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| Reading the fine print | | | | Do home warranties offer protection for buyers? | |  | Lorinda and Brian Couch are still paying the mortgage on a house that sits empty as they wait for a warranty dispute to be resolved.
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NBC NEWS |
| | | April 17 — It may be one of the biggest financial decisions you’ll ever make. Not just an investment in real estate, but an investment in your family and your future. When you buy a new house you want a guarantee you’ll be protected when things go wrong. That’s why so many new buyers bank on home warranties. But once you’re in the door, how much does that piece of paper really protect you? “Dateline NBC” chief consumer correspondent Lea Thompson reports. |
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 Hear a list of home warranty tips from “Dateline NBC” consumer correspondent Lea Thompson.
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“Just be careful on the steps. You kind of have to walk sideways because we have fallen down them several times,” says Lorinda Couch.
This house was supposed to be Brian and Lorinda Couch’s American dream come true.
“Slab’s not level. Front door leaks. Back door leaks. There’s hammer knock in the pipes. Toilets don’t flush,” says Brian.
“Heating and air does not work properly. Our pipes freeze,” says Lorinda.
Not enough heat? Leaking doors? Knocking pipes? Hardly the “Home, Sweet Home” Brian and Lorinda thought they were buying. Lorinda says, “One day, I was out driving and saw this neighborhood and pulled in, and couldn’t believe the prices. And then, when I saw the home, it was a large home, it was wonderful. So I immediately called Brian. I said, ‘Brian, you won’t believe it!’ I said, ‘This house is great!’”
The couple had just moved to Greenville, South Carolina. They liked everything about the house — the layout, the location, the big yard. They especially liked the idea that a new home wouldn’t have many problems.
And they were impressed by the builder, Pulte, a name they knew.
Pulte is the country’s largest builder — selling nearly 20,000 homes in 25 states last year.
“I invited our parents down. I wanted them to see it right away,” says Lorinda.
Later, Brian and Lorinda moved in. They had to dig deep to afford the house. But they also thought it was a good investment — a big three-bedroom with a nice yard for daughter Audrey and son Grant, who soon followed.
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Like a lot of people, they wanted to save some money, so instead of getting an outside lawyer, they used one suggested by the company — it was cheaper. They saved a bit more money by not hiring an inspector — after all, a county inspector had just OK’d the home.
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Like a lot of people, they wanted to save some money, so instead of getting an outside lawyer, they used one suggested by the company — it was cheaper. They saved a bit more money by not hiring an inspector — after all, a county inspector had just OK’d the home.
Besides, they felt comfortable with the house in a big new development, with the country’s largest builder.
Brian and Lorinda did find some minor problems, like a broken doorbell and some dings in the front door. But they say they were assured by Pulte it would make things right.
“We saw a lot of the problems — just cosmetic issues. They said, ‘Oh, we’ll take care of it. We’ll take care of it, we’ll take care of it.’ I mean, they just promised the world,” says Lorinda.
And Pulte backed up those promises with a new-home warranty — a big selling point for Brian and Lorinda. It’s something Pulte and many other homebuilders include with every house they sell and the couple tells us they were assured even if things went really wrong, they’d be protected.
Lea Thompson: “So, that warranty was important to you?”
Brian Couch: “Sure.”
Lorinda Couch: “They told us, everything we haven’t gotten to, it will be covered under warranty. ‘You’ve got a warranty. You’ve got a great warranty. It’ll be covered under warranty.’”
New home warranties like Pulte’s usually cover a long list of potential problems for the first year, a shorter list in the second and major structural defects until year 10.
But as you are about to find out, those warranties aren’t always as good as you might assume or as some sales agents would have you believe. With the help of “Dateline NBC’s” hidden cameras we are about to separate the reality from the hype on new home warranties.
It’s something Brian and Lorinda Couch wish they’d known a whole lot more about when they bought their home in 1996.
Lea Thompson: “Let me read to you from the warranty. ‘If there are problems because of defects in materials and workmanship, Pulte will arrange for their repair or replacement.’ That sounds pretty good.”
Lorinda Couch: “Mmm-hmm.”
Thompson: “But that’s not what happened?”
Couch: “No.”
You’re about to learn how relying on that kind of promise and ignoring the details written in their warranty led Brian and Lorinda to heartache and frustration.
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From the day the family moved in, their list of problems seemed to multiply. Small things like dripping faucets, and crooked moldings but also aggravating problems that couldn’t wait.
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From the day the family moved in, their list of problems seemed to multiply. Small things like dripping faucets and crooked moldings, but also aggravating problems that couldn’t wait.
“Our dryer wouldn’t work. And Dad went out there to look at the electrical, and he said, ‘You’re not going to believe this, but you don’t even have wiring to your dryer.’”
Pulte did send someone over to put in the wiring. But a month later, the couple says, their list detailed dozens of other problems that hadn’t been fixed — most covered by the warranty — or by those promises Brian and Lorinda say Pulte made. And still they were finding more.
“It’s been a gradual thing. We’ve got this list, and it just continues to grow,” says Lorinda.
One door that’s under warranty, also leaked, ruining the floor.
“The foyer would start to peel up and turn black,” says Lorinda.
Pulte has worked on the door again and again at its own expense. Lorinda adds, “The floor has been replaced probably, at least four times. The door has been replaced probably two to three times. They caulked the door probably 16 times.”
But Brian and Lorinda say their door still leaks. Take the windows. They’re under warranty. But try opening them.
Lorinda Couch: “There you go.”
Lea Thompson: “Well, it’s not easy, is it?”
Couch: “No.”
Pulte sent someone over to fix them too.
Lea Thompson: “When you went to Pulte with the window problem, the fact that you couldn’t get your windows to open, what did Pulte say about that?”
Lorinda Couch: “They said they fixed it.”
Brian Couch: “They did their best.”
They did their best. There was nothing more they could do. Words Brian and Lorinda say they would hear again and again about things covered by that warranty — like crooked walls and cracks in the corners.
But it wasn’t just that Pulte wouldn’t fix things to their satisfaction. It also turned out the warranty contained many exceptions — things Pulte wouldn’t fix at all.
Brian says, “It was five days before Christmas and the tree was on the floor and the packages floating in water. Lorinda was out shopping when a pipe froze and burst — flooding their home. We’ve been in the house three months. They tell us, we’re not going to cover any of your damages. It was abnormal temperatures. It says right there in the warranty pipes should be protected from ‘normal anticipated’ cold weather.”
How cold is that? The warranty doesn’t say. That day’s low was 13 degrees — colder than average, but still a temperature seen almost every year in Greenville — three times in the year Brian and Lorinda’s pipe froze.
Pulte contends Brian and Lorinda should have winterized their house. But the couple says Pulte didn’t insulate the pipes properly.
But even if the warranty isn’t clear about frozen pipes, it certainly guarantees the home’s overall structure.
As Brian pushes hard on a front window, the windows rattle and the pictures on the walls shake, the whole room moves.
Lea Thompson: “Good heavens! Brian’s shaking the house in the front and it’s shaking in the back?”
Lorinda Couch: “That’s right.”
Afraid the house might collapse on top of them, Brian and Lorinda called Pulte. The couple says Pulte failed to help them. So they paid an independent engineer to take a look. He concluded the house must be missing required bracing to keep walls stable. But he said, he couldn’t tell for sure without removing huge pieces of siding.
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‘They say the houses are supposed to be built to withstand 70-80 mile-an-hour winds. The structural engineer told us anything over fifty would be trouble.’
— BRIAN COUCH
Homeowner
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“They say the houses are supposed to be built to withstand 70-80 mile-an-hour winds,” says Brian. “The structural engineer told us anything over 50 would be trouble. You know, you’re lying in bed at night, 11:30, kids are in bed (you hear) pop, crack, pop, crack, and you’re sitting there, going, ‘This is crazy.’”
They’ve also called in two state inspectors. Both times, those government inspectors ordered Pulte to repair things the couple contends should have been fixed right away through the warranty. In fact, the state even suspended the license of one high-ranking Pulte employee for five months, saying the company had failed to do what the state had ordered.
Lea Thompson: “Pulte has been in this house many, many times. And it has tried to fix many, many things. Is there a point where Pulte has, indeed, fulfilled its obligation?”
Lorinda Couch: “Never. Has Pulte fulfilled its obligation to us? They guaranteed that we’d have a plumb, level and square, and a house that did not leak. That is not the case.”
And it’s not just Brian and Lorinda who are complaining.
Lea Thompson: “Not every Pulte home is like this. Is this house just a lemon?”
Brian Couch: “It’s a lemon. But it’s not the only lemon.”
Neighbors have problems, too. In fact, three other families have been through mediation with Pulte — complaining about their homes’ construction, and their warranties.
“I was expecting maybe cosmetic issues to deal with, but never the kinds of major issues that we’re having to deal with — just very heartbreaking,” says one homeowner.
Another says, “The people would show up. Or they may not show up. And they would do a halfway job and they’d leave.”
In fact, “Dateline” has spoken with dozens of unhappy Pulte owners from across the country and read hundreds of pages of official complaints — many telling stories similar to Lorinda and Brian’s, and their neighbors’.
Among the complaints we’ve found:
One in Kansas City was in such terrible shape, Pulte was ordered to pay the owners $100,000 — just $7,000 less than they paid for the house.
In South Carolina, Pulte bought one home back quietly after the homeowner complained very publicly about severe construction problems he says the company failed to fix.
And a neighborhood in Ft. Myers, Florida, where several people have moved out, claiming their homes are so leaky, life-threatening levels of mold have grown inside.
Every one of those homes has a warranty. Pulte appealed the Kansas City award and settled the South Carolina case. Some of those homes in Florida have been fixed, the company says, while other unhappy families in the neighborhood haven’t contacted Pulte at all.
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| Several families have moved out of their homes in Ft. Myers, Florida, claiming their homes are so leaky that life-threatening levels of mold have grown inside.
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While there’s no way to know whether Pulte has more or fewer unhappy customers than other builders, we do know Pulte is not alone.
Dateline’s investigation has revealed similar complaints against many other builders, with homes in a wide range of prices.
Knowing all that, we wondered what salespeople for new homebuilders are telling people about warranties.
So we went undercover to find out if what you’re promised is always what you get.
Any tour of any model home gets your adrenaline flowing with the big spaces, sleek kitchens and golf courses. A million buyers a year are often nervously putting down almost everything they have to buy a new home, many enticed and comforted by those new home warranties.
“A lot of builders say, ‘Yeah, we’ve got a 10-year warranty.’ But we stand behind it,” says one home agent.
In fact, home warranties have become a popular selling point, included with up to a third of new homes. And while there is no doubt builders sometimes go above and beyond to keep their customers happy, many people have come to feel the warranties are little more than empty promises.
We wondered, are salespeople being candid about what these warranties do and don’t offer, or is it that homeowners are just expecting too much?
We asked a “Dateline NBC” producer with an undercover camera to pose as a potential buyer.
Knowing that new home warranties from most builders are essentially the same, we visited 18 homes in three cities — Denver, Houston and Atlanta.
Four houses were Pulte’s — the nation’s largest homebuilder. The rest were other builders’.
Sometimes, we discovered, sales agents are candid.
“I mean our warranty is a very good warranty. It’s not instantaneous service. I mean, unless it’s an emergency,” says a US Home agent.
While a Centex Agent says, “No one’s going to just say, ‘You can do anything.’”
The Pulte salesperson was straightforward also.
“So, I mean, if you happen to break a window or a golf ball flies through the window — because, you know, we’re a golf course community — we’re not going to fix that.”
But we also heard this from another Pulte agent:
Pulte agent: “We have actually a 10-year structural warranty. Two years on plumbing, ducting and electrical. And we have one year to where everything is covered.”
Undercover producer: “Everything? No matter what?”
Agent: “Everything, no matter what.”
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He said, “Everything is covered, no matter what.” But when you take a look at the warranty it lists some problems that aren’t covered at all, like uneven color on stained wood. Other problems are listed that Pulte will fix just once like cracked walls. And even for things that are covered, the warranty has rules about how bad things must get before Pulte will step in.
From that same agent, this promise: “We also warranty our concrete for two years. Most builders do it only for one year. So if you have any cracking or heaving in the concrete, we replace it for two years.”
Oh, really? Any crack? Looking at the warranty, it says a crack in your basement floor has to be more than a quarter-inch wide before Pulte will do anything. That’s about as wide as a pencil. The agent said any bad concrete would be replaced. But if you look at the warranty, it mentions patching, caulking and grouting — but no promise of replacement. And the warranty doesn’t even mention cracked sidewalks or concrete driveways.
And remember how Lorinda and Brian Couch complained Pulte did come time and again but never got it right?
Undercover producer: “And what happens if like, if it’s fixed and you, the owner isn’t happy with it? Will you come back, like, until it’s…?”
Pulte agent: “Sure. Definitely.”
Undercover producer: “OK.”
But again when you take a look at the warranty that’s not what it says. Like most builders, Pulte only promises to come back until it’s happy — not until you are.
“The devil is in the details. If you read these warranties carefully, they’re written by builders. So like most warranties they’re really pretty worthless,” says Mark Cramer who is past president of the American Society of Home Inspectors, and the owner of a Florida home inspection business. He’s inspected about 600 new homes, and not surprisingly, he says you should always have a new home inspected before you buy — no matter how good you think your builder is.
Why? Cramer says while some builders do live up to their warranties, you can’t rely on that alone because warranties are really marketing tools designed to help builders sell homes and control the cost of repairs.
“There are some standards in there that are pretty ridiculous,” says Cramer.
Take this for example. You might assume walls are supposed to be straight up and down. But Pulte’s definition of straight may not be the same as yours. The warranty says Pulte doesn’t have to do anything unless a wall leans more than 1/4 of an inch for every thirty-two inches. That’s more than three quarters of an inch for a standard wall.
Cramer says, “It’s something that the average person walking down the street would notice. That’s not a reasonable specification.”
“We have a very solid warranty. I don’t think anybody has to oversell it,” says Jim Zeumer.
Zeumer is Pulte’s vice-president of communications. He defends the company’s new home warranty, its national reputation and those Pulte agents we talked to.
Lea Thompson: “Are you satisfied with how your salespeople described the warranty?”
Jim Zeumer: “I think they actually did a very clear job.”
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What about that agent’s promise to replace cracked concrete?
Well Zeumer acknowledges cracks in concrete driveways and sidewalks aren’t specifically covered under the warranty although he does say the company will voluntarily fix cracks wider than 1/4-inch. As for the concrete inside the house?
“We will take a look at the crack and we will patch it as necessary. Depending on the severity of the crack we may have to replace it,” says Zeumer.
Lea Thompson: “Not likely that the concrete would be replaced?”
Jim Zeumer: “Ideally we’ve built the house right the first time and that’s not an issue.”
And remember this?
Undercover producer: “And what happens if, like, it’s fixed and you’re not, the owner isn’t happy with it? Will you come back, like, until it’s…?”
Pulte agent: “Sure. Definitely.”
Undercover producer: “OK.”
Lea Thompson: “Here’s what the warranty says: ‘Pulte reserves the right to use its judgment in determining the most appropriate method of repairing warranty defects.’ That doesn’t sound like the consumer has much say.”
Jim Zeumer: “We’re the expert in the situation in terms of how to correct the situation — how to service that particular problem. And the consumer has the right to come back to us and say, ‘I’m not satisfied with this repair. Please do it again.’ And we will come back and do it again.”
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Zeumer denies Pulte’s warranty is mainly a marketing tool and says Pulte homeowners make an unusually low number of warranty claims. He also points to several awards — including a recent J.D. Power survey giving the company top marks in two markets — as proof that Pulte takes care of its customers.
But Brian and Lorinda Couch say Pulte didn’t do that for them and we reminded Zeumer of how unstable their house appears to be.
Lea Thompson: “Is what you’ve just seen OK?”
Jim Zeumer: “Is it OK? Of course not. When I see something like that, I just, I can’t tell you how disappointed I am and how concerned I am about the entire situation. I mean that shouldn’t happen.”
And while Brian and Lorinda say Pulte refused to address the shaking problem when it surfaced more than two years ago, Zeumer told us the company has always been willing to go back and make everything right, but couldn’t because the couple wouldn’t let them in.
Lea Thompson: “The Couches paid almost $130,000 for their home. Another builder is now telling them that it would take $170,000 just to fix that house.”
Jim Zeumer: “I would question that. But the fact of the matter is, Lea, if that’s what it’s going to take to go back in there and do whatever repairs are necessary, we’re prepared to do that.”
But it’s not that simple any more. Brian and Lorinda became so angry they hired a lawyer — then discovered the warranty didn’t allow them to sue in court. While their neighbors have recently reached undisclosed settlements with Pulte, Brian and Lorinda are still locked in mediation — unable to agree which repairs are needed and what those repairs should cost — fighting over things the couple thought the warranty covered.
Brian says, “We didn’t receive our warranty packet ‘til after we’d closed on our house.”
“There’s things they don’t cover, and it’s clearly, you know, in their warranty plan, when you read through it, page after page after page. And you don’t really realize it until it’s too late,” adds Lorinda.
So remember, whoever the builder is, if you’re taking a tour through a new house, and you hear, “everything is covered,” be sure to read all of the fine print.
The Couches have moved out, but they’re still paying the mortgage on their house, which sits empty as they wait for a resolution. And Pulte is no longer building houses in South Carolina.
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