How to avoid buying a new-build lemon

There aren't a lot of new-build projects going on right now in this area, but that will change and this advice will be helpful if you plan on buying new. Portions of this post is based upon an article by Marilyn Lewis of MSN Real Estate

When you buy an older home, you're often buying into the implied promise that a home that's held up for 50 years won't suddenly fall down around your ears. My old historic home has been standing since 1885, so I’m pretty sure that it isn’t going to fall down any time soon. But when you buy new home construction, all bets are off if you haven't thoroughly researched your builder. During the recent housing boom, many builders raced to keep up with escalating demand. When builders work fast, the chances of cutting corners and inadequate supervision increases. So while you are unlikely to experience a serious problem with most new-builds, it pays to do your due diligence and protect yourself upfront from a bad builder.

Among the most common problems reported are:

Foundations without proper grading, without sufficient rebar for support or without soil testing for stable ground (allowing foundations and homes to crack and fail);

Windows without flashings (allowing water in);

Roofs without felt backing or those that were improperly nailed (allowing leaks); roofs with no vents or soffits, so air won't circulate in an attic or crawl space. If there's water intrusion, too, the whole attic can be filled with mold and you won't even know it's happening..

Improper installation, voiding manufacturers’ warranties on building materials.

J.D. Power finds the most-common new-build complaints overall involve:

Landscaping (about a third of buyers report a problem);

Heating and air conditioning (three in 10 report issues);

Cabinet quality problems (less than a third of buyers report problems).

Many defects originate in one of three key areas: a building's design, workmanship or materials:

1. Design: Not all designs that look great on paper translate into sturdy, easily maintained structures. Unless you've got money for expensive repairs, avoid complicated or unusual designs — particularly in a condominium.

For example, contemporary designs featuring unusual, flat or complicated roof angles look sophisticated and hip but are particularly prone to problems. With flat-roofed buildings and a short pitched roof overhang, you have a higher degree of likelihood of water intrusion … it's easier for rain to hit the siding and windows and find its way inside. With the complicated, multi roof-line designed every roof valley represents another opportunity for the roofers to make a mistake that will allow leakage, too.

2. Workmanship: Everyone in the construction chain — from developer to subcontractor — faces pressure to cut expenses; that can lead to a lack of quality control, Thompson says. The chance of errors rises on a work site where there's pressure to finish fast, only intermittent supervision and unskilled crews, particularly where a lack of English prevents workers from understanding instructions or reading manufacturers' installation guidelines. Builders often choose subcontractors for their low bid; then the pressure's on the sub to work fast. Without a builder's representative at the site, no one will catch their slapdash work and missteps.

Improper installation of windows and roofing material is a "very common" defect, with missing or poorly installed flashing being the most common issue, along with improper or lack of caulking of doors and windows.. These problems let water leak into the walls causing rot, mold and structural weakness. Other frequent problems include:

Paint slapped onto unprimed, bare wood, increasing the odds it will lift right off, exposing wood to moisture.

The omission of the rubberized membrane in which windows should be wrapped to prevent leaks. Adding to a homebuyer's outrage, such omissions void a manufacturer's warranty on the windows. There is also a rubberized membrane called an ice guard that should be installed under the first few feet of the roof along all eves. Of course all roofs should also have drip molding along all edges, which sometime gets forgotten in hasty roofing jobs.

3.Materials: With new construction, many problems can be traced to weak materials. Sometimes unscrupulous contractors or hurried crews substitute cheap materials for the better quality specified on a contract. Also, cost and availability dictate a trend toward newer, less-expensive materials. For example, with the dwindling supply and high price of higher-grade wood, OSB — oriented strand board — is often used in place of plywood for exterior sheeting and sub floors. OSB is much less water-resistant than plywood. It tends to absorb and retain water, which leads to dry rot. Have you ever driven by a new construction site when it’s raining and the rain is getting all over everything because there was no roof yet? Did you ever wonder how good that is for the exposed flooring inside?

Wood foundation materials, for another example, typically have warranties for just 20 to 30 years. Doesn't this mean that the product manufacturer is not promising that the foundation of the home will last longer than that? What is the owner supposed to do after 20-30 years, put in a new foundation?

Once a house is finished, however, a smooth, handsome envelope of new siding, sheetrock and paint offers no hint of problems beneath the surface, like an incorrectly poured foundation, errors in framing and wiring or shoddy application of the home's internal moisture barrier, all of which can lead to horrific problems. You'd think that problems would be caught by local building inspectors. But they, too, are overworked and moving fast, so they may perform spot checks, not a thorough inspection, critics say.

The National Association of Home Builders says consumers should be active participants in construction by:

Attending the pre-construction orientation meeting and getting to know the superintendent. Most quality builders offer such a meeting.

Understanding the deadlines and process for making selections and adding options.

Visiting the site periodically during construction and reporting any concerns to the superintendent. If something doesn’t seem right and you can’t get a good explanation, get professional advice from a specialist — a certified home inspector specializing in new construction, for example, or another electrical contractor, or your local building official.

Attending your home's pre-drywall inspection, which is hosted by your construction superintendent and meant to familiarize you with what's behind the walls.

Attend the pre-closing walk-through with the builder. Get the builder to acknowledge in writing any items that need to be addressed.

Also, as a rule of thumb, get a lawyer to review any home contract before you sign. Discuss your concerns about quality and ensure the contract addresses them.

So the bottom line is that it’s up to your – the buyer – to make sure that you get the quality construction job that you think you are paying for fro the builder. If you aren’t up to the task, you have two options – go buy a used house or get help from a home inspection professional to inspect and report back to you as the work progresses and include that cost in your buying decision.