J.D. Power Rates Home Builders

WASHINGTON —  J.D. Power & Associates, the company famous for rating consumers’ satisfaction with their cars, plans to begin doing the same for new home buyers nationwide, bolstered by the success of a survey it did in Southern California last year.

Some 16,000 Southland residents who had bought new homes in the previous two years from the region’s largest builders were surveyed by mail in August.

From 3,200 responses, James Paules and Don Trotter, both home-building veterans who head Power’s new real estate services division, developed a list of the builders with the most satisfied buyers.

California Pacific Homes in Irvine topped the list, which was released in November. (For the top five Southland builders, see box, Page K3.)

“The success of the Southern California study convinced us to go nationwide,” Paules said.

Surveys have been sent to recent home buyers in Phoenix and Denver. The San Francisco area will be studied soon, Paules said, and after that Chicago, Washington, Baltimore, Dallas, Atlanta and Florida.

“The home-building industry is a perfect focus for our work in industries where consumer satisfaction is a point of differentiation between highly competitive companies,” said the company’s founder and chairman, J.D. Power III.

After the survey results are tabulated, all builders who rate above average with their customers will be listed in ranked order, Trotter said. But only the top builder will be licensed to advertise his No. 1 rating.

Those who are below average will be listed, too, but only in alphabetical order. Even at that, however, future home buyers will be able to use the ratings to help them choose a quality builder.

“Our surveys are a process-improvement tool,” Paules said. “The only way the process gets better is if consumers know who the offenders are. So in that regard, we will be the ‘voice’ of the new home buyer.”

Builders will also be able to use the information gathered by the company as a “diagnostic tool” to improve their performances.

“Satisfaction is a key differentiator,” Paules said. “It has an enormous impact on the bottom line. Builders want the public to associate their names with superior satisfaction.”

Because J.D. Power is a well-known name, the company expects to have little problem getting people to spend the 20 to 30 minutes it takes to fill out the four-page survey.

“Our name recognition gets us past the trash can,” said Paules, noting that 20% of the packages sent to Phoenix buyers were completed and returned within the first week.

The questionnaire asks buyers to evaluate everything from the physical design of their homes to their builder’s sales and mortgage staffs.

“From A to Z, top to bottom, we want to let consumers tell us what’s important to them,” Paules said.

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In the company’s first survey, for example, buyers in the five-county Southern California region said that, after the physical features of their homes, the one thing that contributed most to their satisfaction level was customer service.

Paules says he was surprised that customer service had such a “huge influence.” How builders handle problems was even more important to the 3,200 respondents than price / value and design elements.

The message here is clear:

If you want to be happy with your new house, you must pay much greater attention to your prospective builders’ ability to follow through, and home builders need to do the same.

“How well a builder fixes things and how many times he had to come back to do it is a huge driver of customer satisfaction,” Paules said. “The ability to solve problems quickly and keep buyers informed during the process is key.”

The Southland study found that only a third of the problems reported by buyers were taken care of on the builder’s first visit.

It took two visits to correct 23% of the problems, and three or more to repair 22% of the cases. But 24%--”a significant number,” said Paules--were never resolved.

A big mistake many builders make is that when the phone stops ringing, they assume the problem has gone away. But just the opposite is true: As unsatisfied, neglected customers stew, they tend to magnify their difficulties.

As a result, less than one in 10 of the purchasers sampled in Southern California called their buying experiences “truly outstanding,” and just 29% rated them excellent. The rest said theirs were either “merely good” (40%), “just OK” (17%) or “poor” (8%).

And, based on a question asking previous buyers if they would recommend their builder to others, the Power official says that “being good in the home-building business isn’t good enough.”

While more than three out of four buyers who rated their experience outstanding or excellent said they would endorse their builders, only one in five who said theirs wasn’t any better than good would recommend their builders.

Said Paules: “It does make a difference who your builder is.”

Distributed by United Feature Syndicate.

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The Whiners

So, who do you think complains the most about their house--first-time buyers or move-ups?

Do you buy the love-is-blind idea and think that excited first-time buyers might complain less than those who have gone through the process several times?

Just the opposite is true:

“New buyers believe the zero-defect spiel,” said James Paules of J.D. Power & Associates. “But the expectations are not nearly as high for those who have done this before.”

They’re the Tops

Here are the Southland home builders with the highest customer satisfaction rankings:

1. California Pacific Homes

2. Lewis Homes

3. Centex; Standard Pacific (tied)

4. J.M. Peters

5. Richmond American