Like a new car, many homeowners expect a newly constructed home to be free of defects and repairs. It’s one of the advantages of buying new versus used.
However, many newly constructed homes could be subject to the same repairs and issues as an older home, especially if the build was rushed, the craftsmanship poor, or the builder overbooked.
Furthermore, many new homes are often not inspected and built without proper construction safety plans in place.
Fortunately, builders can protect homeowners from footing the bill on massive repairs by investing in a new construction warranty, otherwise known as a builders’ warranty.
We’ll discuss the difference between builders’ warranties and home warranties and why builders should protect their projects with new construction warranties.
What’s the Difference Between a Home Builder’s Warranty and Home Warranty?
A home builder’s warranty on new homes is a third-party plan purchased by the home builder to cover any structural or material defects associated with the house.
While only required for homes financed with a VA or FHA-backed loan, a builder’s warranty on a new home will cover the following:
- Carpentry and framing materials
- Doors and windows
- HVAC systems
Most home builders’ warranties differ but generally last for up to 10 years of coverage in most cases.
On the other hand, a home warranty on new construction homes will cover basic and extensive repairs caused by natural use or weather damage. For example, a home builder’s warranty would not cover siding damage after a hail storm, but most home warranties will.
Generally, we recommend both warranties on a new construction home. However, since most new construction repairs will result from poor materials or improper installation, home builders’ warranties are essential to protecting any project and shielding builders from possible financial liability.
For this reason, we’d like to provide five reasons why builders should back all new construction homes with a builder’s warranty.
5 Reasons to Get a Builder’s Warranty on a New Construction Home
1. Avoid Major Repairs
Depending on your contract, you may not be financially or personally responsible for any repairs after the home is officially sold. However, for the sake of quality and protecting your reputation, it’s wise to invest in high-quality materials and internal quality assurance practices to ensure your new construction home is defect-free.
For the most part, all major repairs on a new construction home will result from poor building materials or practices rather than from age or use. Thankfully, builders’ warranties shield homeowners from these repairs and often cover permanent fixtures, such as roofs, foundations, floors, walls, etc.
This coverage provides homeowners with peace of mind and shields them from massive financial burdens.
2. Protect Your Reputation
Sometimes mistakes happen, or you’re not aware of how flawed certain building materials you’ve purchased are until you’ve installed them. Luckily, the home builder’s warranty shields you and the homeowner from dealing with this hassle if an unfortunate repair pops up.
Rather than being obstinate, builders can assist homeowners with a warranty that attests to their quality and professionalism. In turn, this will only keep the referrals coming.
3. Integral Part of QA
Overall, whether you have an internal QA manager or hire a third-party quality assurance specialist, they will direct you to purchase a builders’ warranty to protect your interests. Additionally, routine inspections, setting proper BMPs, and establishing proper incentives and responsibilities will help mitigate issues down the road for builders and avoid repairs before they rear their ugly heads.
4. Make Your Company More Attractive to Buyers
With so much information readily available at the consumer’s fingertips, more and more homeowners are demanding builders’ warranties or will walk away from new constructions unprotected by them. Ultimately, by purchasing a builders’ warranty, you are not only preserving their financial interest but showing them that you are building a new construction with their best interests at heart.
5. Avoid Liability
Finally, in a worst-case scenario, a home builders’ warranty will protect your construction company from any liability. While statutes differ by state, some homeowners can seek financial damages from builders who sell their customers lemons. For the most part, these statutes will generally cover the same period after completion of a project as the warranty itself.
Ultimately, to avoid financial liability, protect your reputation, and improve your internal QA practices, purchasing a new construction warranty is a no-brainer.