Choosing a custom home builder can be daunting. In Texas, there is no licensing or ‘watchdog agency’ to which consumers can turn if building the home of their dreams turns into a nightmare. This is how the consumer can end up with a situation similar to what Sandra Bullock experienced in Austin in 2004 (www.people.com). Unlike your attorney or even your barber in Texas, there is no agency to keep a home builder from bad behavior. Just like this recent news story about a very well-known Austin home builder who left clients with shattered dreams, all too often stories like this emerge. Even more frustrating than the original incident, a builder can just rename his company and come back again under a new name. There is no one watching, and therefore, nothing to keep it from happening over and over again. So, how can one determine how to choose a custom home builder?
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. Since it’s caveat emptor or ‘buyer beware’, it is crucial to adequately research the company you are considering hiring to build your home. Someone recently asked, “After two and a half decades of building homes in Austin, if you were looking for a builder, what questions would you ask them?” These are some of the questions we would definitely ask:
- How long have you been in business under your current business name? (You can then verify this answer in the Texas Name Filing Database, which is public information.)
- Have you ever had a court judgment against you, personally, or your company?
- Have you or any company you were partner in, been sued?
- Have you ever declared bankruptcy?
- What is your educational background and what training have you had in the industry?
- Do you own any spec homes or owe money on lots or land? If so, how many, how long have they been sitting, and what is their status? Followup question: How many specs versus custom homes do you build?
If these questions seem invasive, just remember – this is not just a business transaction you are making. It is much, much more. This is the company which will be building one of your most-valued investments, the place which will house the people who matter most to you. The individuals building your home should be dedicated and passionate about their craft and have spent a lifetime learning and improving it. A likable personality is not an adequate benchmark. Knowing that your builder has the financial strength and a sound business means that your builder will be there throughout the project and for many years afterward.
Unfortunately, many builders are relatively new at running a business, even if they have experience building a home. As such, they have either closed their doors or restructured their businesses because of heavy debt. Just as in any other industry, a good builder will manage his/her business affairs properly and stay in business for many years. This will ensure the company is invested in being around to take care of your home for the next 10 years (which is the Texas statute for structural warranty). What you don’t want is what happened in the recent news story, referenced earlier, where the builder was using cash from new projects to pay for unpaid expenses from other projects. Eventually, that will catch up to any business and cause it to fail.
More Steps to Help You Choose a Custom Home Builder
Here are some additional steps you can take to learn everything there is to know about your builder.
- See if the company ranks in the area in terms of a top 10 list, like a local Business Journal. In Austin, it’s called the Austin Business Journal.
- Check out the Better Business Bureau rankings.
- After you narrow it down, call the local municipality and ask for the building inspection department. Ask their opinion about the one or two builders that you are considering. If it is a small municipality, they will know most of the builders in the area and will have inspected their projects.
- Call a few local vendors (a lumber supplier, for instance) and ask if the builder’s accounts are in good standing. This information will give you one more piece of the puzzle. Some builder’s credit is so bad that they can’t get the materials they need to build homes without getting enough cash together or using credit cards.
- 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. You want to know if the company changed names recently and other important data that might tell the whole story.
In the end, doing your homework can save you huge headaches. When people tell us about their nightmare experiences with past builders, they often say, “I just can’t believe it! He was such a nice guy and seemed so knowledgeable.” Unfortunately, a winsome personality can only take you so far. Following these time-tested techniques should help you choose a custom home builder who builds you a great home and takes care of your home for many years to come.
