In 2016, when the Anderson family in Kenosha County, Wisconsin hired a builder to construct their dream home, they never thought they would end up completing the work by themselves. What happened? The contractor abandoned the project halfway over a $1000 dispute in the contract amount.
The builder quoted $109,340.48, but the couple only agreed to pay $108,323.59. However, after they had paid a total of $134,000 to the builder, the company abandoned the project, leaving the family to spend a further $78,000 to hire subcontractors and buy materials to finish the home.
But the most interesting part is the family couldn’t take the builder to court. Why? As it turns out, there is a clause in the contract the homeowners signed – a mediation-arbitration clause – which says they can’t go to court if there is a problem.
Issues like this underscore the importance of doing your due diligence and following the right steps when hiring a builder. According to SCUDO Real Estate & Property Management, many project owners don’t investigate their builders thoroughly because they are too preoccupied with dreaming about the home or worrying about its cost.
But if you just take the time to take the precautionary steps we will list below, you can avoid most of the problems homeowners encounter when they hire building contractors.
What are the questions you should ask a builder you want to hire? Read on to find the answers.
Questions to ask before you hire a builder
1. Can I see proof of your licensing and professional qualifications?
You can get an idea of the builder’s level of competence through their training and possession of a valid license to work in your city or region.
2. How many years have you been in business in this area?
The builder must have several years of experience working in your particular locality. They should be familiar with the weather, regulations, and other peculiarities.
3. Are you fully insured and bonded?
An insured and bonded builder shields you from liability and financial loss. Proof of the builder’s insurance and bonding should come from the issuing companies, not the builder.
4. Do you offer any type of warranty?
A warranty demonstrates the builder’s confidence in their workmanship and it protects you in the event that anything the builder installs in your home fails.
5. Have you built homes that are similar to mine?
You don’t want just any builder but a builder who has experience with homes that match the size, cost, and style of your own project.
6. Can you provide references from past customers?
Asking for references is meaningless unless you actually plan to contact the people and possibly see the homes. This can give you a good idea of what to expect.
7. Can I tour one of your current projects?
This is a great chance to see the builder at work. Visiting the project offers an inside view of how the builder operates and their relationship with workers.
8. What kind of agreements do you have with subcontractors?
Does the contractor have a binding agreement with the best subcontractors that ensures they are always available for the builder’s projects? This is very important.
9. Why is the contract amount so low or so high?
You can only tell if a builder’s bid is high or low when you have bids from other builders to compare with. It’s helpful to compare and get quotations from 3-5 contractors.
10. Can you explain the items in the contract?
How are the various elements in the contract priced? Is the contract comprehensive or are there omissions that make it hard to be certain what the final amount will be?
11. What is the deposit amount you require?
Many builders want some money upfront; if that amount is high that is a bad sign. Ideally, you should not pay for work that has not been done.
12. How long will it take to build my home?
The builder must be willing to commit to a schedule or they might take another job alongside your own and delay your project.
13. How will you ensure the project stays on budget and schedule?
Building projects easily spin out of control; a builder’s ability to keep the project within the agreed-upon limits is critical.
14. Are you willing to sign a legally binding contract?
The terms of the contract must be included in a written document that is signed by both parties. Have your lawyer review it before you sign.
15. Have you ever been sued by a customer?
How does the builder handle disputes? If they have been sued in the past, what was the reason for the lawsuit and how did it turn out?
17. Who will be my contact person?
Who will oversee this project and who can I reach out to with my questions? How often will you give me progress updates and what form will these updates take? Your builder should have someone available to provide updates and answer your questions.
18. What is your full inspection process?
The inspection process covers various aspects of the project; it guarantees the project quality by ensuring that nothing is overlooked. Thorough inspection procedures eliminate opportunities for mistakes.