Do you want a warranty with that?

One of the home manufactures I work with has a 10 MHWC (manufactures home warranty corporation) warranty program that comes standard with every house.  This is the only time you will ever hear me mention it, I will not promote it, I will not talk about it and I have asked them to stop putting it in their literature.  It’s a marketing ploy and as a manufacture they are above it.  They build exceptional houses, and they should not stoop to these techniques.

Do you remember “RUSTY JONES”? Back when cars biggest issue was that they would rust out before the engine would die they came out with a coating that would slow this process, but no one would pay the extra money for it.  So they came out with a lifetime warranty against rust if you paid to have this installed. I bought it, and I owned the car long enough to get some small rust spots. When I took the car in to have the rust fixed I found out I had been taken, well not really, I had not read the fine print.  It clearly states that for this warranty to maintain for the life of the car, the car had to be brought in every 6 months, if there were any scratches on the paint or the Rusty Jones coating you had to pay to get them repaired.  If you did not then the warranty was voided.

As much as this seemed like a scam to me it really is not. There is no way you can expect something to last forever without some maintenance.  The same is true of houses. If you have hardwood floors in your bathroom, and do not keep a good coat of finish on them while getting them wet everyday, you cannot attempt to hold someone responsible for them lasting forever.

These warranty programs are written with as many rules and restrictions as my Rusty Jones was, essentially rendering them useless.  The state is aware of these dynamics which is why the state law says that the warranty for new construction is 1 year on everything, 2 years on HVAC systems, and 6 years on the structure.  Anyone who tells you anything different is selling you a bill of goods.

The other thing that is important to know is that in the state law the warranty is provided by the general contractor. May builders in our industry like to encourage the home buyer to hire their own sub-contractors to do part of the construction.  The reason for this is by default in the eyes of the state that makes the buyer the general contractor. What many people do not realize is this also makes them the warranter of their new house. Not something people want to find out the hard way.

Thanksgiving caused the housing bubble……

Four years ago I had the same discussion with hundreds of twenty something first time home buyers with no kids. “We only need 1 bedroom, but we want four for our kids in the future and a spare in case my family comes to visit, and we need a formal living room and a big dining room so that everyone can come to our house for Thanksgiving”.  So we would design houses for young couples moving out of 900 sq’ apartments that were 3500 sq’ so one day of the year they could have the family over.  Of course the banks played a role in this because they were willing to loan them the money to massively over spend.  What was not accounted for was the added heating cost, the increased upkeep, and the triple taxes. It is my belief that the housing bubble can be blamed on that one holiday.  364 days of the year these same people only needed 1200 well planned sq’.

The good news is that pendulum has swung 180 degrees the other way.  The kids could not get financing from the banks if they had to, the government realized they could not cancel a national holiday so they have built in financing restrictions to make sure no one with less then 20 years of income stability can mortgage more then 25% of their earnings. Their parents on the other hand are coming through the door in droves looking to down size.

With solid credit, stable income and the good fortune of learning the real cost of home ownership beyond the mortgage payment, they want out, out of the family home designed for 5 and into small functional and cost effective homes with state of the art cost savings systems.  I am guessing you will be able to find some real deals on Mc-Mansions in the coming years.