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How homeowners benefit from an established builder’s systems and relationships

Over the past decade, many new contractors have emerged as homebuilders. This has given homeowners more options, tempting some to choose a contractor based strictly on price.

Bad idea. It’s nearly impossible to compare apples to apples when collecting competitive bids, especially for a complex custom home. That’s why homeowners who have built before prefer to compare builders rather than prices.

By some estimates, the US economy boasts more residential contracting companies (general contractors as well as subcontractors like plumbers and electricians) than any other type of business. This reflects a low barrier to entry: you just need a contractor’s license and the right insurance to get started. Of course, licensing and insurance are crucial—no smart homeowner hires a contractor without them—but they are simply the ante to get in the game. They say nothing about the company’s work quality, budgeting skill, financial stability, or customer service. These factors and a multitude of others are the difference between a great building experience and an expensive disappointment.

The big advantage to hiring an established professional builder is that the pro has the systems needed to manage a custom home project. It’s a real company with a physical location and proven management systems. These include systems for customer service, design, estimating, construction, and warranty work, among others. Advantages for customers include:

Timeliness and accuracy. Professional builders have a team of specialists that handle design, estimating, purchasing, and construction. More gets done, in less time, and with fewer mistakes. One important specialist is a dedicated manager for each jobsite—this person takes ownership of the project to make sure work gets done on time and as planned.

No surprises. A professional provides detailed specs that clearly define the scope of work, eliminate hidden costs, and help prevent disappointing outcomes. Specifications take time and knowledge to create. The professional builder has the systems and staffing to develop and stick  to this ‘master game plan.’ Without clear specs, a homeowner may accept a low-bid proposal that is ultimately unrealistic and the source of unwelcome surprises.

Buying clout. Successful custom builders are highly skilled purchasers. They know the best places to get each of the hundreds of products that go into a home. Their relationships with suppliers help ensure the best available prices and timely delivery.

Value engineering. Years of experience have taught the professional builder the most efficient approaches to new home construction. The builder’s staff will work with the designer, architect, and engineer to make sure the plan minimizes waste and is cost-effective to build.

High-quality subs. Professional builders only work with professionally managed subcontractors. Because the builder is their steady customer, these subs work hard to protect that relationship—for example, by charging fair prices and showing up on the job when needed. 

Warranty confidence. Most new contractors fail after just a few years, often because they lack the financial resources to stay in business. Homeowners can’t be confident that the contractor will be around to fulfill warranty requests. In contrast, the established professional builder has the resources to back up a written warranty of its work. Its longstanding relationships with subs and suppliers help ensure a quick response to warranty claims.

This article isn’t meant to disparage the small contractor. A company that lacks business acumen and capital may be led by a skilled tradesperson who does top-notch work. In fact, talented tradespeople who are unable to grow their businesses often end up putting their skills to work for a professionally managed company.

Q: What does your warranty cover?

A: Surprisingly, a lot of homeowners forget to ask this question. But it's as important to examine the warranty when choosing a contractor as it is when buying a car. Of course, that's only possible when the warranty is in writing. A homeowner should never accept a verbal warranty, which is worth about as much as the paper it's not printed on. A written warranty should detail what is covered and how long it's in force. Although a year minimum is a good rule of thumb, some items installed in the home may carry longer warranties.