Questions to ask your builder before you sign a contract

Building a new home is a huge emotional and financial investment. There are many suppliers of trades and services that conduct themselves unethically and unfairly. Unfortunately some builders are not exempt from behaving in this manner.

Below are several key questions that may help you in your decision as to who you will trust to undertake such a huge investment – that being the construction of your new home.

Are you licenced and do you have Indemnity Insurance?

All builders conducting work over a certain amount must be licenced. The amount varies slightly from state to state, however in general it is around the $10,000 mark, so a new home will definitely fall within the need for a builder to be licenced.

Licenced builders must also carry indemnity insurance which covers you if work has not been completed or faulty work has not been rectified, or the builder dies, disappears or is declared bankrupt.

Can I have the names and numbers of 3 people you have built for?

Always do reference checks. Just like when employers do reference checks on potential new employees, the construction of potentially your biggest ever investment should not be left to just what the ‘candidate’ is saying.

Asking simple open ended questions can help put your mind at ease. Things such as: When the supervisor made contact with you, what sort of things did they keep you updated with?

How do you handle it if costs above your quote arise during the project?

Ask for examples of how they have handled these situations in the past.

How much will you charge me over and above the actual costs for any changes we make?

This will help highlight the cost to you for any changes. Some builders are fair and reasonable, however some take advantage. Be very careful!

I have heard a story of someone who was charged $8000 to change their brick colour soon after signing a contract with a major Australian project home builder – yet the bricks were from the same range, so hence the same cost, to the builder – but the client was told they were an ‘upgrade’. I am quite certain that is by no means fair and reasonable behaviour.

Have you included all the costs associated with the concrete slab in your price, and if not why not?

The concrete slab is critical to the strength and longevity of your home. Always ensure that what the salesperson tells you is true and correct. Your total price should include the slab – not a TBA – as this can add thousands to the contract price.

Unfortunately some builders are in the practice of ‘estimating’ the design requirements of your slab when pricing, by categorising it as needing to be of the minimum requirement. Then after contracts are signed you find out that your concrete is going to cost you thousands more than you expected – which is not a very nice feeling. This is the reason that most ethical builders always have engineering and design details of your slab requirements before giving you a price to build your home. Whilst the cost of this is normally borne by you prior to signing a contract with a builder – it alleviates very expensive surprises down the track.

Do you include any “PC Items”, or “Allowance for….” or “Estimate only” or “No allowance” or “TBA” in your contracts?

Unexpected and costly surprises when building is one of the most complained about things with consumer affair bodies. You should know exactly what the cost of your house will be. Signing a contract you can’t get out of before you know the real cost can leave you open to being taken advantage of. Don’t risk it.

Questions to ask yourself

Did the builder seem knowledgeable? Did they seem to understand all aspects of the building process? Do you have a good rapport with them? This is a business that you will be working closely with for several months, so it is important that your personalities do not clash. Do you trust what they are telling you? Are you comfortable with them? Have you checked references?

You can never be too prepared. You are making a large financial commitment, so get as much information as possible from the professionals and take your time comparing the pros and cons of each.

NEVER choose a builder simply because they are the cheapest. Remember – you get what you pay for.

There are of course lots of other questions that you can ask builders that could help you decide. If you would like to know some more, please feel free to call us on 1300 652 062.