Building a house, whether as your forever home or strategic investment is one of the biggest commitments a family will make. Any new home build is a significant time and financial investment, and the builder you choose to work with ultimately has the responsibility and obligation to execute your build as planned.

That being said, not all builders are the same and as many investors can attest, not every builder carries out work to the same level of quality.

Many things can impact the quality of a build, such as a builder’s experience with your chosen construction materials, the difficulty of the block being built on and their experience in overcoming these challenges as well as their access to quality tradespeople.

Anyone who is at the final stages of contract negotiation with a builder should be asking the 10 following questions before signing on the dotted line and making their initial deposit.

• Are you registered and licenced?

In Australia, each individual state has its own governing body to monitor and maintain building standards in line with each states building code. This includes managing the registration and licensing of builders in that state.

The licensing requirements to become a registered builder are very strict to ensure that only qualified and experienced builders are operating in the market. You should definitely ask for copies on any engaged builders licenses and registrations for your records, and ensure that you confirm these details with your states governing body.

• Who are you insured with, and to what level?

Builders in every state are required to maintain differing levels and types of insurances. You are well within your rights to ask your builders for copies of all applicable insurances and ensure that these policies meet the requirements of either your lender or bank. Professional builders will have no problem in providing you with this level of detail.

• Can we see speak to previous clients?

You should absolutely be asking your building to provide a number of references for you to speak with, ideally with builds of a similar size and quality as what you are wanting. Whilst testimonials and written references are a good start, you should also aim to speak to a number of previous customers to ensure that your builder has a good reputation and is able to complete the job in a timely and professional manner.

• Can we inspect some current projects?

Whilst inspecting a finished build will give you a solid understanding of the level of quality your particular builder is able to produce, asking to view a project in progress can be very educational. Chances are, if your builder’s site is a disaster during the build then you can expect the same for yours. Whilst construction is a messy business, keeping a tidy site and maintaining standards throughout the entire build, not just the lock-up phase speaks volumes about the level of professional standards a builder holds for themselves and their tradespeople.

• How will you keep us up to date with progress?

Good builders will have a clear and written strategy when it comes to maintaining open communication and dialogue with their clients. Whether this is providing a weekly project status update, or scheduling frequent site inspections, your builder should be able to provide you with peace of mind that you will be kept informed throughout the entire process.

• How will you manage quality control?

Any builder worth your time and money will have a formalised quality control process in place for every build. The nature of construction means that there are a number of people and moving parts involved in bringing your new home build to completion. Whilst this is a complex process, quality builders should have total control of the process throughout the entire build and should be able to provide you with a detailed understanding of how they maintain the level of quality that you are expecting from your build.

• Is my contract price fixed or variable?

There are many different types of building contracts, and it is up to you as the customer to ensure that you fully understand the limitations and liabilities during your build. Cost plus contracts, where you agree to pay for the cost of time, labour and materials plus a percentage margin can be risky if your builder hasn’t undertaken a thorough estimating and quoting exercise. If possible, you should always seek an agreement that clearly defines what you are liable for.

• Is your building business, and its directors financially stable?

We have all heard the horror stories of investors losing large amounts of money, and having their projects significantly delayed when their builder has gone into administration. As a potential client, you are well within your rights to seek to understand in detail how financially stable the business is in order to determine and satisfy yourself with the level of risk that signing on with a builder may carry.

• What level of warranty do you provide and for how long?

Whilst there are minimum levels of builders warranty that are required by law for any builder in the market, good builders will seek to go above and beyond the minimum requirements to ensure their clients are well looked after. The scale and relatively difficult nature of building means that defects will absolutely happen over the course of time. Understanding in detail how your builder will deal with these defects, both during the build and for the years after will give you peace of mind that you are partnering with a professional who will take responsibility for their work long after they hand you the keys.

• How do you manage variations?

Most building contracts will provide quite granular detail in what will be provided at the end of the project. However, variations are a natural part of the building process. Variations can occur for many reasons, from the extension of time due to inclement weather, changes of mind during the build process or unexpected challenges, such as hitting “rock” during excavation. You should also have a clear understanding from your builder as to what their process is for managing variations to the contract, including notification, documentation, sign off and execution of approved variations.

In summary, you as the customer are well within your rights to satisfy yourself that the builder you have chosen to work with is capable and experienced, is appropriately licensed and insured, and is willing and able to provide you with evidence to the quality of their previous builds.

The truth is, there are thousands of builders out there, and some are better than others. It is important that you make every effort to ensure that the builder you have chosen is going to provide you with the best possible service and finished product.

Bernie Kyne
Mortgage Consultant
0400141757
bernie.kyne@mortgage-express.com.au