inspections. The builder is both responsible and liable for problems with the home. By documenting any problem areas before you move in, you avoid the problems of how and when they came to exist. Photographs are marvelous tools, and if they must be sent to the builder or other entities, send any correspondence via certified mail. Do not send originals, and be certain to keep copies of any correspondence for your records.

From the Ground UP!

Question: Im having a new home built. Do I need to have a home inspection?
YES. By having phase inspections done you can accomplish several things:

1. The first thing is to let the builder know that you will be having phase inspections done and that you will also have a comprehensive final inspection. Insist on this in your purchase contract with the builder! No good builder should object!

2. You show the builder, sub-contractors, and workers that you will have a high involvement in the building of your home. Let them know you will not accept cutting corners on the single largest investment of your life and/or permit practices that may ultimately risk your familys safety!

Phase Inspections Include but are not limited to:

The soil, compaction, grading and drainage (Poor grading can lead to moisture intrusion and toxic molds.)

• The Foundation
• The Structure
• Stairs and landings
• The electrical and plumbing systems
• Exterior cladding
• The roof, and all ventilation, including roof flashings (poorly installed flashings are a big source for water intrusion and molds.)
• Fireplace/Chimney
• Window Installation (Poor installation can lead to moisture intrusion and molds)
• Finish work (Begin with floorboards, carpets, and doors through completion of finished cabinetry.)
• Interior and Exterior walls
• Appliances

Landscaping (CAUTION: builders often encourage homeowners to do their own landscaping by charging outrageous prices, but when homeowners experience grading problems, the builder then often blames the homeowners landscaping.) ***Read more on walk throughs "What the New Home Buyer Should Know Before Close of Escrow", by Peter Kuchinsky II, in this online manual.

Question: Should I buy any home as is? NO..... Unless you have had an older home fully inspected and are willing to accept and pay for any problems that may have been missed. NEVER buy a new or recently built home AS IS! Question: How long does an inspection take?

Normally the inspection will take anywhere from 2 to 4 hours.

Question: Should I attend the inspection?
Yes. You are encouraged to attend the inspection.

The information that you will gain from being there is invaluable. It is also beneficial to you, as you will be able to go over the report and discuss questions you might have regarding important homeowner maintenance. Many homeowners today are unaware of all the details that go into keeping a new home in good repair. Your inspector can give you ideas for fulfilling your responsibilities in the home (e. g., changing the air filters in your AC and heating units, proper caulking of windows and tubs, along with many other tips)Question: How much does an inspection cost?

Most inspections cost on the average of about $250.00 and more depending on the inspector. As one of the most expensive investments you will make may be at stake, percentage-wise and for peace of mind, the cost of a home inspection is extremely low in comparison to discovering unknown deficiencies and facing repair costs in the future. Just ask us!

Question: I purchased a new home almost a year ago and my builder refuses to address the problems I am having with my home and/or to make repairs. Is there anything that I can do to possibly get their attention?

Yes. Get an inspection. This puts the builder and his sub-contractors on notice. You are letting them know that you are very serious about your concerns and that you have had problems. This is also helpful if you must pursue repairs through other venues. Your builder and subs are hoping you have bought into the fallacy of a one-year warranty, but in most states you have much longer for defects to be addressed and repaired.

Remember to take photos of ongoing problems, document everything, and be certain to send any correspondence by certified mail to the builders and subs. Keep all mail receipts!

DON'T LOSE OUT WITH POOR CONSTRUCTION WORK

Inspecting the Builder

There are unscrupulous and untrained workers offering construction and remodeling work. Buying a dream home or remodeling your home shouldn't turn into a nightmare!

HADD strongly recommends that you have your purchase agreement interpreted to you by an attorney. DO NOT SIGN ANY NEW HOME/ REMODELING/and or INSPECTION CONTRACTS THAT CONTAIN A BINDING ARBITRATION CLAUSE! You will be signing away your rights to the courts should construction defects arise. HADD recommends that you have your contract interpreted to you by a construction defect attorney...they have the hindsight of knowing how your contract can entrap you should you discover problems later on. Also, be certain that your contractor is financially solvent. Ask for copies of liability insurance should something go wrong and for proof of workers compensation insurance should some one sustain injury construction.

Use your own real estate agent; use a buyers agent/broker who doesn't swing, which means they only represent buyers. Never use an agent on-site (model home agent) or the sellers agent. They dont represent you and are not looking out for your best interests. For the same reason, never use the builders/sellers inspectors.

Talk with neighbors in the subdivision. Ask them if they are happy with their homes and how the builder has performed in response to problems with the homes. When remodeling, ask for references and do make those calls.

Check out your contractor with the Better Business Bureau, any state licensing agency, your state attorney generals office, and most importantly, county court records to see if the builder has ever been in litigation for construction defects (a good sign that he wouldn't make repairs and/or honor warranties and/or remodeling contracts). This is information you wont find with the BBB and state licensing agencies.

It is our sincere hopes that you find and buy the home of your dreams, but should problems arise, dont buy into builders warranties. In some states the time period covering statutes and rights for repairs can be as many as ten years. For instance, in California the homebuyer has up to 10 years, but only three years from discovery of a defect to file complaints. Check with a local construction defect attorney.

If you suspect problems with your home, be certain to document everything and send all correspondence via certified mail to the builder. Take pictures---Pictures tell a thousand words.

Dont let your statutes expire waiting for your builder to complete home repairs! Your builder is well aware of these statutes and hopes that is exactly what you will do! This is often the very reason builders give homeowners the run-around!

Also be certain to get in writing that the builder will provide the following one-week prior to close of escrow:

· List of all subcontractors and suppliers (check out all the subcontractors records).

· Copies of all product manufacturer warranties.

· Copy of your home warranty.

· A set of "as-built" drawings showing the stamp of the architect and the structural engineer.

· Instructions on proper maintenance of the home.

· Any and all relationships to lenders, realtors, home inspectors, title companies and all agencies involved in the home buying process.

More help for the home-buying consumer:

What the New Home Buyer Should Know Before Close of Escrow

By Peter Kuchinsky II, Construction Building Analysts

You are about to obtain the American dream of homeownership. In fact, you are one of millions that will buy and move into a new home each year. For the most part you have worked hard to save for the down payment and are committing about a third of your annual income to paying off a 30-year mortgage. With so much on the line, it will benefit you to be prepared and educated about what you should know prior to the close of escrow to avoid your dream home turning into your biggest nightmare.

1. Obtain the Builders Warranty.

Most new homebuilders provide a warranty. Unfortunately, most new homeowners dont read it until after their walkthrough and close of escrow. Like with any manufactured product, a new home comes with both expressed and implied warranties. In addition, each state has a statute of limitations that holds the homebuilders responsible for latent and patent defects. These statutes can range from 1 to 10 years depending upon the state you live it. Because many items can go wrong over a course of several years, you must know what warranties and time limits apply to your new home before you purchase. You should ask builder for their warranty prior to you even opening escrow, and you should have the builder provide you information regarding your State Contractor License Board and Department of Real Estate. You will want this information to check if there are any past or on-going investigations involving the homebuilder. If your builder wont openly provide this information, you should re-consider your new home purchase from the builder.

2. Look for Excluded Items.

You got the warranty, now what? Read it. Read it again. Highlight any items that are excluded after you do your walkthrough. Common items excluded include broken glass, damaged finishes or misuse. This will alert to what specific items you must look at and examine closely during the walkthrough, because unless you note the damage during the walkthrough the builder is most likely not going to repair or replace it when you find it a week after closing. During the walkthrough, it is important that you use and test every item. Turn each knob, open every drawer, lock and unlock doors.

In addition, some items that are built into your new home come with a manufacturers warranty. It is important that you know which items the builder will cover, and which items are covered by the manufacturers warranty. Be sure the builder provides you with all the manufacturers instructions and warranties. You will want you keep those warranties and instructions in a file and safe place. Send in all warranty cards as soon as possible. This protects your rights and allows the manufacturers to notify you in case of recalls.

3. Arrange to have Utilities turned on.

If the builder doesnt turn on the utilities prior to the walkthrough, you can be pretty sure that your home has gone through a limited quality control process. In order to ensure that all items are properly installed and in working order, the only way to check everything out, is to have the gas, electric and water turned prior to your walkthrough and close of escrow. If the new homebuyer doesnt turn on these utilities, again consider a builder that does. During your walkthrough, many items are excluded. How can you test and check these items if there is no light to see, power to test appliances or water to run down the drains to check for leaks? Nothing can ruin the joy of moving into a new home quicker than a backed up toilet or an appliance that doesnt work, because utilities werent turned on during the walkthrough.

4. Hire a Professional.

Moving into a new home requires lots of patience and paperwork. So many things to deal with look it and inspect. Some of the things you dont even understand, but are afraid to ask the question because you might sound dumb. First, there are no dumb questions, and second, if you dont understand something ask. This is where hiring your own professional inspector might help. The inspector works for you unlike the project superintendent, sales agent and customer service representative that work for the builder.

Look for a home inspector that has experience with new homes. This second set of eyes can often discover items that will develop into problems down the road including lack of drainage, inadequate flashings, or improper installations. Dont rely on the builder assuring you that the home has passed all the building inspections. Under the Uniform Building Code it states; nor shall the code enforcement agency (building department or inspectors) be held as assuming any such liability by reason of inspections authorized by this code or any permits or certificates issued under this code. Check before agreeing to purchase the new home form the builder if you can bring a professional home inspector to your walkthrough, if not, again, consider a homebuilder that will.

5. Dont bring family and friends.

With so much going on, you dont need distractions from the task at hand, thoroughly inspecting your new home. You need to give this task your undivided attention. Children should be left with a family, friends or babysitter. Those that you would bring with you to the walkthrough are most likely going to be more interested in whose rooms are whose, what are your decorating or landscaping plans, and not looking at tiles and fixtures for chips or dents. After your walkthrough and on moving day is when you will want family and friends with strong back to come over for a visit.

6. Make a day of it.

Plan on setting aside a day to do your walkthrough. A through home inspection usually takes a professional inspector 2 to 4 hours to complete. In addition, there will be paper work that the builder will want you to read and sign. Each adult that will be signing the mortgage and dealing with the builder after the close of escrow should attend the walkthrough and fully understand the warranty and customer service process.

7. Schedule walk-through at least 3 days before closing.

Three days is the minimum time that should be scheduled before the close of escrow. If possible, schedule the walkthrough one-week before the close of escrow. You should never schedule your walkthrough to be completed on the same day as closing escrow. By allowing some time between your walkthrough and closing date, you allow the builder an opportunity to repair any items noted, without having to schedule around you. Once you move in, you will have to be home in order for work to be done on your home. In some cases, the builder will simply hand you over a list of subcontractors with telephone numbers for you to contact and schedule your own appointments. If this is the case, be prepared to wait weeks for missed appointments when subcontractors dont show up because they forgot or were too busy. During the purchase agreement and terms, obtain a written agreement that allows you to hire a professional inspector and conduct your walkthrough at least 1 week prior to the close of escrow. If your new homebuilder wont agree to these conditions, consider one that will.

8. Verbal promises are broken promises.

Real estate transactions are contracts, and as such, must be done in writing. The spoken work, handshake or promises made by the builder or their representatives are meaningless.

All items you are promised must be in writing. Should you have to file a complaint with the Contractor Board, Department of Real Estate or, worst, go to court, only the written agreement that you have will be of any value to you.

9. The squeaky wheel gets the grease.

During the escrow period and prior to close, find out whos who at the builders company. Most likely your day-to-day dealing will be with the superintendent, sales agent or customer service representative. However, you should know the chain of command and how to reach the Vice-President of Construction, Customer Service or Sales should problems develop along the way. Dont work through Project Manager when issues develop. They are usually better at burying issues, than resolving them. Going to the V. P. level usually gets action, and the word that comes down from the top usually gets action. If needed be prepared to go the company President. In fact, when issues develop, invite the higher level of company management out to your home to review the issue first hand. Again, when dealing with any level in the company, remember to get written confirmation of any promises made or action to be taken.

10. Keep written records and photographs.

Information is power, and documents are information. Once you enter escrow, buy a notebook and keep a log of every visit or appointment you have with the builder, sales agent, design center, and superintendent or customer service representative. Keep it simple and short. Note who, what, when, what, where and how. If needed, obtain samples or take photographs. Note even what you might consider to be a minor issue, because a little stain is often the first sign of a big leak. During the walkthrough, write down any item you want addressed by repair or replacement. After the walkthrough and upon moving in, keep the log on the kitchen counter and note any item that comes to your attention. After the fist week, send in your first customer service request. Continue to keep a running log of items that come to your attention. At the end of two more weeks, follow up with another customer service request. Hopefully, some items from your first request have already been scheduled and completed. From this point on, until all customer service requests are completed, send in a monthly request / reminder to the builders office. Should repairs be attempted that do not meet your level of acceptance or quality expectation, be prepared to ask a V.P. or President of the company to become involved and personally inspect the item. As a rule, a builder should acknowledge your request within two weeks, schedule and repair/repair the item within 2 - 4 weeks, and on the rare occasion when some item is backordered or out of stock, 4 - 6 weeks.

Mr. Peter Kuchinsky II has over twenty years of extensive experience in all segments of residential construction, culminating in superior knowledge and sought after construction management experience. Throughout his career, he has held positions of increasing responsibility and authority with top homebuilders from Project Superintendent to Vice President of Construction. He has provided construction management, inspection and consulting services for major corporations including General Electric, US Bank, Brookfield Homes and Sunrise Colony Companies. His hands on experience and realistic approach to issues and problem solving, along with instructing construction technology and safety classes at the college levels, authoring books and articles related to construction and safety; and membership in leading industry associations completes his qualifications in providing consulting, litigation support, training and expert witness services related to construction and worker safety.

Mr. Kuchinsky can be reached at 760/941-3414 or by e-mail at kuchinpk@nethere.com .

HADD, Inc.

Were on the Web!

http://www.hadd.com

Disclaimer: Although the HADD Board of Directors has researched information to ensure accuracy and completeness of the limited scope of information contained in this brochure, we assume no responsibility for errors, inaccuracies, omissions or any other inconsistency herein. The above information applies to new homes completed prior to Jan. 1st. 2003 and to second owners of homes constructed under ten years. -This brochure does not intend to give any legal specific advice to your situation, you should always consult with an attorney regarding, defective construction, contracts, warranties and other legal matters.

Copyright © 1998 - 2003 HADD, Inc. All Rights Reserved