Ten questions to ask your builder before signing a contract
Signing a contract with a builder is arguably one of the most important steps a buyer must take when investing in a new home build. Some homebuyers however, don’t know the sort of questions they should be asking and can find details that are important to them overlooked, and they end up with a new home that does not meet their initial expectations.
We have compiled a handy reference list that will help you make your final decision, so you know you well-informed, prior to signing your building contract.
Here’s our list of the top ten questions to ask your builder:
1. Are you registered and insured?
The vast majority of builders are registered and insured, but it’s still the most important question to ask as working with a registered and insured builder means you’re protected against a long list of unforeseeable risks.
2. Do you have some examples of the brands and suppliers you use throughout your homes?
Knowing the specific brand names and products that go into your new home will provide you with an insight into the quality of the build materials your builders use. It can also give you confidence that reputable and reliable suppliers are being utilised by your builder.
3. Are your contracts fixed price or cost plus?
Investors need to know the cost of a project in advance, so fixed price contracts are generally preferable. Cost plus contracts can lead to cost and timing blowouts which may negate the financial assumptions at the time of investment.
4. How long is the warranty period and what’s covered?
Longer warranty periods are compelling signs of confidence from builders which provide reassurance to investors. Whilst all builders are required to provide a three-month general warranty and a six-year structural warranty, high quality builders tend to offer a twelve-month general warranty and a longer structural warranty. Longer is always better when it comes to warranties.
5. What’s included in my contract and what’s excluded?
Many investors have been wrong-footed by what’s excluded from their building contracts when they wrongly assumed all essential items were included. However, that’s not always the case. It’s important to read the inclusions and exclusions carefully.
6. How will you communicate with me throughout the build?
High quality builders will keep their clients regularly updated on building progress and will have a process to ensure that happens.
7. Please explain your quality control process?
Reputable builders employ experienced site managers, many of whom are registered builders themselves, to ensure the build quality is maintained throughout the project.
8. Is your business financially stable?
We’ve all heard horror stories in recent months of builders who’ve gone bankrupt during the build process leaving their clients’ projects in disarray. Never has it been more important to ask your builder about their financial stability.
9. Can I make changes or upgrades after I sign the contract?
Most builders will allow their clients to make changes up until the construction stage. It’s worth reading the fair variations contract for a picture of what any variations will cost if you decide to go down that path.
10. Can you provide me with a total cost of construction quote which will allow me to sort out my financing?
Most lenders require a detailed breakdown of the construction costs, so working with a builder who can provide this is vital.
As North Homes General Manager Operations, Sarah Verheyen explains, “Asking the right questions of your builder could save you tens of thousands of dollars and many months of building time when you could otherwise have generated rent. We advise all our clients to ask these questions whenever they’re considering entering a building contract. It’s a simple but effective way of comparing builders and making the right decision for you.”
