6 Important Tips to Choose a Good Home Builder!

Home is one of the few places where you get a chance to enjoy complete peace of mind. Therefore, it is very important to get your home built properly. Thanks to the multitude of options present in the market, choosing a good home building firm is not as easy as you think. You need to exercise caution and above all understand your requirements before being able to convey them to the builder. In fact, choosing a good home builder is one of the most important processes when it comes to buying a new house.

For all those of you who are planning to invest in one, here are a few simple tips that can help you choose the right home builder even when you are running short of time.

1. Ask for the experience

The reputation of any builder is decided majorly by the type of projects handled by him. Therefore, while choosing a home builder, make sure that you invest ample amount of time studying the work that they have already done. Also, those builders who are hesitant to talk about their previous projects should be blacklisted.

2. Verify the credentials

Ideally, you should choose a home builder with the required license permitting him or her to handle projects. However, don’t fall for the claims that the builder makes. Instead do a little research on the market reputation and verify the credentials of the builder to ensure that everything is in order.

3. Don’t forget to talk to ex-customers!

As a prospective customer, home builders will be happy to let you interact with their previous customers. Nevertheless, you can also insist for the same. Interacting with past customers is important. After all, when past buyers are satisfied, it also adds more credibility and positive word of mouth in favour of the home builder.

4. Area of expertise

In cases when you are hiring the builder for complex projects, ensure that his or her area of expertise is in accordance to the demands of your project.

5. Ask for an estimate

Don’t choose your home builder blindly. Instead ask the guy to give you an approximate estimate of the charges to do the job. In fact, you can even ask for quotes from other builders and accordingly choose the option that best suits your budget.

6. Clarify the work to be done

Building or construction is an ambiguous term especially when you are talking about home development. Therefore, make sure that every job to be handled is specified in the contract prior to hiring his or her services.

How to Become a Professional Home Builder – Part I

Over the years I’ve had many of our builder students ask pertinent questions such as what size home do I build; what do I put in it; where do I build it? Looking back it’s easy for me to make these decisions now, but when I first started building in 1975 these were trial and error situations. And my hindsight is crystal clear. It’s very easy for me to look back and see things I wished I had known when I first started building. That’s what you’re going to learn in this article.

You’ll learn the pros and cons of being a speculative or spec builder (as opposed to a contract builder.) If you’re not familiar with those terms, a spec builder is one who will select a site, choose a design, build a home and then sell it to a client. A contract builder is a builder that you hire to build a home for you. By the way, spec building is how I suggest you begin rather than building a home for somebody else. I’ll explain why later.

I’ll begin by showing you how to be one of the best spec builders in your area, even if you’ve never before built a home. I’ll expand this information by discussing points that are unique to spec building. Next I’ll discuss points that are unique to contract building, and points that pertain to both spec and contract building.

A Word Of Caution

I want to stress that when starting your construction business, you must separate your business from your personal life. In the early 70’s I was in real estate commercial sales. I barely survived a major recession. Almost everything I owned was in my name and most of it was repossessed. Had I known then what I know now, I’d have retained that large home, that Mercedes and that airplane.

In the construction industry there are many things that can happen to you, some of which you have absolutely no control over. According to the 2008 Annual Report by the National Center for State Courts, in 2007 Americans filed over 90 million lawsuits, more than a third of which were civil cases. This does not include the volumes of legal disputes that were settled before a lawsuit was ever filed. Based on the sheer number of legal disputes that arise, in and out of court, one could say that most Americans run the risk of being involved in a legal dispute at some point in their lives – for many people, more than once. This is especially true for those who work in professions with high lawsuit vulnerability such as doctors, dentists and, yes, especially builders! You should invest in hiring professionals to help you protect your assets. It’s easier than you may realize. This is one time you can’t procrastinate. I can tell you some great horror stories but I don’t want to scare you this early in the game. Anyway, don’t live in fear of what might happen. You only lose if you don’t play.

I. Speculative Building

A. How To Be One Of The Best Spec Builders In Your Area

Before you buy a lot, before you buy any house plans, the first thing I want you to do is put together your success team. I call this the Henry Ford philosophy. If you read about Henry Ford, you’d learn that some people considered him to be illiterate. He once sued a Chicago newspaper that wrote an article claiming he was illiterate. In the lawsuit, Henry Ford emphasized that he didn’t need to know everything about everything because he hired experts to assist him in all that he wanted to do. This left his mind free and clear to do all the things that he really knew how to do. Well, I’ve learned from that philosophy myself over the years. I realize there is not enough time in this life to do everything. I now hire experts to assist me in my decision-making, and it has been a positive factor in my success building homes.

Your success team should include the following:

1. Real Estate Agent

2. Landscape Architect

3. Artist/Architect

4. Kitchen/Bath Designer

5. Interior Designer

6. Lighting Designer

I’ll discuss each of these team members in detail as we go through the course. Don’t be concerned. When you start out, you don’t need the best. These team members are more affordable than you could possibly imagine.

B. Obtaining Your First Loan

Let me tell you a story. And the further you get away from this story, the harder it’s going to be to borrow money to get started.

Let’s assume that you’re gainfully employed. If you’re not employed, but instead are self-employed, then you have to have a high credit score or produce tax returns for the past three years to qualify for the loan. If you currently rent a home or apartment and you want to build a home for yourself, you’re a prime candidate to borrow money to build a home – for yourself. So, you get the money. You build a home. You put it on the market during construction. You sell it. You go to the bank. You borrow money under the same premise. You get the money. You build a home. Put it up for sale. Sell it. Do it over and over again and pretty soon you walk into the bank and the banker looks at you and says, gosh, you should become a home builder. And you are.

Now, that’s the easiest way to get started. Most every builder I know got started in the industry this way. This method will also provide you with the least risk. Why? Because if you don’t sell the home you’ll simply move into it. In turn, this will make it easier for you to sell because a home that is furnished will normally sell faster than an unfurnished home. You’ll eventually sell it and can start the process again. The bad news is that you may be moving a lot. I remember one couple that wanted to own a home free and clear. They used this method on five homes, plowing their profit back into each home. Their sixth home was constructed completely from cash. They owned it free and clear and got out of the construction business. They simply wanted to do what it took to own their home free and clear.

The further you get away from the above scenario, the harder it is to get the initial loan when you’re just getting started.

For example, let’s say that you currently own a home and you want to borrow money to build another home for yourself. A banker will generally be negative. They tend to look at the downside and might comment something like this. “That sounds real good but you currently own a home. What are you going to do with your current home?” Your response is, “I’ll put it up for sale during the construction of this new home and then I’ll sell it.” The banker comments, “That sounds pretty good, but what if you don’t sell your current home?” The banker generally looks at the downside – that is you’re going to be stuck with two house payments. If you’re able to show you can afford two house payments, you may very well get the money.

You always have to have a successful conclusion to your story you tell the banker. Never look at the banker and say, “Well gosh; I’m only borrowing 70% of the appraised value. If the bank had to repossess the home the bank would have a bargain. The bank could sell the home, and make a good return on its investment.” Never use this kind of logic on a banker. Bankers don’t want to be in the homeowner business. Never imply or even think in your mind this will happen.

If you’re not gainfully employed or you have a problem with your credit or you have no cash, your next best method is to find an investor that will joint venture a project with you. I’ve done this on many large projects when I didn’t have the finances to afford it myself. What I normally did was to structure the investment so that the joint venture partner would put up very little or no money. Investors really like that! What I needed was their strong financial statement. Understand, there are many investors, such as medical doctors, who have tremendous financial statements but they have very little cash. So if you can structure the investment so that it requires very little or no cash, it becomes a relatively easy investment to sell. When I’ve worked with a joint venture partner, after selling the investment, the investor would be repaid any cash he had invested, plus a fair interest rate that was agreed upon up front. All remaining profits would be split 50% to me and 50% to the investor. Normally in a situation like this, the investor would let me deduct any out-of-pocket expenses but, understandably, they would not let me take any salary.

You would not believe some of the wild, crazy, ridiculous investments requiring large amounts of cash I’ve seen these people put money into. Many of them have the same luck in the stock market that I have. These people should feel blessed that you came into their lives with a viable real estate investment. I’ve found these people by talking to friends, going to investment seminars and running ads in the paper.

Home Builder Marketing Tips

Searching for the right home can be a lengthy and stressful process. Buyers, builders and sales agents are often forced to deal with each other for weeks, sometimes months. It can be difficult for contractors and agents to set boundaries and maintain a beneficial working relationship, but it is imperative for the success of their business. Creating happy clients is the equivalent of free advertising; word of mouth is powerful publicity. Buyers who are fully satisfied at the end of the home search process are capable of generating a great deal of future business for builders and sales agents.

There are several approaches to referrals. They can happen naturally, as happy clients start spreading the word. In order for this to occur, builders must take an honest approach. Being straightforward with a potential buyer is the best way for a builder or sales agent to earn respect and trust. If there are problems with the home – or future trouble is anticipated, as in the case of new construction – the buyer has the right to this information. By attempting to conceal shortcomings, builders and agents run the risk of scaring off potential clients and referrals. Communication is key; the happier the client, the better the recommendation.

Meeting and managing the needs of buyers is imperative. A buyer who has a great experience with a builder or agent will forward every detail to family members, friends, co-workers and acquaintances. However, the same rule applies for a bad experience. Regardless of the events that take place or how challenging a buyer becomes, contractors and sales agents need to remain fixated on the power of referral. It does not take long for one outstanding company to become admired in a particular neighborhood and surrounding areas following one successful transaction.

Many builders and agents find it beneficial to implement a referral program. This provides buyers with incentive to spread positive information about the business or company. The motivation can include anything from a future discount to a cash bonus. Clients are very likely to refer their contractor or sales agent to others if it will result in an additional bonus. It is also a great way to keep buyers happy straight through to the end of the project and remind them that their opinions are valued.

With technology at the realm, there is no limit to the influence of online referrals. Several websites exist that encourage clients to leave feedback about a particular company, which can result in either positive or negative exposure. In any case, responses spread like wildfire. Thanks to the Internet, buyers are now able to recommend their builder or agent to complete strangers, creating not only a valuable reference to the world of home buying and building, but also a huge resource for referrals.

Every successful builder and agent flourishes for the same reason; they have worked hard to make a name for themselves and their efforts are appreciated and acknowledged by those involved in their projects. By creating a pleasurable experience for buyers, contractors and sales agents can reap the rewards for months and years to come. A happy buyer equals great response, and great response leads to great referrals.

Tips For Choosing a Home Builder

Once you have decided to build your own home, the single most important decision you will make is what builder you hire to complete your project. Many of the advantages of building a new home versus purchasing an existing structure will be wasted if your builder does not listen to your desires or have the ability to complete the project to you satisfaction.

Since many people who want to build a home have little experience building houses, the experience may seem incredibly frightening. You will have to evaluate builders and decide who is capable of handling your project, but you may not feel confident enough to ask appropriate questions. In order to start the search for your home builder, follow these tips.

Start a List of Possible Builders

Since you likely will be paying for the results for many years to come, you will want your builder to be experienced and reliable, but knowing where to find quality builders can be perplexing. Although you will have to put a lot of thought into hiring your builder, here are a few tips to help get you started.

Contact the home builders’ association in your area to compile a list of local builders. Although this listing will not give you any detail or depth about the prospective builders, finding names will help ensure you know all the choices available to you so you can make an informed choice.

Ask your local real estate agents if they have any experiences with local builders, positive or negative. Few people will know the local housing market like them, so any information they have will give you a better picture of who is actively building homes in your area.

Research your Builder’s Reputation

Once you have completed your list of potential builders, you will need to decide which one will be the best fit for your project. You will need to consider their price, reputation, and past experience in order to determine if you want them to work for you. Try to discover the details of their operation, such as whether or not they have a habit of finishing late or going over budget.

Request a list of recently completed projects so you can view their handiwork in person. Reputable builders will be happy to show what they have built, so any builder does not give you a list of specific projects should raise a red flag.

Talk to as many home owners as possible who used the builder you are considering. Ask specific questions, such as how closely the builder listened to their desires, whether the project went smoothly, if there were many delays, etc. The more people you can reach, the clearer the picture you will develop of your proposed builder.