Choosing a Contractor

Once you have selected a house plan that will soon become your dream home, you will need to tackle another big decision. Who is going to be your building contractor? You may be planning to do a large portion of the building process yourself and want to be your own general contractor. However, depending on the extent of your knowledge about residential building, being your own general contractor may not be for you. Ask yourself the following questions:

• Do I know what building permits will I need?
• Do I know how to obtain all necessary building permits?
• Do I have experience handling legal forms and documents?
• Will I be able to complete and submit all legal documents on my own?
• Can I do most of the work on my new home myself?
• Do I know how many different subcontractors I will need?
• Do I have the knowledge to understand bids and estimates quoted by subcontractors?
• Do I know how to hire and monitor the work of subcontractors?

If you answered YES to most or all of these questions, you might be well prepared to be your own general contractor. However, if you only answered YES to a few of these questions or none of them at all, you will need to consider hiring a general contractor to oversee the construction of your new home. It is important that you find a good building contractor that communicates well with you. The person you choose as your building contractor will be responsible for overseeing that your home is properly built and completed on schedule and on budget. Choosing a skilled builder who is properly qualified to do the job will make your experience stress-free and exciting. It is important to establish a strong and understanding relationship with your contractor in the beginning ensuring a smooth building process.

There are many resources available to help you select a reputable building contractor. Start with family members, friends, and co-workers that may have built homes. Do any of these people recommend or speak highly of the general contractor they used? Ask for contact information. Your local homebuilders association and city/county building department are two other resources that will be able to recommend good residential contractors. Some states require contractors to be licensed. If your state requires a licensed contractor, check with the state licensing board for names of contractors in your area. Keep in mind builders who are registered members of an organization have access to the latest industry techniques and product information.

Once you have a few contractors in mind, take some time to prepare your requirements for bidding the construction of your new home. (It is not necessary to contact the contractors yet.) Create a detailed list of your home building requirements. Be as specific as possible. This will provide contractors and subcontractors the information they need to give accurate bids. Be sure to have a copy of the blueprints available for each contractor and a copy of the material list from the designer of the home plan if available. Also provide a list of the materials you want for your new home such as siding, windows and doors, roofing, decking, insulation, etc. Be sure to include name brands, colors, model numbers and sizes if available. Supply detailed information for appliances and fixtures that you have already selected. Remember, the more specific information you supply, the more accurate bids you will receive from potential contractors. It is worth putting the time into attaining this information to provide it to the contractors.

After you have compiled all of this information submit it to the building contractors you are considering hiring and request a bid for the construction of your new home. When the written bids have been returned to you, review them carefully. (Do not accept a verbal bid.) Each bid should be a detailed written list of all of the elements you will be charged for along with their costs and a total finished price. Be sure the bids include the following information:

• A starting and completion date for construction
• A list of materials the bid is based upon
• An explanation of warranties for materials, fixtures, appliances and labor
• A list of subcontractors, their tasks and associated costs

Read and compare each bid making sure nothing has been left out. Pay attention to unrealistically low bids. You do not want to find out your construction project went way over budget later. Typically, the greatest difference in bids is found in labor costs. They can vary greatly based on how much the contractor will charge for his time and how long they estimate the project will take. Consider the fact that it is worth paying for a reputable builder who takes pride in his work.

Note: Most bids are valid for 30 days.

When you have finished reviewing the bids from each contractor, take time to talk with each of them about the construction of your new home. Think of this as an interview of sorts. By discussing the construction project with them in detail, you will get a feel for how well you can work with them. Ask questions about the contractor's qualifications and experience. Ask questions about your house plans. Do they meet local building codes? Ask if you can see each contractor's work. Are there homes in the area you can drive past and look at from the street? Keep in mind, it is necessary that you select a contractor that submitted a fair bid and is qualified for the job, but is also easy to wok with. Remember, you will be communicating ideas and details about your new home with the contractor you select on a regular basis throughout the duration of the building process. It is essential that you communicate well and form a good relationship with the contractor you select.

Completing a thorough reference check for each general contractor is the next step in selecting the right one for you. Use all of your resources.

1. Call or visit the Better Business Bureau online. Check to see if any past clients filed complaints against the each of the contractors.
2. Check with local lumberyard and material suppliers. These people deal with contractors on a daily basis and may be able to provide insightful information about the contractors you are considering.
3. Request a list of previous clients from each building contractor. They should be able to provide contact information and photos of projects they've completed. Take time to check with one or two clients that worked with the contractor recently (within the last year) and ask specific questions about the building process. Did the contractor follow a timeline? Was the project completed when promised? Was the contractor present at the job site throughout the construction process? Did he answer your questions? Did he take time to walk through the home with you at various stages of construction? How did he handle problems that arose? Did subcontractors arrive at the site in a timely manner and complete tasks on time? Who was responsible for cleaning up the job site when construction was finished?

Next, contact at least one or two clients that worked with each contractor 3-5 years ago. Ask specific questions about craftsmanship and quality of work. How well is the actual structure of the home holding up? What problems have they encountered since completion of the home? Have they had to replace any poor quality materials already? Were problems covered under warranties? Was the contractor available to answer questions about the construction of the home long after the project was finished?

While checking references, incorporate some time to find out if the contractor is bonded and if his workers are covered by worker's compensation insurance. It is good to request to view the insurance certificates and verify that they are current. Ask about the building contractor's insurance in general. If his work is defective, you need to know you are covered.

Now you have all of the necessary information needed to select a contractor. Carefully consider the bids you received, discussions you have had and the references you have checked for each contractor. When you have decided upon the contractor that is right for you, it will be time to move on to the next step - signing a building contract. This is the last big step before construction begins. Take time to go over the contract with your building contractor. Review the details paying close attention to the following items:

• The timeline of the construction process giving specific dates for each task including starting and finish dates
• Specific construction tasks and who will complete them
• An outline of costs
• Total price for the construction of your new home
• Payment terms

Educate yourself about contractor compensation by asking questions. Will the contractor be paid a percentage based on the total cost of the project? Is the contactor charging you a fixed fee for his services? It is possible for the contractor to work under a cost-plus contract. If this option is selected, be sure the contract has a "not-to-exceed" clause setting an upper limit for fees and costs paid by you. Check the contract to be sure it also lists how the subcontractors will be paid and the costs for each service. Make note of the third party listed to arbitrate incase of disputes.

Occasionally a situation arises where the future homeowner has to back out of the contract or changes their mind about building with a particular contractor. Once the contract is singed, the homeowner legally has a three-day "recision period."

Choosing a general contractor is a long and involved process. Taking the time to find a good, reputable building contractor is well worth your time. While they oversee the construction of your new home, they will be watching out for your best interests. This will simplify the building process and improve the quality of your new home. If you take the time and effort to select the right general contractor you will surely see your efforts pay off when you move into your new home.

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