Buying a home is a procurement decision packaged as a relationship decision. Even though buying a home can be a very personal experience, all of the real differences between builders are exposed at points where most buyers never look. For example, how does the builder handle a contingency? How does the builder pay the trades? How does the builder handle a price increase in the lumber after the contract has been signed but before the framing has begun?
What you really want to know to differentiate between builders is embodied in the following questions. The answers reveal whether a builder has really developed systems to deal with all the aspects of a home’s construction or whether that builder just has lots of enthusiasm for what he or she does but hasn’t developed the substance that supports his or her claims.
Ask how the price is assembled, not just what it is
A single bid number for a home builder does not tell you much. What is more important is the contract structure that the builder prefers, and why. How does the builder handle savings from sub-contractors that have come in under budget for their portion of the construction?
Contract model | Who carries cost risk | Visibility into subcontractor pricing | Suits |
Fixed price | Builder, priced into contingency | Usually none | Complete drawings, few unknowns |
Cost plus fee | Owner | Full, with open books | Renovation, unusual sites, evolving scope |
Cost plus with guaranteed maximum | Shared above the cap | Full, with a ceiling | Custom builds where design is largely settled |
Interrogate the allowances
The ‘Allowance’, this is a section in a builder’s bid where they specify the expected cost of various materials and components. However, they also specify an ‘allowance’ for the expected variation in cost. This is typically where the most optimistic bid numbers are hidden. It would be wise to ask the builder for the assumed unit cost for each component in the ‘Allowance’ section. Compare this with the design intent for that section of the home. For example, the ‘Allowance’ for tile may be based on a very basic tile. However, the design intent for a tile finish on a home may specify large format porcelain with mitered edges. The cost of this type of tile is many times the cost of the tile in the ‘Allowance’ section. The difference will show up as a change order at the worst possible time.
Test the preconstruction process before you commit
Most of a builder’s value will be added during preconstruction. This will be the quickest way to expose a builder of poor quality. To determine real pricing for a house of the quality that you require, you must determine when real pricing occurs during the design process. If the first real pricing occurs after completion of the construction documents, then you have paid for a complete set of design documents before you can even determine if the builder can afford to build your house as specified.
At what design milestone do you issue a first estimate, and how do you narrow the range from there?
Who owns the drawings if the relationship ends before construction starts?
How is value engineering documented so the design team can confirm nothing structural or code related was quietly altered?
What site investigation happens before the price is set, such as soils, survey, utility locations, and tree protection requirements?
Probe capacity, supervision, and the trade base
How many homes are they currently constructing and how many superintendents do they have? It is generally good to have no more than 4-5 homes under construction per superintendent, so typically builders are able to have their superintendents oversee the homes remotely via phone. This can happen for a variety of reasons, such as a superintendent being on vacation, or the superintendent having other tasks to attend to.
Questions about subcontractors
Trade retention is another test of character that shows how a builder will react in times of stress. By retaining the top trades and paying them on time, a builder is showing that they value their work and are committed to their home. It is worth asking established Columbia home builders like Schumacher Homes how long the various trades, including the framers, mechanical, and finish carpenters, have been working with them. Then find out how quickly the builder pays the subcontractors after a draw has cleared. If the builder pays the subcontractors quickly, you can bet your house that they will defend the schedule against late-arriving trades that could undermine their work.
Ask questions that expose construction quality
The majority of a home’s details are hidden behind drywall. Therefore, verifying quality claims from completed homes can be extremely difficult. Instead, ask a builder about the processes his or her company uses to assemble and test certain details.
What is the standard wall assembly, and how is the drainage plane detailed at windows and penetrations?
Is a blower door test performed, and what air change result is typical across recent projects?
Are third party inspections used beyond the municipal ones, and at which stages?
How are warranty calls logged, and who performs the work in year two?
Look at a house that has mechanical rough-in (i.e. Pipes for plumbing, electrical, HVAC, etc.) but no insulation. The workmanship and resulting house will be revealed to you much better than in a styled photo of a finished house.
Verify the business behind the build
These are the things you want to check on with your home builder and find out how they handle them. They are typically financial in nature rather than physical and you will want to make sure your home builder is handling them properly. These include, current certificate of insurance, current licenses and that they are in good standing, and the process that your home builder uses to collect lien waivers from the various tiers of subcontractors and then issue a draw.
What to ask past clients
Most Columbia home builders will present you with the owners of the most current homes. However, the best way to determine whether a quality process is in place is to speak with the owners of homes completed roughly two years prior. Ask them about the change orders issued during the construction of their home and how many of those change orders were a result of the builder’s error as opposed to the owner’s request for upgrades or design changes. Also, ask them about any disputes that arose during the construction of their home and how those were resolved. Among the established home builders in Columbia, the owners of completed homes will typically volunteer to speak with potential clients.
Rate each of the builders against each other rather than against some arbitrary ideal. The builder who best answers these questions is the builder with the best contract and fewest change orders.
