Buying a home is one of the biggest decisions anyone will make over the course of their lives. Many prospective homebuyers want to lessen their risk as much as possible and increase the likelihood they will be happy with their purchase decision. Importantly, Builders also want to manage their risk of future litigation from their homeowners. The best way to manage such risk is by Builders giving new homeowners expressed, written warranties when they sell the home.
Warranties assure homebuyers that the houses they are buying are in good condition. They also show homeowners that a Builder is reputable and willing to stand behind his or her work. Generally speaking, Builders have two options when it comes to issuing warranties. They can either issue them on their own (the builder keeps the risk), or they can transfer the risk to third-party warranty providers like American eBuilder.
By choosing American eBuilder for your warranty needs, you can insure your work for 10 years. This protection both makes your homeowners happy, and protects your business investments and professional reputation as well.
Some Builders choose to retain all of the risk and issue warranties on their own. But savvy builders choose to outsource those responsibilities to third parties, such as American eBuilder, for the following reasons:
Warranties from third party warranty providers are considerably less expensive because they spread the risk over thousands of homes. Additionally, Builders who use third parties also do not have to worry about writing, issuing and maintaining warranty records or hiring in-house staff to oversee these obligations.
Third-party providers give Builders the peace of mind that comes with knowing they do not have to worry about warranty responsibilities. This freedom enables them to spend more of their energy on building great homes and growing their business through well-formulated marketing campaigns.
Many homebuyers prefer third-party warranties. If a Builder goes bankrupt, that Builder might no longer honor warranties. Possessing a third party warranty affords the homeowner protection in these types of situations.
In addition to specifying what is warranted, third party warranties also tell a homeowner the issues and conditions that the warranty excludes or does not cover. By providing a written, third-party warranty, the Builder does not have to deal with unrealistic expectations from homeowners.
When prospective homebuyers are shopping for a Builder, one of the most important elements that factor in their decision-making process is whether the Builder is willing to stand behind his workmanship. Builders who offer 10 year structural warranties, such as one from American eBuilder, clearly show prospective homebuyers that they are professionals who are confident in their craftsmanship and have constructed the house with care.
Warranties on homes fall into two categories: implied warranties and expressed warranties. Implied warranties do not have to be spoken or written down. Instead, they are simply assumed because of the nature of a transaction. For example, unless stated otherwise, there is an implied warranty of habitability attached to sales transactions of homes.
In contrast, expressed warranties are written and specific. Expressed warranties:
These expressed warranties also explicitly explain the finite time period during which the warranty applies.
Some Builders might wonder why they need third-party warranties if they are already carrying commercial general liability and builder’s risk insurance. It is true that those two forms of insurance certainly help builders manage their risk. But they do not provide complete coverage after the sale. Generally speaking, liability insurance protects builders from being financially responsible for injuries and property damage from homeowner negligence. Similarly, builder’s risk insurance protects against injuries and damages that occur during construction. Unfortunately, neither of these forms of insurance protect builders from poor craftsmanship or defects that the homeowner discovers after the sale.
Smart Builders know that when they supplement those two forms of insurance with a third-party warranty, such as one from American eBuilder, their companies are protected if any construction defects appear after a home is sold. These warranties clearly articulate what parts of the structure and which systems have coverage—as well as which systems do not have coverage. Additionally, these warranties show how long a homeowner can expect the warrantor to be responsible for remedying them. For example, a written warranty covers many structural components of a home for a decade.
In conclusion, it is important to realize that Builders cannot rely on a structural engineer’s insurance. While these individuals usually carry their own insurance, Builders may still be liable for poor workmanship or failure to follow an engineer’s recommendation.
Smart Builders also recognize that having a third-party warranty from American eBuilder makes it easier to find a solution if the Builder and homeowner are at an impasse or if the homeowner becomes unreasonable. With a third party warranty, an arbitrator will help the two parties find common ground. Arbitration saves Builders from having to incur the time and costs associated with protracted litigation.
Many of our competitors’ definitions of a warranted structural defect are subjective and thus, homeowners and Builders can mis-interpret them. American eBuilder takes the guess work out of applying warranty standards. A third party warranty from American eBuilder contains objective, easily measurable standards. We have gathered these standards from established engineering and industry guidelines. Therefore, the homeowners know exactly what issues are warranted and when. They also know what measurable condition has to occur for them to submit an issue for warranty. Third party warranties typically address such issues as:
This is an example only. Warranty coverage varies. Please check your warranty booklet to find specific coverages for your home.
As you go about your search for a third-party warranty provider, we recommend that you look for providers that have been in business for a decade or more and still have great reputations. You will also want to work with a company that:
If you’d like to protect your business with a third-party warranty, please contact American eBuilder today. We look forward to answering your questions and partnering with you to mitigate your risk!
119 Aster Drive Suite 105, Harrisburg, PA 17112
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