 Poorly Built by Pulte:
A Report on Customer Dissatisfaction
"This report is an important resource for anyone considering the purchase of a newly constructed home. Consumers should educate themselves about warranty coverage when buying a home in case they find construction defects.
If these problems are found, consumers should seek assistance from an attorney knowledgeable in these matters as soon as possible."
-Alys Cohen, Staff Attorney, National Consumer Law Center
"This report is a must-read for anyone considering buying a Pulte home.
Consumers should be wary of any oral promises made to them and need to completely understand the terms of their new home contract, particularly the warranty coverage, which they will need when they encounter construction defects."
-Ira Rheingold, Executive Director, National Association of Consumer Advocates
Things are bad for Pulte Homes
Homebuilders had a rough year in 2007, especially Pulte Homes, Inc.—builder of “Pulte,” “Del Webb” and “DiVosta” brand homes. Pulte’s stock value plummeted. In January 2007, the firm’s stock traded at over $30 per share. One year later, it had tumbled to roughly $10 per share. Credit rating agencies Moody’s and Standard and Poor’s downgraded Pulte debt to junk bond status last fall. Download a pdf of the report  .
The third quarter of 2007 established quarterly and year-over-year records for new home price
declines. A November 28, 2007, Business Week article (“Pulte’s Good News Not Good Enough”)
commented that “shreds of good news from homebuilders get overwhelmed by a torrent of bad
news and a rising level of anxiety.”
But Junk Bond Debt Isn’t the Only “Junk”
According to one new Pulte home buyer:
“After moving into our home in Remington Heights the sale of homes in the Queen Creek area went crazy. To keep up with the demand Pulte was running 24 hour shifts.
We know this because we called the sheriff more than once to have them shut down as the noise was keeping us awake at night.
“You could hear the ‘beeps’ of the forklifts driving up and down the road at 2-3 am.
Pulte had huge, monster spotlights and were building homes under them throughout the
night.
“You could hear the constant ‘bam bam’ of the huge nail guns they build homes
with and this continued night after night. They would cease for a night or two then they
would start building again. How a quality home can be built in the dark is beyond me,
and I wonder how many of the home owners knew their homes were constructed in this
manner?
“I was happy our home was not one of the ‘midnight’ homes that was built in the
dark; however, it may as well have been one with all the problems we experienced.” |
Investors and subprime borrowers aren’t the only ones who have been burned lately. New homebuyers’ voices have been drowned out in the media storm surrounding the industry’s woes. The experiences of some new Pulte homebuyers indicate another emerging problem—defective construction.
Building Justice, a partnership comprised of the International Union
of Painters and Allied Trades, the Sheet Metal Workers International
Association and the AFL-CIO, had reason to suspect that Pulte’s Arizona
homebuyers might be experiencing problems with their homes. Our
representatives regularly speak to contractor employees about conditions
at Pulte construction sites.
Some reported unpaid wages and overtime, pressure to work
through break periods and bypass safety precautions, sexual harassment
and discrimination. At times, appropriate construction materials, safety
equipment and clean drinking water were not available.
 |
It seemed likely that these conditions would result in problematic homes. Changes to Arizona law sought by homebuilders, contractors and pro-industry lobbyists were enacted in 2002. These changes, which occurred during a period of record-breaking new home construction, intensified the imbalance of power and sophistication between homebuilders and their customers. Today, it is impractical for most homeowners to resolve defect issues through litigation. Arizona homebuilders that prevail over buyers in court are entitled to attorney and expert fees—a powerful deterrent.
The Survey: 410 Arizona Families
Throughout the summer and fall of 2007, Building Justice surveyed Arizona homeowners who purchased Pulte or Del Webb homes through a combination of canvassing and direct mail.
The survey effort was concentrated in Maricopa, Pinal and Pima Counties, encompassing the greater Phoenix and Tucson areas. We received 410 responses to our questions designed to gauge homeowner satisfaction with various aspects of their homes and experiences dealing with Pulte Homes, Inc.
Seventy-seven percent of respondents were the original owners of their homes. Sixty-three percent indicated that they had lived in their homes for three or fewer years.
Pulte points to its perennial ranking as one of J.D. Power & Associates’ highest ranking homebuilders in terms of customer satisfaction. J.D. Power’s 2007 New Home-Builder Customer Satisfaction Study ranked Pulte’s Del Webb brand second for the Phoenix market. The results of our survey suggest that these awards overstate home owners’ satisfaction with new Pulte homes.
59% Reported Defects
Fifty-nine percent of respondents reported construction defects within their Pulte homes. References to specific defects cited nearly every aspect of home construction: electrical, painting, drywall, ceilings, stucco and other masonry, plumbing, air conditioning, landscaping, drainage and driveways, among other defects.
Kevin and Patty Pattison were living in New Orleans during Hurricane Katrina. The hurricane turned their lives upside down. They packed up their belongings and moved to Sahuarita, Ariz, located roughly 20 miles south of Tucson to start over. They settled in a newly-constructed home built by Pulte.
A Queen Creek, Ariz., homeowner wrote:
“We closed February 2004. Within two weeks of our closing I reported we were having ‘electrical issues.’ We were blowing fuses, light bulbs and having major power surges. Pulte sent their electrician back out and he changed breakers but the problems continued. An electrical outlet in the front bedroom ‘flashed’ and ‘burned’ when plugging in a string of 20 mini Christmas lights. Again the electrician came out and changed the outlet. Major power surges continued. We reported problems for over a year and a half. In December of 2005, we had an electrical fire (wire melted down) in the attic over the kitchen. We were displaced from our home for over a year.” |
It wasn’t long before they realized that their water-related problems were far from over. Both the upper and lower floors of their home flooded. “It took [Pulte] a good 30 days before they even looked at the flooring, and then they ripped out the floors. We went six months without a floor. When they finally got around to fixing it, the linoleum was faulty and it still hasn’t been fixed. It was the same with the leak in the roof.” The Pattisons felt that getting any help from Pulte was near impossible. “I have never been humiliated and treated so badly by any company in my life,” Patty said.
For many homeowners, identifying construction defects in their new homes is just the beginning of their troubles. The survey asked respondents who observed construction defects to rate their satisfaction with Pulte’s response to defects on a 1-5 scale (1=very dissatisfied and 5=very satisfied).
Pulte's Response to Defects
“Every time we had a problem they gave us excuses and then we had to be inconvenienced to get it fixed,” said a respondent.
Sixty percent of homeowners that reported defects ranked Pulte’s response a “3” or worse. Nineteen percent responded that they were “very dissatisfied” with Pulte’s response. One in five (20 percent) were “very satisfied” with Pulte’s response to their defect concerns. Pulte’s average ranking was 3.06.
Another Pulte homeowner wrote, “They don’t fix what the problem is. They come and pretend to fix problems but the same problems exist from Day One.”
A Peoria, Ariz., homeowner described the many issues with her Pulte home in the West Wing Mountain tract: “One of the water lines had been cut. It caused major water damage in the master bathroom that Pulte repaired. The upstairs guest bedroom window is not square so the window doesn’t close flush with frame, leaving a gap at the top allowing hot or cold air to come in—has not been fixed.” With respect to her home’s plumbing, she wrote: “We have really slow draining sinks upstairs and the toilets clog all the time.” “There were so many problems when we first moved in I wrote up a 15 page list of what seemed to me just cheaply done work—people who did not care about doing a quality job. We spent so much on this home—it should look beautiful when you look at it closely, too.”
Real Limits in Pulte’s “Limited Warranty”
“I had to get ugly with the customer relations manager to get anything done. They moved extremely slow to get things repaired. I felt like they were trying to allow the warranty to lapse.” -- A West Wing Mountain tract homeowner
66%
Nearly two out of every three homeowners (66 percent) indicated that they have sought repairs under Pulte’s limited warranty. |
44%
Among these homeowners, 15
percent responded that they were
“very dissatisfied” with Pulte’s
response to their warranty claim.
Forty-four percent of homeowners ranked Pulte’s response a “3” or worse (on our 1-5 scale). The average ranking of Pulte’s response was 3.56. |
29%
Twenty-nine percent responded that their home had a problem they brought to Pulte’s attention which had not been addressed to their satisfaction.
|
25%
One in four homeowners indicated Pulte’s warranty does not provide an adequate level of consumer protection against construction defects. |
“At first, (Pulte) put everything off. (They) promised at walk through that repairs would be made within a couple of days. Then it took months.” -- A Gold Canyon, Ariz., homeowner
A homeowner from the Peralta Trails tract wrote: “This is our fifth brand new residence—by far the WORST. If someone was not here every day, and on the phone all the time complaining and threatening, NOTHING WOULD HAVE BEEN DONE!”
“Most of [Pulte’s] reps listen, but most do not take an action. I’m very disappointed in this purchase. In most cases, I would not buy from Pulte again.” -- A Queen Creek, Ariz., homeowner
More of the Same at Del Webb
Sharon and Scott Godfrey purchased a Del Webb home in Anthem Parkside. This wasn’t the first time they had purchased a new home, but they had never experienced so many headaches.
“We had numerous major problems that we didn’t notice until after we moved in. The shower in one of the bathrooms didn’t work, one of the plumbing pipes in the attic wasn’t secured down, the dishwasher wasn’t wired properly, and the master tub had to be replaced because the wrong one was put in which left a gap between the tub and the counter.”
The Godfreys learned that identifying a defect was just the start of the problem. At times, numerous visits by several different contractors were required to fix basic problems.
“It took over six months to complete the listed items on the walk-through, as well as the items that were discovered after we moved in. There were way too many problems with way too many service calls, which left me at their beck and call for over six months.”
Sharon even covered for neighbors with construction defects who could not afford to miss work during the contractors’ follow up visits.
Lemons vs. Models
“[Pulte] said I would have a well-built home, etc. I have had nothing but cheap, lazy construction issues inside and out from day one and they continue.”
Fourteen percent of respondents indicated that Pulte’s model homes did not accurately portray homes offered for sale.
A Chandler, Ariz., Pulte homeowner from its Lagos Vistosa tract shared defects he had identified: “Drywall, stucco, cracked patio, driveway, leaky pipes, etc. If this was a car I would get a new one under the Lemon Law. I have had nothing but problems. This house was worth $200, not $200,000.”
Another Chandler homeowner at Pulte’s Solera tract commented: “Model homes were highly upgraded (flooring, furnishings, countertops, cabinetry). Actual homes were sold without upgrades and cost to have upgrades was exorbitant.”
Buyer Beware!
Would homeowners purchase another home from Pulte or Del Webb?
“I encouraged my son NOT to buy a Pulte home,”
-- A Gold Canyon, Ariz., homeowner |
21%
Roughly one in five (21 percent) said “No,” they would not buy another Pulte home. Six percent wrote in “maybe” on their form. When asked to rank their overall satisfaction level with their Pulte home experience, 38 percent gave their experience a “3” or worse. Six percent responded that they were “very dissatisfied”— or worse, as one homeowner ranked their experience by writing in “-1.” The average “overall satisfaction” ranking was 3.64.
16%
Sixteen percent of respondents reported that Pulte did not honor agreements made during their sales negotiations.
“I was shown a much larger lot than the lot size I received. In addition, cabinets, countertops and faucet upgrades were not sold honestly.” --A Peoria, Ariz., homeowner
A Phoenix (Sheely Farms tract) homeowner expressed frustration with Pulte’s willingness to sell houses to investors. “Pulte oversold to speculative buyers who, in turn, can’t move into their houses. So, they rent them out to people who do not care.”
“Gift card was revoked, but we were not notified until after closing.” A Queen Creek, Ariz., homeowner |
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