The Problem With Punch Lists

Every builder and every home buyer is familiar with the catch-all phrase “punch list.” Prospects should be told during the sales process that no matter what builder you hire there will be a punch list. A client’s goal should be to select a builder that has an established reputation for knocking it out in a timely fashion.

So what is the problem with punch? Where do I begin? Some clients use it as a means of leverage to avoid making a payment to their builder. Some clients submit written requests that are in fact change-order requests for new work. You may encounter a client that feels for the money they are spending, a punch list should remain open indefinitely. When clients believe their verbal request to complete a new item obliges your company to accept responsibility for that item, it is time to review with the client the written contract that states your policies and procedures for handling punch.

Additionally, give your client a written warranty from your state that details what is covered and what is not. In New Jersey, new home builders are required by law to provide a warranty policy backed by an insurance company that was approved by the state legislature. If your state does not require you to provide a written warranty, then consult legal counsel and write your own. The positive point of the written state warranty is that you will have a reference point from an outside source for saying no to a request.

A construction agreement should include a specific section devoted to the punch list in order to discuss the policy and procedures of punch. This should include the submitted timing by the client of their punch lists: 1) Production; 2) Preclosing; 3) Final; 4) 60-day post; 5) One-year post.

Also, include this in big bold letters within the agreement: No punch items are to be accepted unless put in writing and sent to the main office.

Use the production punch list to track a client’s concerns during construction. Schedule a preclosing walk-through four weeks before your targeted delivery date. This walk-through should ease any client concerns to let them know that you are aware and focused on addressing minor repairs, and adjustments prior to completion of the home.

One day before delivery, at the preclosing walk-through, arrive with a typed final punch list showing all the items previously mutually agreed on and demonstrate to your client that your team has completed hopefully most, if not all, of the preclosing list. Get a sign-off on all completed items and add any new items to the final punch list, which you should commit to completing within 30 days and not more than 45 days after delivering the new home. Tell your client to put in writing any minor repairs that do not impact mechanical systems for the 60-day list.

In many instances, saying no to a client’s punch request, especially one who is spending millions of dollars, is extremely difficult and may not be the best way to promote customer satisfaction and referrals. At some point, however, you need to be able to tell your client that you have met and exceeded your responsibility of delivering a quality custom product.

Focus on the reality that although you may have completed more than 10,000 components to create their dream home, the items the client will remember most are the ones you did not complete. Knocking out punch may be one of the most difficult phases of the home building business, but it is also the area that will distinguish your company from the others. This will be very important in your reputation for gaining new clients.