Friday, May 17, 2013

"Houston, we have a problem..." - problems with your builder/contractor

You may remember my post on selecting a builder.  I've been meaning to revisit that post and give you some suggestions on how to avoid the problems that we had with ours.  To make things easy, I'm going to cut and paste my original post and add new comments in bold.  

Selecting a builder is probably the most important decision that you'll make when building a custom home.  I won't get into a lot of boring details about the process of interviewing builders, but here are some important points when it comes to picking one:

  • What is your gut feeling?  In our case, I had a pretty strong gut feeling about our builder.  I appreciated his confidence, trusted his judgement and was impressed with his honesty.  As with all things in life, I think it's always good to trust your gut.
I still think it's exceptionally important to trust your gut.  Problem being: our builder's confidence was really an inflated sense of importance and a blatant misrepresentation of his abilities (or lack thereof).  While we did see several of the homes that our builder had constructed, we didn't actually talk to his prior customers.  That was a HUGE mistake on our part and one that I'm still angry at myself for.  

He talked about his decades in the construction industry, his longstanding connections and relationships with the folks at the City (planning, public works, etc).  As it turns out, people at the city had heard of him, but no one really spoke that highly of him when we were knee deep in the process.  

It's also important to ask your builder whether they've been building spec homes or custom homes in the past.  As it turns out, our builder had been building spec homes.  That means the client came to purchase the home after the construction process was completed.  Any error, rework or cost going over the budget was rolled into the final cost of the home, without the purchaser's knowledge of the builder's ability.  There's a BIG difference between building a spec home and a custom home.  Pick a builder who is well versed in building custom homes and working with clients every step of the way - particularly if you're on a tight budget.
  • Is your builder on time?  Our builder is consistently on time, and this tells me that not only does he respect my time, but he also respects his business and reputation.  
I will say that despite all of our issues, our builder was consistently on time - and I do appreciate that.
  • Can you have an honest discussion about finances?  Building a home is a huge financial undertaking, for both you and your builder.  Both parties have to come to the table knowing that there will be some pretty frank discussions about finances.  What can you afford?  What is your budget?  Is your builder pushing you to go above and beyond what you're comfortable with?  (Big red flag!)  Has your builder fallen upon hard times during the subprime lending crisis and subsequent economic slump? All of these questions need to be answered before applying for a construction loan, because the answers will come out in that process (more on that in another post!)
Oh how I wish I could go back in time and do this one over.  In hindsight, I've come to the realization that our discussions about finances were more about our finances and not about the builder's.  

Each month, our builder would submit an invoice to me for the monthly charges.  Since I am obsessed with being on time and paying vendors promptly, I would usually issue payment to the builder on the same day that the invoice was received.  When we started having issues with the cabinet maker (more on that later), I started to withhold parts of our monthly payment to the builder.  This was a way to ensure that we were protected from getting shafted by the cabinet maker who disappeared without providing all of the product we had contractually agreed to pay for.  

As it turns out, the builder had absolutely NO reserve or cash flow to pay the vendors, unless we paid him in full each month.  He had NO line of credit with the bank.  I CANNOT URGE YOU STRONGLY ENOUGH TO MAKE SURE THAT: YOUR BUILDER HAS A LINE OF CREDIT

Instead of paying our vendors (who had already completed their portion of the work, and deserved to be paid in full), our builder began holding money for himself.  Perhaps to pay for his trip to the Bahamas when our final inspection was scheduled.  Yes, you read that correctly, and yes, I'm bitter...

One of the most telling interactions that I had with the builder was during a meeting with our designer.  He kept telling me that I shouldn't be putting a laminate counter in the mud room and in the laundry room - and that high end custom homes always have slab surfaces.  By the time I left the meeting, my designer said "If you had listened to his suggestions during this meeting, you would have spent an additional $2,000."  That was a big red flag that our builder had no respect for our budget and how we wanted to distribute our funds.  
  • Will your builder provide you with a few references?  Ideally, your builder will have past clients who are very pleased with his/her work.  Word of mouth seems to be everything in the construction business, so it's important to get connected with people who have worked with your builder.  These references can come from subcontractors, lenders, and ideally past clients.  In our case, we were able to tour a recently completed home, and the quality of work spoke volumes about our builder's work ethic and capabilities.  
Again, it's totally our fault that we didn't actually talk to past clients.
  • Do you like your builder?  If your builder is a major jackwad, you might want to look elsewhere!  I'm a woman, and I also happen to be the "project manager," because I work odd hours and my husband spends most of his week at work.  Believe it or not, even in 2012, I've been stereotyped and talked down to by some of the "ol' boys" in the business.  Obviously those men didn't get my business and never will.  Bottom line: I like our builder.  He's on time, has a pretty good sense of humor, doesn't talk down to me despite a gap in gender and generation and he's easily accessible by phone/text/e-mail.  You have to like your builder, because you'll be communicating with them several times a day, every day.   
This actually makes me laugh (and cry) now that this whole experience is said and done.  There's one situation on particular that makes me want to smack the guy:

During a meeting with the builder and our jackwad cabinet guy, I was pressing both to commit to a final finish grade of paint.  I wanted to make sure that the cabinets came in painted, finished condition.  The cabinet guy said "Well, the problem is that when people say that the cabinets aren't finished, it's a woman touching the cabinets and they're looking the other way."  Instead of sticking up for me, the client, our builder just laughed like a frat boy.  If there's one thing that irritates me, it situations where women are being put down by men.  I'm pretty sure that my sleep deprived, decaffeinated brain still has more intellect than their brains put together.  

  • Does your builder respect your vision?  This one is pretty simple.  If your builder thinks that you're an idiot because you want to put cork floors in your man cave, it's probably not going to be a good match.  Obviously your builder will have different taste than you do, but part of the builder's job is to be an objective party in creating your dreams.  A good builder will tell you if you're making a huge mistake, but they'll also allow you, the client, to make decisions based on your needs and wants.
I can't really say for certain that our builder respected our vision, because as we worked toward completion of the house, I pretty much ignored him in every way possible.  Thankfully, I had a great designer who helped to affirm that our choices were both financially and aesthetically sound.