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10 ways to reduce new-home hassles

Buying a brand new home? Be prepared for less than perfection.

About 15 percent of the 2 million dwellings constructed each year in the United States have at least one construction defect that demands repair, says Alan Mooney, president of Criterium Engineers, an engineering firm with offices in 35 states. Criterium's primary business is new-home inspection.

"Buying a new home is a scary process," says Mooney.

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Shoddy construction, however, is getting a lot of public attention and some people think the situation is getting better, thanks in part to warranties and other kinds of insurance that builders must carry.

"It's an economic issue. The insurance industry is pushing the home-building industry to adopt quality standards, otherwise the costs are just enormous," says Mooney.

If you're considering buying a brand new house, here are 10 ways to make sure it comes closer to being your dream home rather than a repair nightmare.

1. Deal with a reputable builder.
There's no national rating service, but marketing information firm J.D. Powers does compile home-buyer opinions on the quality of the nation's largest builders (35 percent of all homes are built by the top 10 largest builders). It's also wise to talk to people who have bought new homes built by the same builder, particularly those who've lived in houses two or three years. "That's when problems are likely to surface," Mooney says.

But don't be surprised if people aren't very forthcoming about a builder's shortcomings, warns Lee Seglem, executive assistant to the New Jersey State Commission of Investigation, which examined construction defects in that state. Out-of-court settlements and arbitration agreements routinely prevent litigants from talking about the outcome of their cases. And in any event, "People fear that revealing defects will have an impact on their home's resale value," Seglem says.

2. Check into warranty coverage.
Ask the builder if he provides a builder's warranty backed by a third-party insurer. If he says no, that may be a good reason to look elsewhere.

3. If there is a warranty, find out who backs it.
Some large home builders offer their own 10-year warranties. As a rule, this type of warranty is not as good as an independent warranty because the builder has more at stake financially. If the builder is faced with multiple defects, a likely scenario when every house in a development is built the same way, he'll have to spend a lot of money to make the repairs, says Bruce K. Packard, litigation trial and appellate lawyer for Davis Munck in Dallas.

-- Posted: Aug. 12, 2004


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