Avoiding new-home catastrophe takes work
This column will help prevent the agony caused when a builder abandons a job.
Consider an unfinished house that sits on my street. The builder started construction in May 2016, and it should have been occupied by last Christmas, as it’s not a very big or complicated house.
I met the owner, a single mom, in March as the building site was covered in slush. She told me she was having a tough time getting the builder to show up each day. She was determined to move in by May 31, yet there were thousands of man-hours of work still left to do. I didn’t have the heart to say she’d be lucky to be in by Labor Day.
The progress on this home has now ground to a halt. There’s been no activity for weeks.
My wife, Kathy, said: “That poor woman’s life has been ruined by the builder. I don’t want this to happen to Meghan and Brent.”
Meghan is our oldest daughter, and Brent is her husband. They have asked for our advice because they intend to build a home on Mount Desert Island off the coast of Maine.
I told Meghan and Brent that it’s important to realize the issue is complex. In the first place, you need to perform due diligence to find a professional builder who drives a project like a determined marathon runner runs a race.
The first thing to do is talk with the general manager or owner of the largest lumber yard in the town where you’ll be building. The people running the lumberyard know who the true professionals are. They also know the builders who should be avoided like the plague.
Ask for the names of builders that pay their bills early, buy the best materials and that the manager would want to build his own home. If possible, visit two different lumberyards to see if one builder’s name pops up twice.
It’s equally important to obtain a very detailed cost breakdown of the new home. I created a spreadsheet years ago that’s available on my website. This document has 100-plus rows where you enter a crisp number for each thing that needs to be done to build a home.
For example, the spreadsheet forces you to put in a number for the foundation cost, the cost of the windows, all plumbing fixtures, the rough carpentry labor and all the other costs to build the home.
You must have this information so you can control the flow of money as the project proceeds. As the home is being built, you should pay only for items that have been installed to your satisfaction. If you have a construction loan, the lender will usually issue checks only for work that’s been complete; but, believe me, their inspectors can be fooled.
This way, you’ll always have enough money to bring in another builder to complete the project if need be. Money is the only real motivator you have when building.
A point often overlooked is that it’s vital to have excellent plans and written specifications. A great set of house plans might contain 20 or more pages. Written specifications cover all the other things that don’t show up on the plans. These documents allow you to avoid confrontations or change orders that can cause delays and frustration.
It’s equally important to have a simple paragraph in the contract that allows you to void the contract with the builder if no progress is made for a specified amount of time. There are certain weather conditions that might lead to a delay, but that should be discussed before you sign the contract.