Judi
(left) and friends pitch in as home construction
begins.
From
the Ground Up Fourth in a Series by Judi Heit
You’re
sure you could do it, so you may consider supervising
the project yourself. However, if you haven’t got
a working knowledge about home building (or a consultant
in the wings who can guide you through the process), some
people and management skills, limitless time, lots of
energy and a great deal of determination, don’t
even think about it! You would have to hire (and fire),
schedule, supervise and pay framers, plumbers, electricians
and drywall tapers, to name only a few skilled subcontractors.
You would have to buy (and return) materials and time
deliveries to mesh with the arrival (or non-appearance)
of each subcontractor. You would also need to know what
is a fair cost estimate for the job, the procedures and
techniques for particular tasks, the local building codes
and how to obtain permits and other legal documents. You’d
be responsible for building the house from start to finish
… from foundation to landscaping … for all
facets of the job … with nobody to bail you out
… oh, my!
Unless you’re a contractor yourself, it usually
doesn’t pay to try to become one for a single project.
Also, where building a new home can be stressful on it’s
own, contracting it yourself requires marriage survival
skills your parents never dreamed of teaching you.
So, let’s assume you’re going to take some
sound advice and you’re going to hire a contractor
to build your home. This is not always a clear-cut or
easy process either. If you don’t already have one
in mind, you may have to do a little research.
Finding the right contractor is like choosing a good business
partner. Both require the right ingredients to create
a successful relationship: similar views about the project,
mutual trust and compatibility … important points
to consider when you are collaborating on one of the largest
investments you’ll ever make. And it takes time
to find a good one.
How do you do that? Ideally, you should see each prospective
contractor’s work before considering him. Drive
around and scout out any construction projects that are
in progress. If one impresses you, find out who the contractor
is. Query people who have had a house built. Talk to lending
institutions and lumberyards. Call the REALTOR® who
sold you your land.
Once you’ve got your list of prospects together
(start with a minimum of three), call to arrange interviews
(a list of questions to ask the contractor appears at
the end of this article). Find out if you can visit some
of their completed projects. They should also be willing
to let you speak with previous clients (if a contractor
won’t allow this, drop him from your list). Go and
look at the completed work to check out quality and workmanship
and ask specific questions (see questions to ask past
clients at the end of this article). If you’re shy
or unsure about doing this yourself, bring your architect
along. Consider this additional step: contact the local
contractors’ licensing board to check that each
contractor’s license is valid. The board should
also be able to tell you if there are any complaints or
judgments on file against the contractor.
You should give each prospect all he will need to make
an intelligent bid on your house: working drawings/blueprints
and all modifications thereof, specifications, a list
of materials and an itemized list of elements you want
in your new home (including specific brand you may have
already selected). Be sure you give each of them identical
information so bids can be evaluated on an equal basis
and that you ask for a "turn-key" price (describing
any work you plan to do or subcontract yourself).
Select the most reasonable bid and negotiate with the
contractor, questioning any costs you don’t understand.
There may also be some interpersonal issues you can clear
up with him at this time: Do you have the same basic ideas
about the job? How well do you communicate with one another?
If the person who is managing the project is female, will
he have problems taking instructions from a woman? Now
is the time to determine whether you will be able to comfortably
work with this person. This is as important as any other
factor in hiring the right contractor.
Once the bids are in and you’ve selected a builder,
a contract will be drawn covering the business arrangements.
Whether you use the builder’s contract or draw one
up your own, your attorney should review all contracts
(a contract checklist appears at the end of this article).
NOTE: You should know that written specifications take
precedence over blueprints or working drawings. So be
thoroughly familiar with the specs (they will either be
on a page attached to the blueprints or a separate set
of written instructions) and be certain that you approve
of them, as well as the final modifications of the plan,
since the specifications are legally binding.
In theory, your builder will honestly and ably produce
just what is drawn and specified. In practice, his view
of the latitude or scope of the project may be at odds
with yours. His judgment calls on the details may vary
from those of your architect. This is a very sticky area
and it affects many jobs, even when you’ve carefully
selected the ideal team and placed your faith in them.
But take this advice above all else: hire the architect
to design and specify and the builder to construct and
manage. As the job proceeds, you should expect your architect
to visit the site regularly and apprise you of his view
of progress. If he thinks the builder is shaving the specs
to his advantage, he should let you know immediately.
However, do not make the architect (or anyone else) handle
quarrels over interpreting your contract with the builder.
Settle all disputes yourself, stay apprised of everything
that’s going on at your job site and have a case
of beer ready on Friday afternoons!
Ten
Questions to ask the contractor:
1. How many square feet are in the homes he’s built
and what was the price per square foot? (You’ll
find a major quality difference between builders used
to working on $65-per-square-foot homes vs. those whose
homes run $125 per square foot and up.)
2. If your design calls for anything unusual (i.e., complicated
stairs or complex rooflines) make sure the builder has
plenty of experience with this type of construction. You
don’t want your home to be the most complicated
house they've tackled.
3. Check out his financial standing. This is not an exaggerated
precaution – contractors are accustomed to disclosing
their financial history and status. In fact, you should
be wary of one that won’t.
4. How many years has the contractor been in the business?
(Contractors who have weathered one or more recessions
are less likely to find themselves in financial straits.)
5. Ask about fees and payment schedules.
6. Does he have a problem with you visiting the job site
periodically? (You do NOT need permission to be on your
own property. Neither should you give instructions or
changes to anyone but your contractor or his designee.)
7. Ask if he carries worker’s compensation and general
liability insurance. Ask to see "proof of insurance"
certificates. The contractor should also guarantee that
his subcontractors carry these minimum coverages.
8. You have a smart contractor on the line if he insists
that you carry "builder’s risk" insurance
(and you should!). This insurance protects the property
for the amount of money already advanced to a builder.
For example, if your contractor has trenched around the
house and a thunderstorm floods the trench, collapsing
part of your house, the "builder’s risk"
insurance pays to restore the house to the point where
the loss occurred.
9. Ask what kinds of warranty the builder offers. If it’s
not one year (some builders try 60 days) ask if he’d
extend it for your job. Find out what items are covered
in the warranty and ask if he will deal with an appliance
manufacturer in the event of a warranty claim.
10. Ask when he could get to work if he were awarded the
contract. Good contractors book up early. You don’t
want to get too far into this process or get your heart
set on someone only to find you can’t break ground
for a year.
Ten
Questions to ask past clients:
1. How many contractors did you interview before you made
a final decision? (If they didn’t interview other
contractors it may mean they didn’t do their homework.)
2. What attributes made you think this he was the best
person for the job?
3. Was the contractor easy to work with?
4. Are you satisfied with quality of his work?
5. Was the job site kept neat? (If his crew wasn’t
careful on this project, why would they be any different
regarding yours? Check to see if your HOA covenants includes
a clause about this.)
6. Did you draw up a plan and schedule, including payment
terms? Did the contractor stick to it? (Be wary of a contractor
who worked without a written agreement and demanded full
payment up front.)
7. Did the contractor walk you through the home at various
times to show you what had been done and to get your approval?
(Reputable contractors want the owners’ blessing
at critical intervals.)
8. Did you have any problems after the job was finished?
Did the contractor follow up on problems after the project
was complete? Did he take care of them promptly?
9. If you dealt with a project manager, did he or she
stay involved with the project from beginning to end?
Was the project manager an effective liaison between you
and the workers?
10. Would you hire this contractor again without a doubt?
If not, why? (This is one of the best questions to ask
because references sometimes are reluctant to mention
certain experiences. However, most people will be honest
about their answer.)
Contract
Checklist
The location of the house to be built, along with the
approximate dimensions. This should be accompanied by
a legal description of the property, plus a survey or
sketch showing the siting of the house with setbacks,
etc. as appropriate.
The contractors’ license number, name and working
address.
A detailed description of the work to be performed. Dated
drawings and specifications, including modifications,
should be included as an addendum to the contract and
signed by both parties to the contract. Be sure to eliminate
all "or equal" clauses that will permit the
contractor to make substitutions.
A construction schedule detailing when work is to begin
and when it is scheduled to be completed. Expect clauses
allowing for weather delays and other problems beyond
the control of the builder. Some contracts have a clause
that calls for a monetary penalty against the builder
if certain deadlines aren’t met; some builders won’t
sign such contracts.
A site conditions clause. If site conditions vary from
those assumed in the contract (high water table, bedrock,
etc.) then a procedure for handling plan changes and associated
expenses should be included.
The total cost of the job with a schedule that spells
out the construction milestones and payment amounts for
completing each phase. The final payment is usually withheld
until final approval of all work by the owner and the
receipt of a certificate of occupancy from the local building
inspector
A statement indicating who is responsible for obtaining
and paying for all permits, licenses and other fees along
with sales or use taxes. This task is commonly the responsibility
of the general contractor rather than the client.
Procedures for change orders and a clause stating that
all changes must be in writing. Each such order should
specify the work to be done, the cost and the effect on
the completion schedule. The responsibility for changes
due to the builder’s error and any resulting costs
should be outlined. If there is a disagreement on this
issue, procedures for resolving disputes should be agreed
to that won’t interrupt the progress of the job.
There is also usually a clause absolving the builder of
responsibility for flaws in the design, plans or specifications
that weren’t supplied by his company.
A mention of any agent who will act for you (such as your
architect) as well as the role and liability this person
will assume.
Site improvements, such as clearing, grading and drainage,
and who will make them.
Who pays taxes, utility bills and the like during construction?
Who owns the plans and specifications?
Warranties. Warranty documents walk-through procedures
and the service policy should be attached to the contract.
It should be clearly stated who is responsible for what.
Though manufacturers’ warranties will cover many
items in a new home, the protection often does not extend
to their installation.
Arbitration or mediation procedures to settle disputes.
All complaint notification procedures and time limits
should be detailed.
The conditions under which the contract can be terminated
and the costs to the owner. Bankruptcy issues should also
be addressed
Details of liability and insurance issues. Who pays for
the builder’s risk insurance, for example? The builder
should provide for your inspection certificates of insurance
for builder’s risk, worker’s compensation
and any other insurance forms customary in your locality.
A "waiver of lien" provision, specifying that
the contractor provide you with lien releases from subcontractors
and suppliers as the work is completed. (At the same time,
secure an "affidavit of release of lien" from
your contractor as well.)
Details and schedules for any work or subcontracting you
plan to do yourself.
