Choosing the Right Builder

What to Do Before You Hire a Builder

Here are the key takeaways for this article if you’re short on time:

1: Look at some of the builder’s homes currently under construction.
2: Look at some of the builder’s completed homes.
3: Interview the builder (see Top Questions to Ask a Potential Builder)
4: Have the builder provide a list of previous homeowners.
5: Call two or three previous homeowners this builder has worked for and ask them key questions (see Top Questions to Ask Your Builder’s Previous Homeowners).
6: Become comfortable with the contract documents before signing.
7: Decide on your homebuilding budget.

How important is it to choose a good builder? It’s #1 on the list! You will have a lot of decisions to make as you build your custom home— selecting colors and finishes, determining size and layout, and more. But no decision will impact your homebuilding experience more than the all-important decision you’ll make right at the start. You need to choose a great builder! The fact is you can’t do a good deal with a bad person. No matter how hard you work, you can’t make a silk purse out of a sow’s ear. The same is true with your builder.
Here are the three most important qualities to look for in a builder for your custom home:

1. Trust: Building a new home is probably one of the largest investments a person will ever make. If you don’t believe your builder has your best interests in mind, you’re talking to the wrong builder. You want a builder who works on your behalf, not someone who is only looking out for his own interests. When you call your builder, will you get a straight answer? If something goes wrong on your job, do you trust your builder to make it right? Believe me, when you build a custom home, there will always be bumps in the road no matter which builder you select. There isn’t a contract written yet that will cover every possible condition that you may encounter while building your new custom home. Ask yourself: What is your builder’s intent? If his internal compass is pointing north (with intentions to do the right thing, even when it’s difficult), you’re halfway there.

2. Competence: Does your builder have the ability to see and execute your home from start to finish? How long has he been in business? Is he able to walk you through the concept and design stage to produce a home that will reflect your needs, wants, and lifestyle? Does he have the right interior design team to complement your taste and preference? Does he have the right office staff that will politely and professionally respond to your needs and questions? Does he have an on-time, competent construction team to oversee the building of your new custom home? Does your builder have systems and procedures in place that will allow him to execute the building of your home in an excellent way? Does he have a warranty program with someone to oversee it? Does your builder have a reputation and history in the community that speaks well of his business?

3. Fair Price: Does your builder charge a fair price? Most people start by looking at cost first. While price is certainly important, it’s not nearly as critical as trust and competence. That’s why I put this quality last. More on this below How Many Bids Should I get for My New Home?

Bottom Line:

If you know your builder is charging you a fair price for his services, and if you know he is trustworthy and competent, look no further. You have found your builder. Hire him and begin to focus on how to make your dream home a reality.

So now you’ve selected a competent builder. But you may ask, “Do I have to like the guy? If he has a good reputation as a builder, does it really matter if I like him?”
Yes, it matters. Don’t sign a contract with a builder you don’t like, trust, or respect. If you do, you could be headed for trouble.
Why? Because this is a long-term relationship and a long-term relationship with someone you don’t like, trust, or respect can be challenging, frustrating, and more than disappointing. The planning stages of custom building a new home can take anywhere from months to years. Actual construction may range from 16 months to 24 months or longer, depending on the size and scope of your home. Add to that a one year limited warranty time period, as well as the fact that you may need additional information from your builder for many years to come regarding warranty information, vendor and subcontractor contacts, and other nuances.
In this business, it’s not uncommon to lose some contracts to other builders, and it usually boils down to perceived costs. A prospective homeowner may initially think our pricing is higher than our competitor, but most often that’s because we didn’t have the opportunity to thoroughly compare the two proposals.
We like to ask our homeowners why they chose us to build their home. Often the answer is trust. When challenges arise in your project and you call to ask questions, it’s important to know that you’ll get a straight and honest answer.
Do you respect your builder’s values? You don’t have to socialize together, but sometimes people choose a builder they actually dislike. Maybe the husband likes the builder or his price, but his wife doesn’t care for his style, approach, or manners. Ask yourself this question: Is there a reason you’re uncomfortable with this person? If so, why in the world would you trust him to build your single most important investment? If you or your spouse sense that a potential builder operates from a less-than-honest value system, why would you trust him to operate his business with honest values?
During the construction process there will be times when your builder will be making some judgment calls. Many of these will be unknown to you, and that’s just part of the business. When it comes to your home, you’ll want to know that your builder will be making choices as if it’s his own home, as if his own family’s safety depended on the choices he makes. Not just what will pass code inspections. No shortcuts for a quick profit.
Are values important? You bet they are!

Bottom Line:

Don’t sign a contract with someone you don’t like, trust, and respect.

Interview builders first and select your builder based on trust and respect, not necessarily the best bid. Ask them all some of the same questions to create common ground to compare them. I’ve created a list of 20 questions to ask a potential builder. Print the PDF or view the list below.

I met with a prospective client – let’s call him Ross – at a lot where he was considering building a new home. About 25 minutes into the meeting, I noticed he was distracted by a car that had pulled up to the property.
I asked Ross, “Are you expecting someone?” He told me he was meeting with six builders that day and requesting bids from all of them. As I wrapped up the final few minutes of our meeting, Ross asked if I could give him a bid on his new home. The plans weren’t complete; there were a lot of items that needed to be corrected (the specifications, including the finishes, tile, cabinetry, countertops, etc., weren’t even defined). It is reasonable to want pricing and reasons behind the pricing, but there were just too many variables for me to give an accurate answer.
I followed up with a letter to Ross affirming that I thought it was a good idea for him to interview six builders, but from my experience getting six bids was counterproductive. When all the bids came back, there would be no common basis for him to compare what was or was not included in the bids. In other words, he would be comparing apples to oranges to potatoes to carrots to tomatoes, and this would only add to the confusion of an already involved process. I suggested that Ross narrow his scope down to one or two builders that he connected with and felt he could trust, like, and respect, and put focused energy in working through the details of his new home. A few days later at an Asheville builders’ meeting, I ran into Steve, the builder who had arrived after me at Ross’s lot that day. I asked Steve about his meeting with Ross, and he said the project was too crowded for him. Ross had also asked Steve for a bid, and Steve was going to pass.
I’m not advocating you only interview one or two builders, but I am suggesting you narrow your search down to one or two builders. When I know there are many builders competing for the same job (especially if the job doesn’t have a clear, defined focus), I decide to put my limited time and energy where I can be most effective. That’s with people who have narrowed their scope, have a reasonably good idea of what they want, and who value what I value. Then we can put more concentrated effort in to addressing their needs and concerns.
Quality custom-home builders often don’t have to bid their jobs against other builders because from the onset they have made a connection with the homeowner, discussed their fee structure, and demonstrated their competency. As a result, they can give their homeowners focused service. This is important because it takes a tremendous amount of time, energy, and focus to execute the process of homebuilding with excellence.

Ross and his wife ended up choosing the lowest bid for their new home and immediately had to refinish their floors. They had six—count ‘em, six—separate flooring companies at their home in a three-week period providing estimates to sand and refinish their hardwood floors. About a month later, an unusual sound came from their house, loud enough that everyone in the neighborhood heard it. There was an explosion of screaming and yelling that continued for several minutes. A hardwood flooring van was parked out front; can you guess what happened? The couple expected a beautiful, high-quality floor, but what they got was what they paid for. They were not happy.
Ross and his wife had selected their hardwood flooring contractor based strictly on price, but somehow they expected they would receive quality, speed, service, and the best price. Sure, they probably got the lowest price, but with it came a lot of heartache because they expected more and got a lot less.
It’s no different than selecting a builder for your custom home. You need to determine what you value and decide what’s most important: quality, speed, service, or price. Of course, you want all four components, but most often you will need to find a builder who can provide three out of four. That’s reality. Is it reasonable to expect that you’ll get a builder who will give you the lowest price with great quality, great service, and a timely finish? Let’s consider the merits of each:

1. Quality: A good company prides itself on providing a quality product, especially in the custom home market. They encourage prospective homeowners to look closely at the work they’ve done for other homeowners and affirm they would be pleased with the excellent workmanship the company provides. Comfort with quality, luxury with outstanding craftsmanship. Drawings should be done, priced, and approved for important interior features.

1. Speed: An on-time finish is important, but there may be times, especially in a busy market, when a builder misses some deadlines. If that happens, you want your builder to proactively communicate with you and, if possible, find a way to make up the time and get it done quickly. With current labor shortages, finishing on-time is often challenging.

1. Service: A builder with exceptional customer care will provide good communication and attend to the homeowner’s needs before, during, and after their home is completed. Builders work for numerous personalities at a time. Some clients thrive on the process while others find it more challenging.

4. Price: The best companies aren’t usually the cheapest, but consider this: they’re probably not the most expensive either. Great companies deliver good value. An honest builder charges at or below market value for the level of service and quality product they provide. Very seldom is the cheapest price the best choice for a homebuilder. With availability and volatility in today’s market, pricing can be a frequent exercise.

Don’t make the mistake of thinking you can have all four qualities in one builder. A Lexus or a Mercedes is priced differently than a Dodge. If you pay Dodge pricing (like Ross) and still expect a Lexus or Mercedes level of performance, you are setting yourself up for disappointment, conflict, and sometimes even a lawsuit.

Bottom Line:

Know what’s important to you and adjust your expectations. If cost is your most important value, then choose the contract with the lowest price. However, if you value quality, be sure you look for excellent workmanship. You can get the results you want in a quality, custom home; just be sure to select your builder based on what you truly value.

We hear of new scams all the time. You can hardly pick up a newspaper these days without reading about some unscrupulous people devising a new scam to take advantage of unsuspecting people. While this may be true, it doesn’t mean you have to become a victim. Knowing what signs to watch for can help keep you out of trouble. Pay attention to these warning signs:

Too Good To Be True: When a builder gives you a price that sounds too good to be true, be wary. If a builder says yes to all of your questions, walk away. If you ask him if something is included in his price, and he always answers yes, be cautious. It can’t all be included! If it sounds too good to be true, it probably is.

Too Few References: If a builder is only willing to give you one or two references, you should wonder why. Any builder can give you a couple of references, although it may be his brother, cousin, and very best friend. Make sure the references you get are recent and credible.

Rush to Contract: If a builder is trying to get you to rush to sign a contract with him, you should see red flags waving and a caution light going off. Building a custom home is a big decision, and if you’re rushed into signing something, you could be in for some big surprises later.

Check Online Resources: There are online resources available where you can verify some important information on the builder. In some states, you can do online verification of a builder’s credentials and license, verify how long he has been in business, the tax ID number, search for liens, find out if their workers compensation insurance is current or has ever been cancelled. Another good resource is your local Better Business Bureau.

Vague Specifications: Is your builder “open book?” If the specifications are vague (type of material, quality, and finishes for your home), and/or incomplete, ask that they be made specific. Vague specifications leave a lot of room for interpretation and are one way a scammer can argue later. If you sense your builder is being vague or giving you specifications that are incomplete, consider getting a bid from another reputable builder to compare the specifications from each builder. This will help you raise your level of confidence in the builder you choose that he is being honest and forthright about what he is, and what he isn’t, providing in his proposal for your new home.

Insufficient Allowances: One of the most common ways that a builder could present a price that is too good to be true is to knowingly or unknowingly include allowances that are insufficient to complete your home as you expect it. The allowances provided should mean something to you. You should have a good sense as to what your allowances will buy. In researching your allowances, if you find that the level of quality that the allowances provide are consistently less than what you and your builder discussed, be wary.

A little healthy skepticism is a good thing. Respect and trust are earned and you want your builder to earn your respect. If you have any suspicions at all that a builder is trying to scam you, do not sign a contract with him, even if it means you have to start all over again with another builder. When it comes to building your new home, trust is everything.

Bottom Line:

Make sure your builder earns your trust and respect before you sign a contract.

1. Why should I hire you?

2. What is your fee structure?

3. How do your fees compare to other builders’ fees?

4. What are your weaknesses?

5. What makes you different from other builders in this market?

6. What type of warranty do you provide, and what is your philosophy on warranty?

7. What was your worst building experience with a homeowner, and what did you learn from it?

8. How long have you been building?

9. What is your education?

10. How many custom homes have you built?

11. How many homes will you have under construction at the time my home will be built?

12. How do you handle changes?

13. How many Change Orders would you consider average in building a home?

14. Can I meet the person who will be running my job?

15. How often is the superintendent on the job?

16. What work do you do with your own crews, and what work do you subcontract out?

17. Do you have contracts with your subcontractors? Can I see a sample?

18. Can you provide us with a bank reference?

19. Can you provide us with a copy of your insurance certificate?

20. Do you provide Builder’s Risk insurance for your clients?

1. Why did you select this builder?

2. Did your builder demonstrate character and integrity during the time you knew him?

3. Did you feel your builder had your best interests in mind?

4. Did your builder treat you in a respectful, honorable way, and did he communicate clearly with you?

5. What was the worst thing that happened during your building process?

6. What would you do differently if you had to build your home all over again?

7. Did you finalize all selections before you begin construction?

8. Was your home built on time?

9. Did you make any changes?

10. Was your home completed on budget

11. Was there ever a time you felt your builder was being untruthful?

12. Did your builder exceed your expectations?

13. What were your builder’s best qualities

14. What were some of your builder’s limitations and weaknesses?

15. Would you use this builder again? (The most important question of all!)