Starting a new building project is exciting but also a major undertaking. Your builder can make or break the project.
The most common risk of hiring the wrong home builder is that your project might not get completed correctly.
In addition, your project budget may double, and you might still have to hire another contractor to complete the project or fix the poorly done work.
That is why you need to know when to walk away from a builder who is about to make your home project spend more money than expected.
Here are some warning signs that you have picked the wrong home builder.
- 1 1. Lack of References From Your Builder
- 2 2. The Builder Doesn’t Belong to Any Trade Organizations
- 3 3. The Contract is Vague
- 4 4. They Can’t Provide Proof of Insurance or Licensure
- 5 5. Pricing for Your Home Project is Too High or Too Low
- 6 6. They Want a Large Down Payment
- 7 7. Too Many Mistakes
- 8 Endnote
1. Lack of References From Your Builder
A reliable home builder like Excel Builders should have the latest references for customers and trades they have worked with.
They should also show some of the projects they have completed. If they don’t have these prerequisites, that might be a major red flag.
It could mean they don’t have the necessary experience or their clients are unhappy with their work.
Look for a builder with a high customer satisfaction rate.
2. The Builder Doesn’t Belong to Any Trade Organizations
If a home builder is serious about their business, they should be engaged in at least one association or organization.
Being a member of these groups shows that your contractor wants to be involved in the home building community, and they are an accredited business.
However, if your builder is not engaged in any association, it may indicate they don’t have the desire to remain updated on the industry.
3. The Contract is Vague
The contract presented by your builder should be detailed enough and easy to read.
Be wary of a contract that lacks details or uses vague language regarding the project’s scope.
A valid home builder should provide enough verbiage in a contract or proposal that details all the client’s needs, the exact costs, and the payment schedule.
They should also list all items that aren’t included so that the client has clarity and understanding of what to expect through a valid contract.
4. They Can’t Provide Proof of Insurance or Licensure
One of the most common red flags is if your home builder can’t prove they are licensed or insured.
A reliable builder should have all the essential documents and paperwork, including bonds, licenses, and insurance.
If this isn’t the case, they can cause problems for your personal homeowners’ insurance or even issues if a member of your home builder’s team is injured during the work.
The injured party has a legal right to sue you since their injury occurred on your property.
Be sure to ask for these documents before hiring a home builder.
5. Pricing for Your Home Project is Too High or Too Low
Another sign you have hired the wrong home builder is if you are paying way more than you should or the cost is too low.
It may not be easy to know how much others are paying for their home projects in your area, but this is something you can research.
Getting incredibly low rates or estimates is usually a sign of inexperience and can also show desperation.
If you feel that the home builder might be undercharging or overcharging you, do research and learn about the median home building prices in your area.
6. They Want a Large Down Payment
Be wary of a contractor who asks for the total cost of the project upfront.
A reliable builder will develop a payment plan with you, and you will pay as work is completed.
It’s normal to collect an advance toward securing expensive materials, but it’s illegal for a building contractor to exceed a specific down payment in some states.
However, with or without these regulations, you should expect to pay a down payment of about 20% to 30% of the entire project cost.
If your builder asks more than this, it may indicate they don’t have enough cash to manage the project.
7. Too Many Mistakes
If your home is not turning out as expected, this could be a sign that you have hired the wrong builder.
It’s normal for mistakes to occur here and there, but too many errors that are not fixed may show a lack of experience or necessary skills to do the job well.
A reliable contractor would do all they can to remedy the situation and ensure you are happy with the completed project.
Finding the right builder for your custom home project can be challenging.
However, working with a reliable and credible contractor is essential to ensure your home project is successful.
Be cautious of these red flags of a wrong home builder and ensure you stay away from them immediately when you discover one of these warning signs.