The Silver Bullet for Reducing Litigation

It’s time to stop shrugging off responsibility for everything that happens to your homes after the first year

BY DICK BRYAN

As a builder offering the standard 1-year home warranty, you know that things are generally pretty good for that first year: Homeowners contact you for general repairs; you send your trades or service representatives out to address the issues; and you’ve got blue skies and happy customers. But once that warranty period ends, you’d better pull on your litigation galoshes — the potential for lawsuits can quickly rain on your parade.

In post-warranty years 2-3, significant service issues will cost you money — one way or the other. You will either choose to fix your home owner’s problem at cost ‘x’, or run the risk of legal fees at cost ‘x + y’. Most often, you will choose to make the repair; not just because it’s the right thing to do, but because this creates good public relations, great word of mouth, and because it avoids opening the litigation door.

Bottom line: Post-warranty service is the least expensive option.

It’s time to stop shrugging off responsibility for everything that happens to your homes after the first year. I know of several enlightened builders who already have ‘Post-Warranty Service’ teams in place. The financial benefits of this approach are enormous.

As long as you are already providing some level of service during post-warranty years 2-3, why not formalize this process and take full advantage of the opportunity to reduce potentially costly litigation?

I have already tested a silver bullet for reducing potential litigation: “The 3-Year Warranty.” It has positively impacted (1) our sales, (2) homeowners’ willingness to refer us to a friend, and (3) our customer service ratings.

You ought to implement it as soon as possible. And don’t give me the excuse that your customer service process is too weak to support this extended warranty. You are spending the time and money anyway — turn it into an advantage!

Offering a 3-Year Warranty sets you apart from other builders. Service issues your competitors won’t claim responsibility for after their first-year warranty is up will still be covered under your 3-Year Warranty. This is a salesperson’s dream!

Suddenly, you’re the good guy, even if your customer service scores haven’t been top-notch. Litigation is eliminated with The 3-Year Warranty because there’s nothing to sue for: everything covered in the first year is now covered for three years.

Homebuyers will feel infinitely more confident buying from you because they assume you must be a better builder… Why else would you guarantee the quality of your construction for two years longer than other builders? Again, a salesperson’s dream!

Prospective buyers will also recognize that they won’t be out any money for repairs and damage for the first three years. They’ll give you higher satisfaction ratings (great for your social media rankings!) and you’ll benefit from additional sales from referrals.

If that isn’t enough incentive to implement The 3-Year Warranty, consider this: our experience has been that you may qualify for lower insurance premiums and lower requirements for warranty reserves. And since your HOA won’t be dealing with homeowner complaints, a happier HOA is much less likely to create or support future litigation.

Implementing a 3-Year Warranty takes careful planning, but I can tell you it’s not that difficult. (Ask Eliant for a step-by-step check-list: rmirman@eliant.com) 

The 3-Year Warranty is not just a sales- person’s dream: It is a game-changer.

[Editor’s Note: Dick Bryan was ‘Customer Service Executive of the Decade’ (2000) while with John Laing Homes. He received the 2005 ‘Trailblazer’ award for his extraordinary contribution to the building industry. In 2014, he was voted the ‘Eliant Customer Experience Leader of the Year.’]

Dick Bryan is a Builder Consultant. He may be reached at www.dickbryan.com.

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