Within the custom home industry, there are a wide variety of people who call themselves custom home builders. From the “Chuck in a truck” – essentially a person with a truck and a business card – to those who have years of experience, all have the right to call themselves custom home builders according to Texas law. There is currently no formal governing body over residential construction in Texas. That means, in effect, that there is no licensing in Texas. Said Carole Keeton Strayhorn, “In a homeowner survey conducted by my office, I found that 86 percent of homeowners who responded said their builder failed to fix construction defects in their homes. And that was after going through the mandated State Sponsored Inspection and Dispute Resolution process that verified the defects” (2010). In fact, according to the contractors license organization website,
Only specialty contractors, including HVAC, fire sprinkler systems, plumbing, electricians and well drilling/pump installation specialists, need to be licensed in Texas. Home builders are not licensed in Texas. We find it very interesting that cutting someone’s hair does require a license, but it takes no license for someone to build your $1M+ home.
That means the consumer can easily end up with a situation similar to what Sandra Bullock experienced in 2004. The way to avoid such a potentially disastrous situation is to ask the following key questions of any builder you are interviewing:
- How long have you been in business?
- What company name should I look up, if I were to do a public records search on your company?
- Have you ever declared bankruptcy?
- How many homes have you built?
- What is your formal training in the construction industry?
- Do you have any formal training or long-term experience managing a business?
- Do you own any spec homes or lots that you owe money on? If so, how long have they been sitting and what is their status?
It sounds like overkill, but it is important to know the credentials of the company you will trust with potentially your most-valued investment. That the individuals building your home need to understand all the complex details of building a home goes without saying. And yet, many fall into the trap of trusting a builder simply because they liked them and seemed like they would be nice to work with. Knowing that your builder has financial strength and a sound business plan means that your builder will be there for many years should you need them. Unfortunately, during the downturn, many builders either closed their doors or declared bankruptcy and restructured their businesses because of heavy debt and obligations.
Being well educated and experienced is also an important part of being a good builder because the science of construction is an important part of building it right. Here are some other questions to ask. Taken individually, they will not tell the whole story, but taken all together the answers to these questions may help distinguish the reputable builder from the (to quote Strayhorn) “unethical or inept builders”.
- See if the company ranks in the area in terms of a top 10 list, like a local Business Journal. Top 10 companies should be more established and reputable.
- After you narrow it down, call the local municipality and ask for the building inspection department. If it is a small municipality, they will know most of the builders in the area. Ask their opinion about the one or two that you are considering.
- Call the local Home Builders Association (www.austinhomebuilders.com). They often know the reputable home builders from the “Chuck in a truck”s.
- Do a Public Records Search. Contact an attorney, who has access to judgments against anyone you are considering. Ask them to do a public records search. Unfortunately, most online searches are incomplete and, thus, inaccurate. A true public records search will require a little digging and some time to flesh out the data. It may cost $300 – $400, but think about how much it would cost if you make a mistake!
Note: Judgments against a contractor from more than one vendor or subcontractor in a short time period may indicate that the builder is not working well with others. The reason this is a problem is that word travels, and often trade contractors refuse to work with a builder who won’t pay or work with the trades. Judgments from a or client(s) show an unwillingness to work things out with an individual, but the more serious judgments are those resulting from a fire or flood or other defect in workmanship.
According to an article on eHow.com, “Request a written estimate. Any contractor who does not provide you with a written estimate should be crossed off your list immediately. Get at least three estimates and then compare prices with what is included. Remember the lowest bidder is not always the best.
This may seem like a lot of work, but in the end, doing your homework can save you time and money. Protect your investment! When something goes wrong, people will often say, “But he was so nice! I just can’t believe it!”. A nice person can often sound knowledgeable and friendly, but it takes a reputable company with a long track record to ensure a custom home is well built and can support any of its needs on an ongoing basis.