How do I do due diligence on a builder?
- Thread starter Moglet
- Start date
Contact the department of fair trading and see if there has been any complaints lodged against the entity.
Apart from that you really need to ensure that the building contract is water tight. There is a huge gap from when you initially receive the building contact from the builder to where it needs to be.
Apart from that you really need to ensure that the building contract is water tight. There is a huge gap from when you initially receive the building contact from the builder to where it needs to be.
What do you mean by your last sentence Shahin?
I was discussing our potential townhouse build with my son who suggested we go with a big company who cares about their reputation and who cannot just go broke as a loan builder can. I don't agree with that at all, because plenty of big building companies have gone broke and left people in a bad way.
My idea is that whoever does any build would want to have a contract written so that progress payments made cover work actually done. So, if a builder, large or small, goes broke or walks off the job, the payments made are not more than the work done.
We learned this the hard way with our pool many years ago. By the time the pool was 70% complete, we'd paid about 95% of the contract. We had to push and push to get them back to finish it, and I believe they went bust soon after. We were lucky to get ours finished.
In our case, if and when we engage a builder, how do we know we have a good contract? I'm guessing we get RPI or someone else who knows what they need to be looking for to look it over. We have a friend who says he works very hard to get a tight contract when he builds townhouses, and then he relaxes.
Hey Wylie,
When you receive a building contract from the builder - they generally include the bare minimum and leave out a whole bunch of things which you and I will think it is necessary or the quality of finishes or fixtures are extremely basic.
When you sign the contract and get to a point where you need to do something and realise its not in the building contract - the builder raises a variation and you just need close eyes, become religious and basically hope that it doesn't hurt that much and that its the last variation.
For example, the builder may say that they will do the electrical work and cater for 1 powerpoint per room but then you realise that the living room is huge and requires 3 power points - the builder (or rather their contractor) raises a silly variation and says it will cost $XYZ to add in an additional 2 power points.
There may also be technical things missing from the contract such as sarking or asbestos removal, or whatever that you may not have thought upfront.
When you receive a building contract from the builder - they generally include the bare minimum and leave out a whole bunch of things which you and I will think it is necessary or the quality of finishes or fixtures are extremely basic.
When you sign the contract and get to a point where you need to do something and realise its not in the building contract - the builder raises a variation and you just need close eyes, become religious and basically hope that it doesn't hurt that much and that its the last variation.
For example, the builder may say that they will do the electrical work and cater for 1 powerpoint per room but then you realise that the living room is huge and requires 3 power points - the builder (or rather their contractor) raises a silly variation and says it will cost $XYZ to add in an additional 2 power points.
There may also be technical things missing from the contract such as sarking or asbestos removal, or whatever that you may not have thought upfront.
Thanks Shahin. I've been warned about things like number of power points etc. Would love to hear any other traps we would need to look out for from anyone who has been caught out.
We also were caught in this little trap when we did our big reno on our own house, so we know some things to watch for, but there are still plenty of things we don't know.
We also were caught in this little trap when we did our big reno on our own house, so we know some things to watch for, but there are still plenty of things we don't know.
We're going through a design process at the moment. One of the things they're offering is to include in the final design specifications a detailed (and visualised) breakdown of literally every inclusion in the property. The height of splash-backs, the location of power points, everything.
We give all this detail to the builder and get them to quote based on this, not just the basic design and a thrown together list of inclusions. We can actually see how everything fits.
It means we know what we're getting and the builder knows exactly what to build.
We give all this detail to the builder and get them to quote based on this, not just the basic design and a thrown together list of inclusions. We can actually see how everything fits.
It means we know what we're getting and the builder knows exactly what to build.
There are literally heaps of things - the big thing though is not knowing what to include in the contract.
The best thing to do is grab yourself a whole bunch of building contracts and just run through the inclusions and determine whether your job needs that.
I was talking to a client and she was complaining that the builder didn't clean inside the house after completion. So I added this in the contract. There is basically an expectation that the builder does certain things but you need to ensure that these things are covered in the contract and "not just expected".
Have you had a look the Homeone site for anyone building with the sane company?
We built a few years back and chose the builder who's built the most houses in that estate. They went bust the day after we paid our final payment ready to move in.
The majority of builders will have a front-loaded progress payment schedule. The bigger the builder you go with, the more front loaded the payments and the more likely that the contract will favour the builder.
We built a few years back and chose the builder who's built the most houses in that estate. They went bust the day after we paid our final payment ready to move in.
The majority of builders will have a front-loaded progress payment schedule. The bigger the builder you go with, the more front loaded the payments and the more likely that the contract will favour the builder.
Ask them for references to their last few builds. Go to these places and speak directly to the clients and get their honest feedback.
If they (the builder) hesitate to give out previous job details then wipe 'em clean off your builder list.
And as others have mentioned, build your contract , not theirs.