"Our warranty innovations are not motivated by defect litigation concerns. It’s just the right thing to do." -- Regis Homes president Joe Richter
Orange County, Calif., builder Joe Richter is setting benchmarks for commitment to quality and customer service that the whole housing industry might be well-advised to emulate.
Richter is president of Regis Homes, the Southern California housing division of Sares-Regis Group. That Irvine, Calif.-based, multifaceted real estate and construction firm has operations in commercial and rental apartment construction as well as home building. The overall company is 99th in this year’s Giants rankings (up from 128th last year) based on total housing revenue of $143.9 million. Besides Richter’s Orange County operation, which closed on 113 attached and 70 detached homes last year, there’s also a smaller for-sale housing division in Northern California. But it is Richter who is raising the bar on quality.
Regis recently extended its new home warranty from one to two years on single-family detached homes to three years on attached units and to five years on high-density condo flats. In addition, Richter created the new position of asset manager, a person responsible for working closely with homeowner associations in all new Regis developments for five years after the last unit is sold.
All this in a firm that in 1991 was among the first to hire third-party inspectors to check each phase of the home building process. Such inspections are now the norm in Southern California, where construction defect litigation is rampant (mostly because that state’s courts treat production-built homes as manufactured products in defect liability cases).
Regis’ high quality-control standards are one reason the firm has avoided construction defect litigation. Now Richter is raising the bar even higher.
"I was a custom builder for many years before I went into production housing," he says. "When I made that switch in the 1980s, I was appalled at what I saw on production job sites. Home buyers do not hold us to a lower standard just because the houses are production-built. And our warranty innovations are not motivated by concerns about defect litigation. It’s just the right thing to do."
Richter says he has the support of Regis Group managing director Geoffrey Stack even though other Sares-Regis divisions have yet to follow suit. "This is truly an attempt to call upon the better angels of our natures and share what we know about quality and service with our trade partners and our customers," Richter says. "After all, they are the ones who give us the right to build houses."
Richter calls the time under coverage a "customer service period" rather than a warranty period. "We’re still taking calls on houses we built three years ago, so extending a written commitment to two years is not really so radical," he says. "We’re just telling people in our single-family communities that we will be there to help them for two years. I think the commitment, and the creation of the asset manager position, will be the key to being in business 10 years from now."
The asset manager will be a one-person, stand-alone department, not part of the construction, sales or even customer service department. This person will attend homeowner association board meetings as a representative of the builder but will have no voice in the proceedings. "He will act as an observer, a note taker, and develop an action list of corrections requested by the HOA from the builder," says Richter.
"We believe the attached and high-density projects require a longer service period, not so much for the individual units themselves, but rather for the common areas and other association assets. Many of our projects are oceanfront, which means they are exposed to salt air and salt spray corrosion."
At what density does a project move from three to five years of warranty protection? "We don’t know yet," Richter says. "We’ll decide that on a project-by-project basis. We’ll probably inform customers that they are covered for three years but that we reserve the right to extend it to five years, if we decide that’s necessary."
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