HomeLatest NewsFeatured HomebuildersHome Buyer ResourcesBinding ArbitrationResource LinksSubmit ComplaintsView ComplaintsTake Action 101!Report Mortgage FraudMortgage Fraud NewsForeclosure NewsConstruction DefectsHome DefectsPhoto GalleryFoundation ProblemsHomeowner Website LinksHOA Reform
Main Menu
Home
Latest News
Featured Homebuilders
Home Buyer Resources
Binding Arbitration
Resource Links
Submit Complaints
View Complaints
Take Action 101!
Report Mortgage Fraud
Mortgage Fraud News
Foreclosure News
Construction Defects
Home Defects
Photo Gallery
Foundation Problems
Homeowner Website Links
HOA Reform
Featured Topics
Builder Death Spiral
Report Mortgage Fraud
Foreclosure Special Report
Mold & New Home Guide
Special News Reports
Centex & Habitability
How Fast Can They Build Them?
TRCC Editorial
Texas TRCC Scandal
Texas Watch - Tell Lawmakers
TRCC Recommendations
Sandra Bullock
People's Lawyer
Prevent Nightmare Homes
Choice Homes
Smart Money
Weekly Update Message
HOBB Archives
About HOBB
Contact Us
Fair Use Notice
Legislative Work
Your House

 HOBB News Alerts
and Updates

Click Here to Subscribe

Support HOBB - Become a Sustaining Member
Who's Online
ABC Special Report
Investigation: New Home Heartbreak
Trump - NAHB Homebuilders Shoddy Construction and Forced Arbitration

Organizing your community to bring public attention to builder’s bad deeds and seeking assistance from local, state and federal elected officials has proven to be more effective and much quicker for thousands of families. You do have choices and alternatives.  Janet Ahmad

Homebuilder Spend less on Warranty Issues
Sunday, 20 February 2005

Homebuilding Industry Warranty Spending is Extremely Low
New homebuilder warranty claims are low, while homebuyer complaints are at an all-time high? 
When buying an airplane, helicopter, a car, a washer or dryer, computer, printer, desk or even an office chair, the percentage of dollars spent by the manufactures on customer warranty issues is greater than that spent by the homebuilding industry on defectively built new home warranty claims.  The percentage of earnings spent by a builder on warranty issues of a new home is as little as 0.3% while Gateway reported 6.2% and Lexmark International, a manufacturer of printers spent 9.7%.  Read the entire series: Warranty Week Six Part Series    


Homebuilding Industry Warranty Spending is Extremely Low
New homebuilder warranty claims are low, while homebuyer complaints are at an all-time high?

When buying an airplane, helicopter, a car, a washer or dryer, computer, printer, desk or even an office chair, the percentage of dollars spent by the manufactures on customer warranty issues is greater than that spent by the homebuilding industry on defectively built new home warranty claims.  The percentage of earnings spent by a builder on warranty issues of a new home is as little as 0.3% while Gateway reported 6.2% and Lexmark International, a manufacturer of printers spent 9.7%.  Read the entire series: Warranty Week Six Part Series

Warranty Week Reported:
The first chart below lists just the 16 builders of site-built homes who reported details of their warranty spending in their latest financial statements. Centex Corp. and Capital Pacific Holdings Inc. reported annual figures, so their warranty claims cost was divided into four equal parts, and what you see below is 1/4 of their annual spending. Beazer Homes USA Inc., meanwhile, reported six month figures, so those claims were divided into two equal parts. It's highly unlikely that warranty claims were exactly the same in two successive quarters, but for the purposes of this column that's what we're assuming. 

In other words, Centex most certainly spent 0.3% of its home sales revenue on warranty over the course of its entire fiscal year.  

Warranty Spending
in the Site-Built Home Market
First Quarter 2003  

(all figures in $ Millions and percent)  

Site Built Homes 

Spent 

Percent

  

  

on 

of 

Company

  

Warranty

  

Sales

  

D.R. Horton Inc.

  

$5.20

  

0.3%

  

Centex Corp. (1)

  

$4.58

  

0.3%

  

Meritage Corp.

  

$1.12

  

0.4%

  

Avatar Holdings Inc.

  

$0.20

  

0.4%

  

Dominion Homes Inc.

  

$0.52

  

0.5%

  

Capital Pacific Holdings (1)

  

$0.41

  

0.7%

  

Ryland Group Inc.

  

$4.25

  

0.7%

  

NVR Inc.

  

$4.83

  

0.7%

  

M/I Schottenstein Homes Inc.

  

$1.41

  

0.7%

  

KB Home

  

$9.40

  

0.9%

  

Pulte Homes Inc.

  

$15.75

  

1.0%

  

Lennar Corp.

  

$15.92

  

1.1%

  

M.D.C. Holdings Inc.

  

$7.05

  

1.3%

  

Beazer Homes USA Inc. (2)

  

$5.66

  

1.7%

  

William Lyon Homes

  

$1.42

  

2.0%

  

Arvida/JMB Partners L.P.

  

$0.80

  

6.8%

  

Other

  

$9.87

  

  

  

Industry Total & Average

  

$88.4

  

0.7%

  

Source: SEC Form 10-Q & Form 10-K 

Notes: 

  1. Derived from annual report data, estimated for the first quarter 

  2. Derived from six month data, estimated for the first quarter 

  3. Derived from nine month data, estimated for the first quarter

    Update: Arvida/JMB Partners (6.8%) has been embroiled in a series of investigations regarding defective homes. 

Arvida/JMB Partners developed master-planned residential and resort communities in the southeastern US before electing to call it quits. The communities included homes, townhouses, and condominiums and featured golf courses, tennis courts, swimming pools, and management services provided by the partnership. Arvida/JMB's communities were marketed toward middle- and upper-income residents in Florida , Georgia , and North Carolina … Arvida/JMB is liquidating its assets and preparing to exit the real estate business  


Top 25 Warranty Providers
 

Top U.S.-Based Warranty Spenders
First Quarter, 2003
(all figures in $
US millions)  

 Warranty-Issuing

  

Product 

  

Warranty

  

Percent

  

 Parent Company

  

Revenue

  

Claims   

  

of Sales

  

 General Motors Co.

  

$38,777

  

$1,096   

  

     2.8% (2)

  

 Ford Motor Co.

  

$34,200

  

$834   

  

     2.4% (2)

  

 Hewlett-Packard Co.

  

$14,446

  

$581   

  

     4.0% (2)

  

 Dell Inc. (1)

  

$8,851

  

$217   

  

     2.7% 

  

 IBM Corp.

  

$5,808

  

$190   

  

     3.3% (2)

  

 Caterpillar Inc.

  

$4,424

  

$117   

  

     2.6% (2)

  

 United Technologies

  

$4,864

  

$113   

  

     2.3% (2) 

  

 Sun Microsystems

  

$1,930

  

$106   

  

     5.2% (2) 

  

 Cisco Systems

  

$3,901

  

$80   

  

     2.3% (2) 

  

 Whirlpool Corp.

  

$2,716

  

$76   

  

     3.1% 

  

 Boeing Co.

  

$5,697

  

$69   

  

     1.2% 

  

 Deere & Co.

  

$3,071

  

$58   

  

     2.1% (2) 

  

 Gateway Inc.

  

$844

  

$47   

  

     6.2% 

  

 Lexmark International

  

$466

  

$45   

  

     9.7% 

  

 Lucent Technologies

  

$1,798

  

$44   

  

     3.5% (2) 

  

 Navistar International

  

$1,481

  

$44   

  

     3.0% (2) 

  

 Maxtor Corp.

  

$939

  

$42   

  

     4.5% 

  

 Paccar Inc.

  

$1,789

  

$42.4   

  

     2.4% (2) 

  

 Applied Materials Inc.

  

$1,000

  

$40   

  

     4.0% 

  

 Honeywell International

  

$4,619

  

$35   

  

     0.8% (2) 

  

 Seagate Corp.

  

$1,620

  

$33   

  

     2.0% 

  

 Maytag Corp.

  

$1,136

  

$31   

  

     3.1% 

  

 American Standard

  

$1,951

  

$28   

  

     1.5% 

  

 AutoZone Inc.

  

$1,121

  

$20   

  

     1.8% 

  

 Brunswick Corp.

$935

  

$21   

  

     2.3% 

  

  

  

  

  

  

  

  

  

Source: SEC Filings

  

  

  

  

  

  

  

  

Notes: (1) Fiscal Year figures ÷ 4
(2) Percent of warranted product revenue only; no finance, software or service revenue
  

Warranty Spenders by Industry Sector  

Reserve: balance as of March 31, 2003
Claims: during the First Quarter of 2003  

Industry Category

  

Warranty Reserve

  

Warranty Claims

  

   Automotive

  

$16.3 b

  

$2.3 b

  

   Computers

  

$5.4 b

  

$1.4 b 

  

   Aerospace/Marine

  

$3 b

  

$298 m 

  

   Heavy Industry

  

$1.6 b

  

$279 m 

  

   Telecom Equipment

  

$1.47 b

  

$276 m 

  

   Home & Office Furn.

  

$646 m

  

$223 m 

  

   Electrical Power Equip.

  

$1.4 b

  

$199 m 

  

   Semiconductors

  

$554 m

  

$146 m 

  

   New Homes 

  

$581 m 

  

$126 m 

  

   Medical & Scientific

  

$435 m

  

$104 m 

  

   HVAC/R

  

$928 m

  

$97 m 

  

   Security Systems

  

$502 m

  

$69 m 

  

  

  

  

  

  

   Total

  

$32.87 b

  

$5.7 b 

  

New Home Construction
Warranty Claims & Accrual Rates,
First Quarter 2003 to Second Quarter 2004
 
Source: Warranty Week from SEC data 

  

Warranty Week Full Report: Part 1 - 6 

 

 
< Prev
Search HOBB.org

Reckless Endangerment
BY: GRETCHEN MORGENSON
and JOSHUA ROSNER

Outsized Ambition, Greed and
Corruption Led to
Economic Armageddon


Amazon
Barnes & Noble

 Feature
Rise and Fall of Predatory Lending and Housing

NY Times: Building Flawed American Dreams 
Read CATO Institute: 
HUD Scandals

Listen to NPR:
Reckless Endangerman
by
Gretchen Morgenson : How 'Reckless' Greed Contributed
to Financial Crisis - Fannie Mae

NPR Special Report
Part I Listen Now
Perry Home - No Warranty 
Part II Listen Now
Texas Favors Builders

Washington Post
The housing bubble, in four chapters
BusinessWeek Special Reports
Bonfire of the Builders
Homebuilders helped fuel the housing crisis
Housing: That Sinking Feeling

Texas Regulates Homebuyers
 
Texas Comptroller Condemns TRCC Builder Protection Agency
TRCC is the punishment phase of homeownership in Texas

Consumer Affairs Builder Complaints

 TRCC Implosion
 TRCC Shut Down
 Sunset Report

IS YOUR STATE NEXT?
As Goes Texas So Goes the Nation
Knowledge and Financial Responsibility are still Optional for Texas Home Builders

OUTSTANDING FOX4 REPORT
TRCC from Bad to Worse
Case of the Crooked House

TRCC AN ARRESTING EXPERIENCE
The Pat and Bob Egert Building & TRCC Experience 

Build it right the first time
An interview with Janet Ahmad

Bad Binding Arbitration Experience?
This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
or call 1-210-402-6800

Homebuilding Texas Style
And the walls came
tumblin' down

Pulte Homeowner Survey
Warranty & Mortgage Experience
 Click to participate

top of page

© 2024 HomeOwners for Better Building
Joomla! is Free Software released under the GNU/GPL License.