Working with New Home Builders

building 

I remember years ago, sitting in my lawyers’ office as we purchased yet another project home. We were discussing the new home market and he quickly explained, with every “upturn in the Real Estate cycle” “new home Builders” crawl out of the woodwork. Some good who stand the test of time and remain long after the boom, most others not so good and they are the first to disappear when the pendulum swings the other way.  Well over the last 15 years, I can’t count the number of “New Home Builders” I have come across. What I’m not surprised at is the distinct difference between the good ones and the bad ones.

 Well as we’ve seen over the last year or so, the pendulum has begun to swing to a more balanced market. There is just more inventory available for buyers to choose from. This means sellers need to make an effort to sell their homes. Whether that means fixing them up, whether dated or deferred maintenance issues, de-cluttering and even staging are becoming increasingly common to catch the Buyer’s attention. This will also begin to weed out the good builders from the others.

I cannot count the number of phone calls and emails I receive from panicked sellers because their home has not sold in 2 weeks! The average days on the market before a property is sold has risen since last year. So comparing your home sale now to houses selling 2-3 years ago is no longer accurate. Year-end statistics from the WREB should tell a very interesting story this year! I have had a number of clients who had been listed for months with no success, we’ve staged and then their home sells! Staging works in a competitive market!

However, the thing I find the most eye opening is the number of new homes we are being called into for renovations and repairs. One home built by a very well-known builder, has major structural issues. Unfortunately, the one year basic warranty has expired and the 5 year structural warranty just expired. Our client paid close to $700,000 for this home back in 2008. It was a show home backing onto the lake. As a show home it had a 2nd storey deck built on piles that looked down over the lake. Great selling feature! Built to impress! Unfortunately, there are 2 large cracks that extend up the corner of each rear outside corner wall at the back of the house. If you push on the structure at this point – it moves. Exterior walls are not supposed to move!!! 

No surprise here, the Builder cannot be reached, and is hiding behind his office staff. The only response is the warranty period has expired and they would be happy to inspect it for a $1500 retainer fee. We were shocked. No one is perfect. Everyone makes mistakes. Sometimes you have new guys working for who you or your sub trades and although you  believe they know what they are doing, and then you find out, it wasn’t done to your standards. Ultimately, as the builder or G.C. YOU are always ultimately responsible!  You are the go to guy. That’s why you get paid the big bucks! If I see something I don’t like on one of my jobs, I stop and change it there, I’m a stickler for doing it right. No the client doesn’t pay for the re-do, they are trusting us to do it right!  That trust is very important to me. I would never let someone down. That is why I’m deeply saddened and shocked to see my lawyers’ words come full circle. Not all New Home Builders are worth the trust we place in them.  Maybe I’m just old fashioned, but if a client trusted me, I would go above and beyond to ensure they were happy. If I screwed up, I would want to be the one to fix it. Worst case scenario, the builder has business insurance, I’m sure it would kick in for a case like this. However, I would simply find it more important to own up to my mistakes and fix them! One happy client is worth more to me than an unhappy one. My reputation is more important to me and I could never hide behind office staff if I was being called out for a sub-standard job. It may not be pleasant, but this would be one I myself would face head on! Honesty, Integrity and Professionalism re not just words, they are how you run your business and who you are as a leader and a person!

It should be very interesting to see which New Home Builder’s remain in the market over the next 10 years and which do not. If I was planning on building and conducting interviews, I would ask them lots of questions, including how they handle issues past the warranty period. Also find out their legal name as well as their operating name. Do a search of Court of Queen’s Bench for claims or judgements against them. Do both a legal name and the known business name. Find out how many other names they may have operated under over the last number of years and why????  Ask your lawyer to do some digging. Speak to unhappy clients – not just happy clients that have had their home built. If you are going to be making one of the largest purchases of your life with them, – do your homework!  Just because a name is well known – doesn’t necessarily mean their businesses practices are worthy of your money! This is the time when natural Real Estate Cycles will weed out the “men” (professionals) from the “boys” (amateurs).  Everyone wants to get in to make a quick buck, it’s those that plan on sticking around long term that are worth your time!