by Jenny Clark
Your builder will be the most important person helping to make your dream home a reality. This is a relationship that will last for months (if not longer), so it's crucially important to find the right fit. But where should you start?
I spoke with two people who were kind enough to share their time and insights: Echo Jones, 31, Sales & Marketing Assistant at Donald A. Gardner Architects, Inc., who (together with her husband) is in the process of building a new home and her home builder Todd Usher, who is also president of Addison Homes (addison-homes.com), a home building company located in Greenville, South Carolina.
Here's what I learned.
1: When should you get a home builder involved?
"I will always say to folks--the earlier you can get a builder involved, the better,” says Usher.
Jones explains that she and her husband started talking to home builders after researching blueprints for houses and plots of land, but before making any major purchases. This is a smart strategy to follow, as it will allow you to assemble your thoughts on the project (i.e. what you want/what you don't want from a plan/lot) while still affording you the freedom to embrace new ideas and concerns that potential builders could propose during the interview process.
2: How should you compile a list of potential home builders?
For Jones, who happens to work for Donald A. Gardner Architects, Inc., a highly respected company that designs house plans, getting a short list of potential home builders was as easy as asking colleagues for recommendations.
Unfortunately, for the average person who wants to build a home, it's not always that easy. But there are resources you can utilize to make the process easier. The following 6 came up during my conversation with Usher:
The Better Business Bureau (BBB) – The BBB will allow you to search for a specific company (e.g. Addison Homes) or something broader, like “home builders,” in your area. It will then show you what the company’s BBB rating is. Furthermore, if the company has reviews—read them. If the company has complaints—read them too. One or two complaints shouldn’t be an immediate red flag, assuming the company dealt with them appropriately, says Usher.
The Department of Energy (DOE) – Usher notes that different home builders build to different standards—some simply meet the minimum requirements set forth by the building code, while others take their work to a more advanced level. “Probably one of the most stringent [building] standards in the country, today, is the Department of Energy’s Zero Energy Ready Home program,” says Usher. In fact, on the DOE's website, Usher continues, you can search by state for home builders that build to this standard; learn how many homes a particular builder has built to this standard; and, sometimes, even see pictures of a builder's completed projects. The current, direct link for this page is as follows (just copy and paste it into your browser): http://www5.eere.energy.gov/buildings/residential/locator
The National Association of Home Builders (NAHB) – search their directory to see which home builders are based in your area and what designations they have. Obviously, you’ll need to research what the designations mean if you don’t already know.
Your local or state Home Builders’ Association (HBA) – run a web search and find out what your local and/or state HBA is. Then, determine which local builders are members of it and what (if any) local or state certifications they have earned. If this information is not listed on the HBA’s site, contact them. In fact, you may want to contact them anyway, as the HBA could, possibly, be able to recommend one or two builders who they know to be especially qualified for the particular project you’re about to undertake.
Your State Licensing Board – Most states require licensing, says Usher. Assuming you live in such a state, ask your potential home builder during the interview process what his or her license number is. Then, search it out on your state licensing board’s website. See if the license is in good standing and review any complaints associated with the home builder, as well as what the status of those complaints is, says Usher.
A reputable third party customer satisfaction site – “Most professional builders are going to have…an automated customer satisfaction survey program that they participate in--where you can go to a third party, like Guild Quality or Avid Ratings, and see what past clients have said about them,” explains Usher.
3: Which questions should you ask potential home builders?
Once you have a list of potential home builders, you’re going to want to interview them. Below is a list of questions Usher and I came up with. While the list is by no means complete, as every person who is about to build a home will likely have unique things they are curious/concerned about, it should help you get started.
How long has the home builder been in business?
How many homes has the builder built?
Has the home builder built many (or, at least, a couple) homes in your area? Note that the builder needs to be familiar with which materials, foundation, etc., are best suited for your area, as well as which rules and regulations must be adhered to, says Usher.
How many homes has the builder built that are similar to the one you’re planning to build? If Builder X, for instance, has only ever worked with small Farmhouse Home Plans, and you have your heart set on a huge, 3 story ultra Contemporary-Modern House Plans, this could spell trouble.
What are the home builder’s credentials? Are they a member of their local or state Home Builders’ Association (HBA)? Do they have local, state, or national certifications? And how do I verify these credentials? Ultimately, you’re trying to determine if the builder is serious about being in business long-term, qualified for the project, and “up to snuff on the latest and greatest in the industry,” says Usher. Usher notes that if the home builder is not part of his or her local HBA (a resource that’s often used by home builders to refine their trade), that could be a sign the builder isn’t serious about being in business long-term. Likewise, if the builder hasn’t pursued any kind of continuing education, this could be a sign that the builder is stuck in their ways and may not be as open-minded as they should be when it comes to constructing the home you wish to build, says Usher.
How do I verify the home builder’s credentials? This can be daunting, admits Usher, as no one site will likely be able to verify all of a home builder's credentials. However, the local or state HBA should be able to verify local and state certifications, respectively, says Usher. Likewise, continues Usher, the National Association of Home Builders (NAHB) should be able to verify certifications associated with the national level.
Following up on the previous question, what is the home builder’s license number (assuming your state requires licensing)? Ask for this so you can search out the license number on your state licensing board’s website and review its status as well as the status of any associated complaints, says Usher.
Does the home builder have an office that you can visit? If the home builder does all of their business out of a truck, this could be yet another sign that the builder is not serious about being in business long-term, warns Usher.
What kind of tools/software does the home builder use to help you visualize the completed home? Usher explains that Addison Homes uses 3D software, which has the ability to add furniture (based on dimensions supplied by the client) to the digital 3D rendering, so the client can better understand what the space is really going to look and feel like once all is said and done.
Does the home builder offer an efficient communication system? If a question comes up, who can you contact to get an answer? If a home builder offers only his or her cell number, this could, potentially, be a problem, notes Usher, especially if the question is time-sensitive and the builder is not available to answer the phone. Usher explains that Addison Homes offers an online portal through which clients can submit questions which can then be seen by every member of Usher’s team.
What is the home builder’s process for planning/building the house? In other words, does the home builder have a thoughtful plan for getting the project done? Are important steps and deadlines clearly defined? For instance, when are material selections going to be made? Before construction starts or as construction is underway?
What kind of contract does the home builder offer—a fixed price or cost plus agreement (or something else)? Usher uses and recommends a fixed price agreement—where a fixed price for building the home is presented to the client upfront. An alternative to this, explains Usher, would be a cost plus agreement, where the home builder is paid for his/her costs, plus a percentage of the costs. (In Usher’s opinion, a cost plus agreement doesn’t give the home builder an incentive to save money, as the more the client spends, the higher the builder’s percentage will be.) That said, Usher also notes that fixed price agreements require the client to make as many decisions as possible (on materials, etc) prior to the start of construction. Therefore, if it's vital that you break ground right away, a fixed price agreement may not be conducive to your situation. Ultimately, you need to ask potential builders lots of questions about their process and carefully review their references. Since there are multiple arguments for and against both types of agreements, make sure the builder proves to you that a) their agreement has worked for clients in the past and b) their agreement is the best option for you.
How long have the home builder’s subcontractors worked for them? The answer you’re looking for here is: We’ve had the same subs for years, explains Usher. Why? Because having very little subcontractor turnover says to Usher that the company is stable. Furthermore, if you’re working with the same group of people over and over again, that usually means more shorthand and less hand-holding, says Usher. Example: the builder can simply tell the subcontractor: “Do what we did on the last house,” as opposed to, “Okay, I need you to follow steps 1, 2, 3, and 4 – then call me to check it—then complete steps 5, 6, 7, and 8—then let me check it again.”
Does the home builder have any concerns about the home plan you’re thinking about buying? Jones notes that she obtained a 1 copy study set (a lower-priced option that is intended for review purposes only) of the house plan she was thinking about buying and discussed it with potential builders during the interview process. Note: Dream Home Source offers a 90% credit on 1 copy study sets, assuming you choose to upgrade the 1 copy to a full set of plans within 90 days. Example: Let's say Plan X offers a 1 copy study set for $1,000 and a PDF for $1,100. If you buy the 1 copy now and then the PDF (for the same plan) within 90 days, the total you'll end up paying (minus tax, and assuming you don't buy anything else) will be: $1,200 (10% of the 1 copy price plus the cost of the PDF). If the plan you like does not offer a 1 copy study set, try showing potential builders the design on DreamHomeSource.com and see what they have to say.
What type of home plan set does the builder recommend buying? Different home plans offer different types of plan sets, and some plan sets are better suited, or, sometimes required, based on what you’re planning to do.
Does the home builder have any concerns about the plot of land you’re thinking about buying?
Is the home builder willing to visit the plot of land you’re thinking about buying in person to try to anticipate as many potential problems as possible? Before officially hiring Addison Homes, Jones explains that she asked this of them. Usher says he was happy to do it. In fact, if a home builder is not willing to do this during the interview process, this could be a red flag that the builder is simply too busy or, worse, doesn’t care enough about the project, warns Usher.
Ask for pictures of past projects, ask for references (and verify them!), and ask to be taken (in-person) to one of the builder’s completed homes—preferably, one that is similar to the project you’re about to undertake. This way you can see a finished product and discuss what the building experience was like with the homeowner in person. Ask the homeowner if they feel the agreement (fixed price, cost plus, etc) worked for them, or if they feel they ended up paying more than they should have. Usher remarks, frankly, that if a home builder doesn’t have a past client that he or she is willing to introduce you to...that’s probably a sign you need to move on to the next candidate.
Once the contract is signed, how long before construction starts? Usher says, in his experience, this usually depends on the client's financing. For example, construction will usually start 3-4 weeks after the contract is signed if a client is paying Addison Homes in cash, says Usher. On the other hand, continues Usher, if a client must work to get a loan approved by a bank, 6-8 weeks is typically a closer estimate.
How long does the home builder estimate the project will take? Usher explains that homes his company builds generally take between 4 and 8 months to complete, but if the project is huge and fancy, it could take upwards of a year.
And finally... shall we all say it together? What is the home building project going to cost? Be sure to talk through your specific ideas and desires with each builder you interview, says Usher. For example: discuss what kind of appliances you’re looking to install, what size kitchen cabinets you’re envisioning, what kind of materials you desire (flooring, counter tops, etc)—as much information you can give the builder, the better. Otherwise, warns Usher, you probably won’t get comparable bids. For example, Builder X might supply a bid of $500,000, while Builder Y might supply a bid of $600,000. Why? Because, even if you’re working with a very detailed home plan, if you don’t thoughtfully talk through what you’re imagining, different builders will likely make different assumptions, explains Usher.
Note: while Jones explains that Usher was able to supply her with a complete bid (cost estimate) after simply reviewing her 1 copy study set, that’s not always the case. Depending on the builder and the situation, a complete bid may not be possible without first reviewing a full set of plans (e.g. a PDF). Be sure to ask potential builders what they require.
4: After you’ve absorbed all this information, how do you make a final decision on which home builder to hire?
Your decision should be based on the totality of the information you have collected—not a single element. For example, if your state licensing board says that Builder X’s license is in good standing and there are no complaints—great. But, you’re still going to want to look at other resources as well, like the BBB, to confirm they have a good reputation. Likewise, if the home builder answers all of your questions to your satisfaction and presents you with a reasonable bid—terrific. But, you’re still going to want to verify their references, which, hopefully, includes an in-person visit to a past project/meet and greet with a previous client.
Both Jones and Usher make a point of noting that the bid the home builder provides (i.e. the amount of money the builder says it will take to build the house) should not necessarily sway your judgement one way or the other. Now, obviously, if your budget is, say, $400,000, and Builder X comes back with a quote of $800,000, that's a serious problem. However, if Builder X supplies a quote of, say, $405,000, while Builder Y explains it will only cost $400,000, you shouldn’t select the lowest bid simply because it is the lowest bid. You must consider everything you’ve learned up until this point, including the bid, and make a decision based on the totality of the information at hand.
Usher's advice is simple: choose the builder you feel most comfortable with.