Avoid Common Mistakes on Your Home Construction Contract

12 Jan Avoid Common Mistakes on Your Home Construction Contract

Hopefully you never encounter a contractor who acts in bad faith. Yet even a good-intentioned contractor might fail to deliver the results you want if you aren’t on the same page from the beginning. A great home construction contract protects you while also making it crystal clear that you get what you want.

In our decades of experience as a builder, we have helped many home buyers through the process of stipulating a clear contract that everyone feels confident about. Here’s what we’ve learned:

Know Your Budget Beforehand

You may have a budget in mind, but it’s best to go ahead and apply for home construction loans or refinancing before signing the contract. With a clear picture of cash or lending, you can make better decisions about down payment size, frequency of installment payments, and of course the overall cost.

Compare Bids Closely

Contractors bidding on the same project can submit vastly different bids — particularly in the form of what’s included and what costs extra. You can’t call it a “hidden fee” if you do not read the contract closely at the beginning.

The first estimate you receive may be wildly high or low. Get multiple bids and then break things down for a like comparison. A good home construction contractor may actually include more in the contract, making a somewhat higher bid better than a lower bid with tons of extra charges later.

Vagueness Is Your Enemy

Bad contractors are like a magic genie who grants terrible wishes that only meet your request on a technicality. How do you define “satisfactory” and “standard” when it comes to the finer details of home construction? This is the time to interpret the legalese and make clarifications to the contract to make sure you get what you want.

Perhaps most importantly, specify allowed substitutions and how to handle circumstances where the original plan or material may not be plausible. You don’t want your contractor substituting cheaper materials or techniques behind your back.

Get Completion Dates in Writing

Without a firm timeline, a contractor may abandon a project when something more lucrative comes up. Set goals in writing and stipulate financial incentives if possible, e.g., a small refund if home construction continues past a certain date.

Plan for the Unforeseen

Foundation problems, inclement weather, plans that turn out to violate code — the unforeseen can force changes throughout home construction. Leave wiggle room in the budget and make sure your contract holds the correct parties responsible for mistakes.

Don’t Overestimate What You Can DIY

If you plan on adding “sweat equity” during home construction, be realistic. In terms of your personal time and the quality of results — and even the ultimate costs — it’s usually in your best interest to have the builder handle everything, or at least everything but the final finishing touches. For example, you might add a towel bar yourself but a contractor should install the sink.

Ultimately, your goal should be to sign a home construction contract that specifies everything you really want with appropriate arrangements for the unexpected. Start down the right path by talking to contractors and comparing the estimates — then speak up about your goals and concerns. Contact us today as we’re here to help.