Building a home is one of the most important considerations you make in your life. Chances are it is also one of the largest investments you will make. Before you jump in headfirst, you should understand what you are getting yourself into because choosing a builder that is not right for your home construction can lead to a financial nightmare and plenty of disappointment down the road. Aside from the obvious need for research to ensure that you are making the right decision, there are many factors that you should consider before making your decision.
Start with your Desired Home Type
Are you a first-time homebuyer or is this a subsequent home for you? That is a perfect place to start. If you are looking to build a luxury home with many customized features, you do not want a builder that specializes in first-time homes or tract homes – you want a builder that is used to meeting the unique needs of the buyer. This will help you narrow down your choices from the available builders in the area as each builder has a niche. If you find a builder that does build both first-time homes and luxury homes, you should beware as he has not quite found his niche and is probably not considered an expert in either type of home, resulting in a less than desired outcome in the end.
Strive for Experienced Builders
Everyone needs to start somewhere, but do you really want to risk using a brand new builder on your custom home? Chances are you would rather use someone that has been around the block, so to speak. Don’t just ask the builders about their experience though; ask for referrals and talk to those referrals yourself. You want tangible evidence of what the builder can produce so that you can see if it aligns with what you desire in your home. You might find, no matter how much you like the way the builder talks, that his work is not up to your standards or that he just has a different viewpoint than you. That is okay, but it is better to find this out up front rather than down the road when he is building your home! While you are talking to those referrals about the work done on their home, ask their direct opinion about the builder. Sometimes there is more than meets the eye when it comes to builders – you need to know their ability to work with you; to accept changes; and to give opinions when you ask for it. These answers can only come from people that have worked with the builder before.
Only Work with Builders with Credentials
Not every area of the country requires builders to have a license, but insurance is a must no matter where you live. Do your research and find out if your area does require builders to have a license and ask for proof of it when you interview them. In addition, find out the type of insurance that they carry. You do not want to be held liable for any damages or injuries that may occur, which would be the case if there is not adequate insurance in place. Ask about liability and workmen’s compensation insurance to ensure that you are protected should anything occur.
Choosing a Builder: Guarantee of Work Should be Required
The builder you choose should stand behind his work and be proud of it. This is usually done with a guarantee of work – should something go wrong in the near future, the builder should be available to fix/change whatever the problem may be. If you find that the builder is hesitant to provide any type of guarantee, it means that he is not sure of the work that he offers and does not want to be on the hook for many changes in the future. This should be a red flag and a reason for you to move onto another builder. Builders that stand behind their name are more likely to provide quality work and admit mistakes when they occur.
Warranties are Necessary
Everything that fills your new home should be brand new and working just fine, but we all know that things break when we least expect it, even brand new things. This is why a warranty should be in place on the structural aspects of the home. If the roof were to leak or the foundation crack within the first few years, you know you are covered and will not have to fork out a large amount of cash soon after building your home. The warranty is there to protect you and should be there for the duration of 10 years for most builders.
Choosing a Builder: Discuss how Sub Contractors are Handled
A major issue with new home construction is the liability of the sub-contractors. It is great to have these workers available to help you build your home, but you need to know how they are paid. Ask your builder upfront how they handle subcontractors to ensure that they will be paid upon completion of the work. If the subcontractor is not paid, he may put a mechanic’s lien on your new home, which will prevent you from closing the permanent loan on your new home, which could mean that you would be left without a place to live and with a large construction loan to pay in full. Careful consideration about which subcontractors are used and how they are used is essential to the process.
It can be very exciting to get going when you are choosing a builder for your new construction, but you must proceed with caution. Acting too fast can leave you with a lackluster builder that is all talk but has nothing to back it up. If you want to build a quality home that has the guarantee of the builder’s service behind it, do your due diligence and interview builders by asking the right questions. In the end, you will be happy that you did!
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.