How to find the right homebuilder

By ,
Ask a Lender
April 6, 2017 | Updated September 6, 2017


Key Points

Where to look for builders

  • Realtor, lender and homeowner referrals
  • Local homebuilders association
  • Better Business Bureau
  • Internet searches
  • Suppliers and contractors

If you want to build a new home instead of purchasing an existing home, the most important decision you will probably make will be which builder to hire. You will need to work closely with this person for nine months or more and then live in the house for years afterward, so it makes sense to do a lot of research before signing a contract.

Where can I find potential homebuilders?

The first hurdle is finding a list of reputable homebuilders in your area. If you have a good relationship with a local Realtor or mortgage lender, you can start by asking them for recommendations. Real estate and mortgage professionals probably know the local builder market better than anyone because they often work with contractors. Business relationships can sometimes bias opinions, so it also is a good idea to talk with homeowners who have worked with those builders to make sure they were happy with the builder and the house.

If you want to do some initial research on the internet, one good starting place is the member list of your local homebuilders association. The National Association of Home Builders (NAHB) provides a search tool to locate state and local associations. Not all builders will join their local association, but membership can be an indication of a builder's long-term commitment to the profession.

Once you have a list of possible builders, do your research. Check with the Better Business Bureau to see if anyone has lodged complaints against the builders on your list. Attend open houses or walk through model homes constructed by those builders and check the quality of construction and amenities. Talk with homeowners in new subdivisions who have worked with the builders on your list and ask them if they had any problems with the builder or the home. Finally, check to see if the builder is licensed in your state or local area. Not all states require licensing for contractors, but you can check the Homeowners & Trades Resource Center for state-contractor licensing requirements to determine the licensing requirements for your state.

Which builder should I choose?

Once you have a short list of builders, meet with each and outline what you are looking for in your new home and find out if they have the right resources to help you achieve your dream. The NAHB provides a good list of questions to ask during initial builder interviews. In addition, if you need a designer for your home, ask if the builder works with one. If you already have a designer and a design, then make sure the builder will work with your designer and from your design.

You also will want to get some sample documents from each builder you interview, including contracts, budgets, draw requests, construction schedules, warranties on work, and their insurance information. Having these samples will allow you to compare builders more easily. Finally, get a list of referrals that includes previous and current clients, so you can once again talk to actual homeowners about their experiences with the builders and their level of happiness with the process and the house.

Don't stop there, however. You also should talk with suppliers and external contractors that have worked with the builder — such as roofers, electricians and plumbers. These people can provide information about that builder's professionalism, reliability and fiscal responsibility.

Your home is the biggest investment you will ever make, and when you are building from the ground up, you have nothing to inspect before you make the decision to purchase. It only makes sense to spend time researching builders to make sure you find the right one. Don't rush into signing a contract until you are completely comfortable with your choice. And don't be afraid to ask questions at every step along the way.

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