In 31 years of home building, Tom Zimmer has been surprised — make that flabbergasted — by one constant: what little thought most people give, he said, to choosing the right home builder.
“I run into this all the time,” said Zimmer, a custom builder from Fitchburg. “If you were going to buy a refrigerator, would you not go to three or four places, read Consumer Reports, follow up with a company’s references, and make sure you get it at a reputable place?”
“People do not do any of that building houses,” he added. “What people do — and I’ve had them in my office doing this — is they come and just say, ‘Tom, how much a square foot?’”
Zimmer, who in March put up the framing for University of Wisconsin football coach Bret Bielema’s new house on Lake Kegonsa, said he can’t quote any customer an exact price until he knows a lot more details about a job.
What’s more, while consumers certainly can’t be faulted for trying to get a good price on such a major purchase, it’s a mistake, Zimmer said, to rely on price alone in deciding.
“You need to do your homework,” he said. “But it seems like with a builder, people just want to take the cheapest guy.” That approach can backfire if a builder takes short cuts, substitutes cheaper materials or sticks buyers with a big final bill after low-balling to win a bid.
“There are lots of ways to cheat on a house,” Zimmer said. “With the economy being down, we’ve lost a lot of builders, and the crummy ones usually go first. But now, (with an uptick in building permits), they’re starting to stick their heads up again.”
Builders are busier
New home permits hit a five-year high in June in Dane County. Housing starts increased nearly 43 percent to 80 permits, up from 56 in June 2011, according to MTD Marketing Services of Wisconsin.
That’s still historically low — and a long way off from the high of 258 permits in June 2003 — but it’s the best June builders have seen since 2007, when there were 114 permits. It also marks five out of six months this year to post a year-over-year increase.
“Business is going quite well for us,” said Sun Prairie-based custom builder Dan Duren. “We have a number of homes started, and we’re talking to new people on a regular basis.”
Getting legal help
But good market or bad, anyone signing a new home contract should do so with care, experts said. Beyond researching the best builder for the job, people having a home built need to make sure they:
• Read their contracts closely.
• Understand the construction process and what’s covered by the builder’s warranty.
• Keep in close contact with their builder as construction takes place.
• Protect themselves financially by securing “lien releases,” which show subcontractors and suppliers were paid. The builder should provide lien releases as construction occurs, so the homeowner can’t be sued for unpaid bills later.
Local real estate lawyers, meanwhile, say the best way to ensure you don’t get cheated is to have an attorney review and sign off on construction contracts.
It may sound self-serving, Madison attorney James Graham acknowledged, but hiring a lawyer versed in real estate law can put a new home customer in a much better position.
“Most (new-home) transactions don’t involve an attorney, and to the extent a person is represented by anyone, they’re often using a real estate broker — who’s not trained in reviewing contracts, is not allowed to give legal advice, and is an interested party in the transaction,” said Graham, who works for Accession Law.
How to pick a builder
Industry and consumer experts said a builder should be a good fit personally and professionally.
“Find a builder you can communicate with,” said Jerry Deschane, executive vice president of the Wisconsin Builders Association. “Find someone you’re comfortable working with, because you’re going to spend a lot of time and make some very stressful decisions with them.”
To research builders, consumers can ask for references, check with trade associations, and look up builders’ legal histories in online court records.
People also should search out references on their own, rather than relying only on a builder’s list.
“You can do it by talking to others,” said Kent Carnell, a trial lawyer at Madison-based Lawton & Cates. “If you can talk to somebody in the building industry, that’s good, but maybe it’s a commercial contractor rather than a residential builder, and you can ask them what they know about companies that are building houses.”
Andrew Inman, vice president of development for T. Wall Properties, recommended consumers check with a company’s vendors and subcontractors on past jobs. Builders can be asked for such a list, and those on the list may be able to suggest others.
“People should ask, ‘What is your procedure to make sure my home is built on time and in a quality fashion?’” added David Simon, president of operations for Veridian, Dane County’s largest home builder. “There are a lot of choices to made, which can be fun and exciting, if you’re doing it right.”
What builders want
Customers can help ensure smooth building projects by communicating with their builders early and often, Graham said.
“Most reputable builders want to have happy clients,” he said. “That’s how they make their living. The frustration for builders is if they don’t realize until fairly far along in the process that they’re building something a person might be complaining about and calling a defect. It usually comes from a failure to communicate early on.”
Confusion over change orders is a common way things go bad. Desired changes to the job should be documented in writing.
“There’s much less likelihood of disputes that way,” Graham said. “You’ll hear a builder say, ‘Every time I turned around, they wanted a change here and a change there,’ but later the client had a completely different recollection.”
Sun Prairie builder Duren, who constructed a 4,400-square-foot home in Bristol for this summer’s annual Parade of Homes, said he was “always willing” to weave in clients’ ideas as he builds, though he said sooner was better.
“I tell people to jot down their wants and needs,” Duren said. “Keep a list, and when you see something you like somewhere, if you can take a photo, pictures are always helpful.”
Carnell said consumers should insist on a specific completion date for the construction and include penalties if the house isn’t finished by that time.
“Builders don’t like that,” he said. “But it helps get it done. Give them enough time to complete it — a typical time in Madison is five or six months — but then make sure it’s done within that time.”
Graham said the construction lawsuits he has handled always erupted from three areas: a project being late, being over-budget or falling apart.
Carefully drawn contracts can minimize issues. “You try to have contracts specify those areas with sufficient detail and also to anticipate problems and solutions,” Graham said.
Carnell also warned people to be sure their builders’ estimates for supplies and furnishings, known as “allowances,” are realistic. A builder might quote $5,000 for cabinets, for instance, but that could be for lower quality materials, while the cost to get something that looks like it did in the builder’s model home might be $10,000.
“Then what if that happens in all the various (contract) categories?” Carnell added. “You think you’re building a house that’s going to cost $200,000, and by the time you’re done, it’s $250,000.”