Choosing A Builder: Common Mistakes To Avoid

Do you plan to build your own home? Perhaps you’re looking to renovate or extend your existing home.

Either way, there are many ways to make the right and wrong decisions when choosing a builder. When choosing a builder, a good place to start is by asking any family and friends that have hired a builder to construct their home or renovate. Chances are you probably would have heard the stories, whether the experience was amazing or a nightmare. Be wary of going through friends of friends because they may not necessarily be builders you can put a lot of faith in. The builder may feel like they’re “doing someone a favour” and because of that, they may place a lower priority on the job and take longer to start work. Should you listen to your architect’s recommendations? Building designers and architects often work with the same trusted contractors they know will do justice to their designs. Their recommendation is usually a great place to start.

Is The Builder Legit?

Licences And Insurance

Whether you’re going through a home builder or designing your own home, or doing renovation works with help from an architect; it’s important that you choose a builder that is licensed, registered and insured. You should be wary of builders that either refuse or don’t make it clear upfront that they are legally permitted to be involved in building and construction. Some builders’ licences or registrations may have simply expired, or some may have had their licences revoked but are still involved in the building industry. Regulators are historically slow at catching these dodgy builders, so you must be one step ahead.
At a minimum, they should have Public Liability Insurance and Home Building Compensation (HBC), formerly known as Home Warranty Insurance (HWI). It is known as Domestic Building Insurance in Victoria. Bear in mind that Home Building Compensation isn’t a requirement in Tasmania.

To get started, you can check to see if your builder is registered by asking the Housing Industry of Australia (HIA) or the Master Builders of Australia (MBA) for their list of members.

You’ll also be able to find a list of builders that are licensed and insured by your state or territory’s relevant department of fair trading or consumer affairs.

Experience And Skills

Question whether they have the skills you need. If they only have experience in renovations and extensions, they’re not the right choice for your home.

It’s also important to note that builders who have only built residential properties in the past may not have a good grasp of the complexities of extensions and renovations.

Portfolio And References

First of all, check out their previous jobs and, if possible, have a physical walk-through of a home they’ve built. Even consulting an engineer to walk through the property may be worth the cost if you’re serious about choosing the right builder.

Builders may quickly offer you the contact details of a handful of selected clients, but they may just offer a biased opinion.

It’s best to ask to speak with their most current clients, particularly those in the middle of the building stage.

You’ll likely get a more balanced opinion of the builder, specifically regarding communication and how efficient they are in the construction process.

How Do I Make Sure I Don’t Get Ripped Off?

When you’re spending hundreds of thousands of dollars on building or extending a property, you’ll want to do your homework. First of all, building plans can provide a good overview of the construction job, but they don’t provide a complete breakdown. Put together a ‘tender package’ with help from your architect or building designer. In it, you should clearly detail:

• The scope of the work: This is typically an outline of the work required by the builder. Make it clear if you’ll be contracting to a third-party tradesman for parts of the construction or, if you have the skills, where you’ll be doing the work yourself.
• The building plan: This should include engineering documents and soil tests. The builder needs to know exactly what’s involved and what you want to see in the completed home. It will also help them to figure out the total costs of material and labour as well as the timeframe for completion.
• The building schedule: The materials, fittings and fixtures you want for the house. Be as detailed as possible to avoid a cost blowout.

With a tender package, the builder knows exactly what the job entails and what you expect to see in the finished project. When they come back to you with a quote, ensure it’s itemised with the materials and labour involved in all stages of construction. Once you have an itemised quote, you can compare quotes with other licenced builders by going through the same tender process. In this way, you’re comparing apples with apples. You’re likely to find massive price differences in the quotes you get, but It may be that one builder is doing something extra that the other isn’t. If you’re in doubt, it’s good to check quotes with your architect.
Getting 3-5 different quotes is a good general rule but remember that you don’t want a builder to cut corners and sacrifice workmanship so that you can get a cheaper price.

Questions To Ask A Builder

Miscommunication is a major problem when dealing with a builder, which is why a detailed tender package and a building contract are essential. You should have a proper understanding of everything related to the construction. The following questions will help you.

• Does the builder have a licence for the work you want done?
• Have they previously performed this kind of work?
• Are driveways, garage doors, fences, landscaping, hot water and gas supply, light fixtures, the quantity and location of power outlets, window locks, flyscreens, and roof insulation a part of the finished building work?
• With whom does the builder have construction agreements? Or with whom did they have building contracts?
• How many other jobs do they have running concurrently, and how much focus can they devote to your job?
• Are they close by? If there is an issue, like a water leak, you don’t want your builder to be too far away.
• What supplies do they employ?
• Do they employ internal staff members or outside contractors (and do they employ the same ones frequently)?
• Once the job begins, whom should I call first?
• Has the builder been granted a licence to perform the work you require?
• Have they done this kind of work before?

Do You Know Who You’re Dealing With?

So you’ve done your due diligence on choosing a builder, they’ve given you a fair quote, and you’re ready to proceed. By this point, you’ve probably built a good rapport with them but keep in mind that they may not necessarily be the person constructing your home or extension. The building company may have several different contractors on their books, so you may want to make it a condition of the contract that you select the builder.

Don’t Sign The Building Contract Until You’re Ready

It’s important to get legal advice whenever signing a building contract to ensure that the contract is in your best interests. In particular, speak to a solicitor with building contract expertise.

Any small changes to the contract can cause you major headaches when it comes to getting approved for a construction loan and drawing down your progress payments for the build.

Consider the following:

• What warranties can they offer you?
• Do they offer termite prevention? It may cost you in the short-term but it’ll likely save you thousands over the long-term.
• The contract should include the fully itemised list of quotes that you agreed upon initially.
• Make it clear that you should be made aware of any changes to the building schedule that may need to be made during construction. It may be that certain materials will need to be substituted in order to stay within your budget. If you haven’t made this clear, the builder may use fixtures and fittings that will cost you more than you can afford.
• It should include the construction start date, key construction stages (where you’ll need to make progress payments on your construction loan) and the completion date.

You can check out the NSW Fair Trading website for information on building contracts.

In addition, on the HIA and MBA websites, you’ll find standard, proforma construction contracts which are accepted throughout the industry.

Do You Need A Construction Loan?

As mortgage brokers, we can’t help you choose a builder, but we can help you qualify for a building loan and get your construction loan documents sorted.

Many brokers, and even the banks, don’t understand construction but we do!

Even if you’re just looking to renovate, we can help you get access equity in your home to cover the costs.

Call us on 1300 889 743 or complete our free assessment form to speak to one of our expert brokers about your plans to build or renovate.