Presley Homes Offers 5-Year Warranty Plan

Escalating the weaponry in the builders’ battle for home buyers, Presley of Southern California on Wednesday launched a five-year warranty plan covering all of its new houses.

The firm, the largest of the Presley Cos.’ five home-building divisions, said it also will provide all home buyers with a mortgage payment insurance plan--something several other Orange County builders recently began offering.

The five-year warranty, however, appears to be rare.

Bob Albertson Jr., Presley of Southern California president, said he believes his company is the only one in the state to offer such a program.

A program with warranties that ran as long as 10 years was offered in some areas of San Diego County a few years ago, but appears to have died out because of a lack of interest, said Ken Agid, an Irvine-based real estate marketing consultant.

That program was provided to builders through an industry-sponsored insurance plan. The Presley program, however, is sponsored and financed directly by the company.

“The buyer won’t have to call an insurance company somewhere,” Albertson said. “They will call Presley and we’ll take care of it.”

Retroactive to Jan. 1, all home buyers in Presley of Southern California developments will be covered by the warranty for 60 months from the close of escrow. The company builds homes in the $200,000-$300,000 range in Orange, Riverside, San Bernardino, Los Angeles and Ventura counties.

The plan covers defects and workmanship not only for the structures but for most components and appliances, including heating and air-conditioning systems, ovens, even faucets and lights.

Agid said the program “is a fairly aggressive step by a builder, and a fairly timely one. Consumer confidence is a significant issue these days.”

Builders generally copy shamelessly when one firm hits on a well-received marketing program: Presley, for instance, is at least the fourth developer to offer mortgage payment insurance since the William Lyon Co. instituted the first program late last year. Others offering such programs include Barratt American Inc. and Arvida of California, which is providing mortgage insurance for buyers of new homes in its gated community of Coto de Caza.

But Agid said that home warranty plans can be quite costly and suggested that many in the industry will take a hard look at Presley’s experiences before joining in.

“Presley also tried giving away cars awhile ago, and I didn’t see everyone following that example.”

Agid said the one-year new-home warranty programs that are standard in California cost builders as much as $2,000 per home, mainly in administration costs. Most problems with a new home are uncovered during the first six months, he said.

Agid also said he believes that most buyer incentive plans are on the way out as inventories of unsold new homes continue to shrink. “We are heading into a housing shortage” that will last for two or three years, he said. And in a shortage, builders don’t have to give anything away to sell their limited stock.

Albertson, however, said that as far as he is concerned, the five-year warranty program is here to stay.

“Our plan is that this is permanent,” he said. “We believe it is time to provide consumers the assurances they need.”