Learn something about the builder before committing



Selecting a homebuilder?

Then you may spare yourself a peck of problems by thoroughly researching the builder's background before you commit.

"There's no substitute for the involved, skeptical consumer," says Baltimore real estate attorney Jay Lenrow. Whether building a custom home or having a house built in a new subdivision, the process can be a thorny one, he says.

If the builder's workmanship is poor, your home could have serious structural problems. If he's unreliable, the job could take far longer than planned.

At the very least that could inconvenience you. A delay also could force you to make expensive temporary housing plans as you wait to move into your new home.

"There's a lot of room for precaution," Mr. Lenrow says.

Regrettably, the recession-era downturn in new home construction means more reasons for sweaty palms, real estate specialists say. A number of builders are on the brink of bankruptcy and some have already gone under.

What would happen if, midway through the construction process, your builder failed?

Then either the home's ultimate completion or the return of your deposit money could be called into question.

Maryland, like other states, has strengthened the law to give you

more recourse if you must take your builder to court. But trying to win a court case against a financially ruined builder is no fun.

Better to find a good builder from the outset than to wrangle with a bad one later.

But screening builders can be a difficult process, points out William C. Young, head of consumer affairs for the National Association of Home Builders.

"Unfortunately, there's no Consumer Reports where you can check on the quality of a particular builder," says Mr. Young, whose organization represents about 50,000 home building firms.

Furthermore, trying to check on a builder through a local government consumer affairs office or Better Business Bureau often yields little information of value.

"All they can tell you is the official opinion. They have to be very careful. They can't tell you anything that's not on the record," he says.

While you'll never be able to gain perfect knowledge of a builder and his finances, real estate experts suggest these ways of learning what you can:

* Create a short list of builders worthy of your consideration.

Friends and associates who've had a good experience with a particular builder are your best bet for recommendations.

Local architects often know which builders are good. If neither of these sources yields the names you're seeking, you can work off a list provided by the homebuilders' associations, such as the Baltimore-based Home Builders Association of Maryland, recommends Mr. Lenrow, the lawyer.

* Seek references for builders on your short list.

The idea here is not to let the builder pick and chose the names. A hand-picked list is likely to exclude those who may have been unhappy with the builder's work.

Rather, request from a custom homebuilder a complete list of homes he's finished in a given period. For a small custom builder who does half a dozen or fewer homes a year, it would be appropriate to ask for a complete list of two years' worth of work, for example, Mr. Lenrow says.

Be prepared for resistance from some builders in your quest for a complete list, however.

Mr. Young, of the homebuilders association, says builders are sometimes reluctant to give out customers' names on the

grounds that the customers wouldn't want their privacy violated. They may want to call ahead to get customers' permission.

* Visit any subdivisions already done by a builder who does subdivision work.

It's one thing to examine a model in a prospective community and quite another to see how the builder ultimately completed other neighborhoods, Mr. Young points out.

How did the site design and landscaping work out? Is this the sort of community where you'd want to live?

It's best to make such a visit on a Saturday or other time when people are likely to be out in their yards or readily accessible to conversation.Don't be afraid to question those living in the community about their experiences with the builder.

Ask open-ended questions: "Did it meet your needs?" "Where there any surprises ?" "If you had it to do all over again,what would you do differently?"

Expect to get an earful from many with whom you speak,Mr Young says.

"If they're happy with the builder,they'll want to give him more business," he says, " If they're unhappy,they'll want to get even."


Ask for a financial statement from the builder.

" One of the ways builders get in trouble in times of economic downturn is by taking money from a current customer to pay bills for another job," Mr.Lenrow says.

You can't get a feeling about the builder's ability to perform as promised by looking at his financial statements.

It's naive to think most builders will be pleased to provide these reports.

Still,Mr. Lenrow strongly recommends that anyone planning to hire a builder try to get a profit and loss statement for his firm.

" If the builder is unwilling to give it out, that's a danger signal that should raise a red flag for you."

* Look to public records to learn about your builder's background.

To to the local courthouse and find out if lawsuits are pending against the builder or whether judgments have been brought, says Douglas Bregman, a Bethesda-based real estate attorney.

"To know who has sued him for what and why can be valuable information and give you names of people to call," Mr. Bregman says.

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