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Most Commonly Asked Question Series- Question #2

Question #2 – What are the Biggest Mistakes Buyers Make When Selecting a Home Builder?

 

Lingenfelter Custom Homes – In Business to Build Dreams

Written by Adam Lingenfelter

 

  1. They focus too much on finish and not enough focus is given to the quality of the structure itself – Contrary to what you may hear from many real estate agents, the most important part of the structure is what you don’t see. What is the foundation like? How is the house framed and what kind of material and size of material did the builder use? How was the house weatherproofed? What type of insulation (and how much) did the builder use? What type of HVAC units did the builder use? Are those units single stage, two stage, variable speed units? Do they have high efficiency units? How energy efficient are the windows? What kind of framing hardware is in the structure?  How will the house hold up in a storm?  These items are very expensive to fix later so it’s important that the structure itself is built properly. But it is much easier to upgrade finishes later if you choose to do so.

 

  1. They get pricing from too many builders – It is important to talk to 2 or 3 builders because this is a big decision and you need to make sure you hire the right one. However, I have seen many times when buyers talk to too many builders and in doing so they don’t spend enough time talking to any of the builders.  It will likely take several conversations with each builder before you truly find out who you want to work with.

 

  1. They look for the best deal and end up hiring the “cheapest” builder – There are so many ways a builder can develop estimates that it makes it very difficult for someone with limited experience to make the best decision on which builder to use. Buyers often go with the builder with the lowest bottom line but end up paying more in the long run because the builder left out key components or didn’t include things the buyer really wanted done.  It is always important to look at pricing but it’s even more important to choose the builder who you feel is the most trustworthy. Sadly, many builders have found ways to deceive their clients in the way they create their budgets. Look for a builder that is transparent in the way they price their projects and transparent with their change order process.

 

  1. They don’t ask for references or they don’t call the references – A good way to know how a builder is to work with is to talk to both previous and current clients. Current clients are almost always better to talk to because the build process is fresh in their minds and you will likely hear honest feedback from them (both good and bad). Homes are built by humans so no build process is perfect because humans make mistakes sometimes.  It’s how a builder deals with those mistakes that sets them apart from the rest. The best builders pursue excellence in their home builds and their clients will recognize that but there will still be some things that the best clients are frustrated with during the build even if their home is being built by one of the very best builders in a particular market.

 

  1. They don’t look at current projects that are in various stages of construction – It’s important to see what the builder’s homes look like in framing, rough-in stages, drywall, finish trim etc. It’s one thing to have a builder tell you what they do but its much better to see it in person. Not all builders do what they say they do so its important to verify it.

 

  1. They give the builder too large of a down payment – Home builders need a certain amount down to cover soft costs and payroll at the early stages of a project because they need enough to operate until they can take the first construction draws. However, a home builder does not typically need more than 30-50k (possibly a little more on projects over 1 million). If a builder asks for 100k-200k (or more), they are likely having cash flow issues and that should be a huge red flag. Fairly recently, there was a home builder in our area that was taking deposits over 100k and he eventually filed for bankruptcy. Sadly, many good people lost some or all those deposits.

 

  1. They don’t ask enough detailed questions when interviewing builders