Friday, November 7, 2008

Building A New Home Part 1

Building a home is a complicated process and the bigger and more expensive the home, the more complicated the process can be. There are many things to consider when building a home, so you need an expert. I want to talk about the process of selecting a builder, things to look out for, things to plan for along the way, and just generally outline the entire process of building a home.

Before you do anything you need to select a builder. The builder is the cornerstone of the foundation (pun intended) of the team of experts that will be assembled and that you will work with throughout the building process. To start you can ask friends and family who have recently built to refer you to their contractor (assuming they had a good experience). You can also go to the local Home Builders Association (HBA) and ask for referrals. Membership in the local HBA is an important criteria to have met because as members we are held to a higher code of ethics. Once you have narrowed it down to 2-3 builders you need to have a meeting where you can interview each other. Just as you would like to know more about your potential contractor, he too would like to know about you, so don't be surprised if he asks you some probing questions also. As far as the things that you should look for in a contractor, first would be references. References should include not just previous clients but should also include some trade references, and professional references (Realtors, mortgage companies, etc). Then you need to request that you be able preview some of the projects that the builder has recently completed.

When speaking to client references ask them a few questions like "how was the builder to work with?", or "how is the quality of your home?". You should also ask how the builder has responded to warranty claims. These are important things to know. Aside from feeling good about the answers you get to these questions you also need to assess your relationship with the builder up to this point. Do you get along well? Do you like the builder? Does he respond to calls and email in a timely manner. And lastly, even though your relationship with him is in the very beginning stages, has he done for you what he said he would do for you in the time frame established?

Once you have completed your due diligence you should be able to make a final selection. The builder may want you to sign a Professional Services Agreement (PSA) which is an agreement between the two of you where he agrees to spend a given amount of hours helping you find a building lot and meeting with the architect to contribute to the design process among other things. Most builders are going to charge in the neighborhood of $100 an hour for their time. The purpose of a PSA is for you to get the professional advice and guidance from the builder (remember he's the cornerstone) without actually committing to him to build your home. You need the builder on your team early in the game yet there can be months of lot searching, design, and obtaining financing before you are even ready to sign a contract to have your home built. So a PSA gets the builder on your team and compensates him fair market value while not yet binding the two of you together too early in the process for the actual construction of your project.

So when it comes time to select your builder, remember, get one on your team early in the game. Take your time in the selection process. Make sure you like the builder, make sure you like his work, and make sure his clients and professional colleagues like him. As long as you cover these bases you should have a successful relationship with your builder.

If you have any questions about this or any other home building or remodeling projects you may reach me at

Look for part two shortly.


Kelly Anderson
General Manager, Ironwood Custom Builders
Builder Director, Salt Lake Home Builders Association
Winner Parade of Homes "Best of Show"

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