How to Hire a Builder

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Hire a Builder
Hire a Builder

Find a custom builder to build a one-of-a-kind dream house on either your land or the builder's. Specializing in single-family, high-end homes, custom builders generally build 25 homes (or fewer) a year.

Get background on licensing and other specifics. Get referrals from friends and neighbors who are satisfied with their builder's work. Calling your town engineers for recommendations is also a smart move, since they have to approve any additions or new homes.

Retain an architect whether you're drawing up plans for new home construction or using an existing set of blueprints. Make sure builders you interview are capable of handling the type of construction you're looking for.

Get at least two but preferably three competitive bids for every job. Compare the bids to make certain they cover the same scope of work, use the same quality of materials, provide the same warranties, and have the same completion date.

Ask if the builder has done any projects similar to yours. If so, do your best to check them out as that will give you a first-hand view of a comparable project. Call the home owners and ask how the work went and if they have any positive or negative comments about the builder.

Get the builder's license information. Ask how long they've been in business and how large their staff is. Finally, find out all you can about their level of insurance and whether their workers are bonded.

Check out the builder's record with local home building organizations, contractor associations or your state's licensing board. Contact your local Better Business Bureau to learn if any complaints have been lodged against the builder (see Resources).

Get all guarantees and warranties in writing. It's essential to have an attorney draw up a contract or review any the builder supplies. The contract should be as detailed as possible, specifying materials used, brands, colors and more.

Make certain your contract specifies a payment schedule and finance charges, if they apply. It should include a start and completion date, set penalties for any delays as well as specify how any cost overruns will be handled.

Hold a percentage of the purchase price in escrow until any disputes have been resolved. Most construction contracts include a clause that states how much will be put aside until you're fully satisfied, but if not, add it to cover the value of whatever work has not yet been resolved. This can be enough incentive for the builder to resolve any problems quickly and painlessly.

Tips & Warnings

  • Production builders specialize in higher volume projects.
  • If you decide to build a home with a builder and negotiate the deal yourself without a real estate agent, be sure to ask for a credit of 3 percent to cover the commission the builder would have had to pay an agent. The builder probably won't offer it, but you're entitled to it.
  • If the interest rate the builder offers for a series of payments is too high on a remodeling project, consider getting a home equity loan. The interest rate will likely be a good deal less expensive than builder financing.
  • Any changes you decide to make to your plans along the way need to be documented in order to ensure your contractor takes care of them, typically called a change order. Whenever you make a decision, be sure either you or your contractor puts it in writing and signs it. Oral agreements to fix something offer no protections or proof that the request was ever made.

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