Archive for the ‘News’ Category
In Texas, the homebuilding industry has experienced significant growth over the years, driven by factors such as population influx, economic expansion, and urbanization. However, this growth has also brought to light some concerning practices within the industry, particularly regarding the treatment of homebuyers by certain unregulated homebuilders.
The term “transactional” implies a purely business-oriented approach, where the focus is solely on completing the sale and maximizing profit, often at the expense of other considerations such as quality, customer satisfaction, or long-term relationships. When homebuilders treat homebuyers as fungible, they see them as interchangeable units rather than individuals with unique needs, preferences, and concerns. This can manifest in several ways:
- Lack of Customization: Fungible treatment often means offering standardized, cookie-cutter homes without much regard for customization or personalization. Homebuyers may feel like they’re just another number in a long line of transactions, with little attention paid to their specific desires or requirements.
- Neglecting Quality: When the primary goal is to churn out as many homes as possible to maximize profits, corners may be cut on quality control measures. This can result in shoddy construction, the use of subpar materials, and a general disregard for craftsmanship, leaving homebuyers with homes that are plagued by defects and issues.
- Poor Customer Service: Viewing homebuyers as fungible entities can lead to a lack of emphasis on providing satisfactory customer service. Homebuilders may be less responsive to buyer inquiries, complaints, or warranty claims, further exacerbating the feeling of being treated as mere transactions rather than valued clients.
- Limited Transparency: Fungible treatment can also involve a lack of transparency in the homebuying process. Important information about the home, its construction, warranties, or future developments in the area may be withheld or glossed over, leaving buyers feeling uninformed and vulnerable.
- Short-Term Focus: Homebuilders focused solely on transactions may prioritize short-term gains over long-term sustainability. This can lead to unsustainable development practices, such as disregarding environmental concerns or building in flood-prone areas, ultimately putting buyers at risk in the long run.
- While not all homebuilders in Texas operate in this manner, in my experience most do. The absence of stringent regulations and oversight in the industry has created an environment where such practices thrive. Addressing these issues requires a concerted effort from policymakers, industry stakeholders, and consumers to promote ethical standards, enforce regulations, and hold accountable those who prioritize profit over people. By fostering a culture of transparency, accountability, and customer-centricity, the homebuilding industry in Texas can better serve the needs and interests of homebuyers, rather than treating them as mere commodities in a transactional process.
The Republican-led government in Texas has historically advocated for limited regulation and government intervention in various industries, including the housing sector. While this approach is often framed as promoting economic freedom and individual responsibility, it has also created an environment where unregulated home builders and remodeling contractors can exploit gaps in oversight to the detriment of the public.
Lax Regulatory Framework: Texas has relatively lenient regulations compared to other states when it comes to home construction and remodeling. This lack of stringent oversight allows unscrupulous builders and contractors to operate with minimal accountability, leading to a higher risk of poor-quality workmanship, safety hazards, and fraudulent practices.
Limited Consumer Protections: The emphasis on limited government intervention means that consumer protections in the housing industry are often woefully inadequate. Homebuyers and homeowners have fewer avenues for recourse when disputes arise or when they encounter issues with builders or contractors. This lack of protection can leave consumers vulnerable to exploitation and financial harm.
Political Influence: The homebuilding industry holds significant sway in Texas politics, often wielding influence through campaign contributions and lobbying efforts. This political influence can shape legislation and regulatory policies in favor of industry interests, further eroding protections for consumers and enabling unregulated practices to persist.
Zoning and Development Policies: Republican-led governments in Texas have generally favored pro-development policies, which prioritize economic growth and property rights over environmental conservation and community interests. While promoting development can stimulate the housing market, it can also lead to unchecked expansion and urban sprawl, exacerbating issues related to unregulated construction and inadequate infrastructure.
Deregulation Agenda: The overarching deregulation agenda pursued by Republican officials in Texas has contributed to a hands-off approach to industry oversight. While proponents argue that deregulation fosters innovation and economic competitiveness, critics contend that it can result in a race to the bottom, where companies prioritize profit over public welfare and environmental sustainability.
Overall, the Republican government in Texas has played a significant role in creating an environment where unregulated home builders and remodeling contractors can thrive. Addressing these issues requires a reevaluation of regulatory policies, stronger consumer protections, and a commitment to balancing economic interests with the health, safety, and well-being of the public. Think on these things in the upcoming elections.
We’ve all heard and instinctively understand that purchasing a home is one of the most significant investments people make in their lifetime. That is why ensuring that the transaction is legally sound and protects the buyer’s interests is crucial. Here are several reasons why hiring an attorney before purchasing a new home from an unregulated Texas home builder is of utmost importance:
Legal Expertise: Attorneys specialize in understanding complex legal documents and contracts. They can review the purchase agreement, warranty documents, and other legal paperwork associated with buying a home to ensure the terms are fair and favorable to the buyer.
Contract Review: Home purchase contracts can be lengthy and contain legal jargon that may be difficult for the average person to understand. An attorney can review the contract thoroughly, explain its terms to the buyer, and negotiate any necessary changes to protect their interests.
Protection Against Fraud: Unfortunately, there have been numerous cases of fraud and misconduct involving unregulated home builders. An attorney can identify any red flags indicating potential fraud or unethical behavior.
Compliance with Laws and Regulations: Texas and each municipality have specific laws and regulations governing the home-buying process, including disclosure requirements, construction standards, and warranty obligations. An attorney can ensure that the builder complies with all applicable laws and regulations, protecting the buyer from legal issues down the line.
Negotiation: Attorneys are skilled negotiators who can advocate for the buyer’s interests during the home-buying process. Whether it’s negotiating the purchase price, financing terms, or upgrades to the home, an attorney can help the buyer achieve the best possible outcome.
Dispute Resolution: If disputes arise during the home buying process or after the purchase is complete, having an attorney on your side can be invaluable. They can represent you in negotiations, mediation, or litigation to resolve the dispute quickly and effectively.
Overall, hiring an attorney before purchasing a new home from an unregulated Texas home builder provides the buyer an added layer of protection and peace of mind. It ensures that the buyer’s interests are fully represented and they make a sound investment in their future home.
Fans of Mike Holmes, dba the Canadian Showboat, might be surprised to find that it is all blow and no go with the popular builder/inspector. https://www.cbc.ca/news/investigates/mike-holmes-lawsuit-demolition-1.7091774
If you haven’t already, you might want to check out the recent WFAA article discussing the declining quality of home construction in the DFW area. You can find it here:
While the inspector’s concerns in the article are a step in the right direction, they may not be providing you with the full picture. His optimism in estimating that only 90% of new houses in the area have structural defects is questionable at best. In my 27 years of inspecting houses, I consistently find structural issues in every single one, and they seem to be worsening.
The recommendation to have inspections during the construction process, as suggested by the inspector in the article, is indeed sound advice. However, the problem lies in the fact that, like the inspector mentioned, almost 100% of the home inspectors licensed by the Texas Real Estate Commission lack the qualifications needed to inspect buildings under construction.
All houses built in Texas must adhere to standards such as the International Residential (IRC) and Energy Conservation (IECC) Codes, as well as the National Electrical Code (NEC). However, the standards of practice (SOP) for TREC-licensed inspectors explicitly exclude knowledge of building, energy, or electrical codes.
Builders are required to conform to prescriptive codes, which provide detailed requirements for the design and construction of buildings, specifying certain materials, methods, and dimensions.
In contrast, the SOP for TREC inspectors follows a performance code, which sets overall goals and objectives for buildings in terms of safety, functionality, and sustainability. Rather than specifying materials or methods, performance codes prioritize achieving desired outcomes over time.
It’s important to note that a house under construction, obligated to be built according to a prescriptive code, cannot be effectively inspected using a performance code. Since it’s new, no time has passed, and its performance over time cannot be measured. Due to the intricate nature of house construction projects and the multitude of factors involved, performance codes lack the detailed instructions necessary for proper construction. This opens the door to interpretations by contractors and inspectors that often serve as excuses for not adhering to proper procedures.
Think about it like this. Car and Driver, Motor Trend, Edmonds, et al., don’t publish reliability reports on automobiles that have just rolled off the assembly line, right?
Builders required to adhere to prescriptive codes are unlikely to address reported defects from an inspector operating under a performance code. Hiring an under-qualified and under-performing inspector will lead to wasted money and a house that does not perform as intended over time.
No inspector lacking a Residential Combination Inspector certification from the International Code Council is qualified to inspect new house. Check your inspector’s credentials (or lack thereof) here:
The practice of using more elaborate or prestigious titles to describe a job or position than its conventional or common name is often referred to as “euphemism” or “title inflation.” Calling a janitor a “sanitation engineer” would be an example of using a euphemistic or inflated title to make the job sound more sophisticated or important. This can be done for various reasons, such as to enhance the perceived status of the position or to make it more appealing. However, it’s important to note that the appropriateness and effectiveness of such terminology can vary, and some may view it as an attempt to mask the true nature of the job.
The home inspection industry is rife with these euphemistic titles. Inspectors with zero construction experience and little time in the profession will attempt to lure customers in using such puffery. For those of you in the market for an inspector I’ve made an attempt here to decode a few of these for you lest you fall under their sway.
Thermographer is the term adopted to glorify users of infrared cameras. I suggest “heat whisperer” or perhaps “infrared ninja”. Any inspector in the business for more than 15 minutes owns an infrared camera. They have limited uses. They are not magical devices used to see inside of walls. An infrared camera is just another tool in the box.
Sewer Scope Inspector is the grandiloquent term for someone who inserts a rather long endoscopic device into the sewer pipes of a building. I like the term “rotoscatographer”. Any plumber is qualified to perform this function. Home inspectors are not. Allowed by nonsensical Texas law? Yes. Qualified? Not a chance.
UAV Pilot (drone pilot) is the term used by people who play with drones when they should be working, exceptions being commercial drone operators like utility contractors, commercial roofers, law enforcement agencies, etc. I prefer “Sky Commander” or “Crashologist”. If the drone cost less than $10K it is a mere toy. Toys are not tools.
I could add a few of my own to the vernacular, but fear that they might actually become commonplace.
“Darkness Disruption Technician” – One who uses a flashlight.
“Elevation Engineer” – One who climbs a ladder.
“Fastener Manipulation Expert” – One who employs a screwdriver.
“Gravity Consultant” – One who uses a level.
“Hydraulic Scrutinizer” – One who uses a water pressure gauge.
“Doctor of Distance Divination” – One who utilizes a tape measure.
And finally, “Home Inspector” – This is a misnomer that has been promoted by the real estate industry brokers and salespeople. One cannot inspect a home. One can only inspect the house that has been made a home by its inhabitants.
And now off we go into 2024!
Labor shortages, lumber shortages, supply chain issues, mortgage rates, etc. are not the real cause of the current housing issue.
Read this: https://www.futurity.org/buying-a-house-real-estate-2973222-2/
I recently sent this letter to the editor of the ASHI Reporter, the magazine of the American Society of Home Inspectors. Since I doubt seriously that they will publish it, I thought I’d post it here as well.
“Inspecting New Construction
While pondering over the idea of penning a technical article on new construction inspections for the upcoming December issue of the ASHI Reporter, I felt I should say this first.
If your business is not located in Texas – be happy. Properly inspecting new residential construction here is a serious challenge. Builders are not regulated, i.e. need not be licensed, bonded, insured, educated – nada. It may be similar in other states, but is certainly not as blatant as it is where I work.
Municipal inspectors are, I suspect, like they are nearly everywhere; overworked, under-paid, and questionably-proficient in building code enforcement. Even those who are in the know, well-meaning, and have a solid ethical base are often not allowed to be too strict, if they value their jobs. Builders are notorious for putting pressure on building officials, either via payola or by threat of moving their building sites to another jurisdiction where less enforcement will be encountered.
With both home prices and mortgage interest rates soaring it has become crystal clear to the home buying public that independent interim inspections are a must. In Texas, any inspector licensed by the Texas Real Estate Commission is allowed to inspect new homes under construction. This is certainly questionable, since they specifically exclude any building code knowledge from their SOP. This is also the case with the major inspection associations – including ASHI.
Where does this leave the home buyers? In peril. As professional inspectors it is our duty to inform clients of material and safety defects found during an inspection. If we are not ourselves intimately familiar with the minimum construction standards, i.e. the building, electrical, and energy efficiency codes, how will that work? It will not.
I think it is high time that ASHI makes the long overdue move toward requiring ICC certification for its members and assisting them in obtaining it. You cannot simply pretend to be the best, you must make proactive moves to ensure that you are indeed the best. One can spout all of the ethics one likes, but without action, it is just so much hot air.
Certification is the only way that one can prove knowledge of a process such as building. Without it, one is unaware of the very bones of construction regulations, not to mention the nuances that come by actually building homes – another prerequisite lacking for association memberships or state licensing.
The term “ASHI Certified Inspector” would take on a much broader and authoritative meaning if backed by more than the current minimalist SOP.
Flipping through the pages of the ASHI Reporter over the past few years gives me a clear view of the professional liability insurance industry’s influence that appears to be predominant. Insurance carriers do what is best for their bottom line by spouting fear-inducing mantras such as “do not exceed your SOP” or “do not quote codes”. In other words, be minimalists. Do the very least imaginable in order to protect your insurance company’s assets.
I apologize if the title of this article lured you in with the idea of discussing technical aspects of new construction inspections. I assume that, for the overwhelming majority of you who lack boots-on-the-ground construction experience and code certification, that might be a bridge too far.”
THE EVER-SHRINKING HOMEBUILDER WARRANTIES
I have written numerous times about the near-worthless warranties offered by Texas homebuilders. On September 1, 2023, I will now have less to write about. The barking-mad buffoons in the Texas Legislature were successfully lobbied by the Texas Builders Association and their insurers into lowering the 10-year maximum structural warranty to 6 years. There must have been some big money changing hands to get a whopping 40% reduction in consumer protection. Ya’ think?
It has been a slow-moving coup. We went from having an implied warranty of good workmanship (remember that?) and habitability back in 2000 to express warranties of 1-2-10 years, and now to 1-2-6 years. Given the philosophies embraced by the ruling party in Austin, I give it another 5 years before we are down to a 1-2-3 express warranty. Another 10 years, and they’ll be like the warranties on the appliance the builders install – 365 days.
The bright side, if there is one, is that the express warranties never actually warranted much anyway. So, homebuyers have not lost a whole lot—just 40% of disingenuous, empty promises.
I am reminding those of you who are about to sign on the dotted line with an unlicensed, unregulated Texas builder to have them build your new house that you have literally no protection from the unconscionable building practices that prevail here.
Get a copy of the warranty before you buy. Read the exclusions. These warranties consist mostly of exclusions. Important exclusions. For example, they do not cover building code violations. Since the building codes are the MINIMAL standards, one might presume that the warranties would insist on ensuring compliance with them. That is not the case.
If you do not have your house independently inspected during the construction process for code compliance, who will ensure that compliance? Your builder certainly will not. The municipal inspectors will not. The Texas Legislature will definitely not. The Texas Attorney General cannot – he’s been put on indefinite leave due to “alleged” corruption. You’ll be screwed. Self-screwed, not to put too fine a point on it.
With the relatively recent advent of media bombardment regarding A.I. meddling in human affairs, I feel I should remind everyone that I do not employ artificial intelligence in writing my blog articles or inspection reports. There is simply no question as to who is more qualified; me with 48 years in construction defect identification or AI with literally no boots-on-the-ground experience.
As with most businesses, A.I. lovers are attempting to insinuate themselves into everything. Inspection report-writing software companies are hawking their wares with ludicrous statements like:
“One of the key drivers for the adoption of AI-based home inspection software is the shortage of skilled labor in the industry. According to the National Association of Home Inspectors, the demand for home inspections is projected to grow by 10% over the next decade, while the supply of qualified inspectors is expected to decrease by 15%. This means that the industry will face a shortage of 25,000 inspectors by 2029.
AI-based home inspection software like XYZ is providing a solution to this problem by providing a consistent level of quality across all inspections, regardless of the inspector. This technology is capable of analyzing large amounts of data quickly and providing a detailed report and recommendations for repairs or upgrades in a fraction of the time it would take a human inspector.”
A.I. lovers dream on.