America's Largest Homebuilders Shift the Cost of Shoddy Construction to Buyers

I would like a way for serious problems to not be covered up, but I believe you're going to need to do this by tying it to a home inspector's license, such as obligating "severe problem" reports to a registry which anyone could query for a fee that would be nominal for any serious potential buyer. Perhaps 0.05% of the property's highest-ever sale price, or $100, whichever is higher? Maybe some of that fee goes to the home inspectors who did the reports, to encourage severe-problem-free reports. Still lots of problems and abuses to mitigate, the least of which is how to define "severe problem", but that has the potential to provide a net benefit, unlike comments on Zillow.

I would also not expect buyers to normally avoid their own home inspection by using such a report, it would simply be another fee -- which I dislike -- though as a nearly-instantaneous result, I see a way to structure it to fit after the contingent offer is accepted (or perhaps just before submitting the offer) and before hiring their own inspection. The buyers now have a chance to address their specific concerns about the severe-problem report by what they ask from their inspector.

You could provide aggregate statistics on home inspectors to show competency. "Within the past 5 years, Harry the Home Inspector has submitted [X] reports. Of those, [X] were also reported by other inspectors within [12 months] of Harry's reports, and Harry is [in the top third / above average / below average] when ranking for not missing severe problems that were reported by other inspectors." But now you have to track repairs that explain why one inspector didn't report what another did, have some way of vetting severe problems for being correctly reporting (or setup an appeal system...), you have to track the scope of inspections to know if a severe problem would have been expected to have been found, and it continues.

From my armchair continuing to think this through, I don't see how to control the complexity on any of this in a feasible way for what would need to be run by a government licensing agency so that society has a net benefit.

The incredible range of perspectives in real estate makes this kind of feedback even more pointless than amazon product reviews.

There are homes that are catastrophic for a family but absolutely perfect for an individual who is doing things like working off shore or remote. Lifestyle is probably the most important factor.

Really though... this is a result of three things working in tandem: chronic underbuilding of housing especially in some areas, a prolonged period of low interest rates, and financialization of housing. The underbuilding of housing is driven by both NIMBYism and a particularly bad boom-bust cycle in housing a few years ago that scared off a lot of builders.

The winds shifted about a year ago. Pull up any property in the north Houston area (Conroe, etc) if you really want a punch in the gut relative to your current desired market.

The market prices an absolutely insane premium on being the guy that takes the risk to build a house.

A good project might be a little cabin that is under the sq ft to need a permit.

There are limits to home inspections, and many types of defects you're just not going to see. For example, that leaking water line causing a brown spot on the wall that reappeared after a week could be slightly slower (or in a drier season) and only appear after a few months. Many problems take time to manifest as symptoms, and especially with a newly constructed home there just hasn't been enough time. (also why code inspectors check at separate stages of progress, while many more problems can be visible without having to open walls)

Furthermore, home inspectors don't actually have any skin in the game. They're not giving you any kind of representation or warranty, but rather more of a quick look from the perspective of someone who knows how houses are built and have a list of common problems to look for. And they can certainly succumb to the same type of normalization of deviance going on with the contractors in this article.

That's not even getting into the types of ongoing scams I've heard of where builders/sellers do things like "seal" the attic access door for "energy efficiency" reasons, and then assert that home inspectors cannot inspect the attic (eg the roof!) because opening the door would be causing damage. Or that a seller can easily cover up many types of problems a home inspector would notice, it's just generally illegal.

I'd say the real problems here are the high pressure sales funnel, and the complete lack of legal accountability. Forced arbitration and other onerous terms should be illegal. Heck if we're talking about a professional developer with an inventory, liquidated damages themselves should mostly be illegal. And newly built homes should have mandatory warranty periods longer than a year, probably at least 5 years, culminating with an independent inspector at the end to help notice any still-developing problems.

Then, claims for defects shouldn't be going directly to the builder who's strongly incentivized to trickle it down to some disempowered guy in a van, claiming to have solved the problem with whatever he had on hand. Rather the homeowner should be able to choose any contractor to fix the problem and file a claim on the builder's insurance - just as if it was home insurance claim, with a different responsible party.

As a buyer, I don't need you to tell me that an $800 dishwasher or $1200 water heater might fail someday; you might as well tell me that the water coming from the faucets is wet. I want to know about the major systems. That particular inspection was "no ready roof access, so a visual inspection was conducted from the ground with nothing obvious detected; if you're concerned about roof condition, have a roofer come out." No, the roof is one of the very few things I care about from hiring you.

Most recent inspection was better, but still included a dozen pages of ticky-tack nonsense that no one should care about. I suspect that makes people feel better that they got their money's worth by someone pointing out that a kitchen floor tile had a visible crack in it, one kitchen light bulb was burned out, and an HVAC filter was overdue for changing, but that crap doesn't even need to be in the report let alone become a permanent part of the registered record of the property, nor should it be forced as part of the purchase process.

Requiring it as part of every transaction would be a massive giveaway to the home inspection industry. Adults are capable of making adult decisions, and if they want an inspection as part of the decision, they can choose to get one. Likewise, sellers can choose to go with the buyer who best fits their circumstances.

Which is both wrong and short sighted, but I could not get them to budge on acknowledging that other materials would actually be better for houses than wood and some foam.

You can actually search around on the Internet for this query as well and American stubbornness (/ exceptionalism?) once again rears it's head.

The trick for the builder is that THEY are the owner until final paper sign - so anything above final pre purchase inspection is not something they have to allow.

Which is why you don’t use them, or go in expecting shiny crap.

Buying tract homes is hard to avoid the high-volume builders (by definition), but it's entirely possible to avoid bad builders.

I've been in a situation with a "seller's" Realtor (TM) who would just agree to whatever logistical details the buyers were asking, and then tell us how we had to dance to their tune. The attorney set them all straight, but it never should have gotten to that point. The same Realtor (TM) bungled the one house showing that I wasn't around to facilitate, setting off the alarm system that we had warned her about multiple times - including specifically for that showing. I'm sure prospective homeowners love being greeted by a loud siren. There was some other last-minute problem too that I'm not recalling the details of, but we ended up emailing the owner of her agency and told them we wanted someone else to represent us at the closing. She was that bad, but of course she had talked a really good game to get us to sign that lock-in exclusive contract at the start. Getting that contract signed is the Realtor's (TM) chief KPI, and they know it.

Of course Sturgeon's law and all that. I'm sure there are realtors who take their duties seriously. And I'm sure some people have had the complete opposite experience with poor attorneys. The incentives for Realtors (TM) are just much poorer though.

Which is the point of the second half of my comment and the link to an interview with folks that had this exact problem. (Also why I started with the word "theoretically", as how actual legal coverage works in practice can be different.)

Lots of the cost come with fixing up that mess the next time something breaks.