Key questions to ask before you hire builders for your home range from the financial stability of the business to whether defects will be rectified, an expert advises. Photo / Jason Oxenham
The boss of New Zealand’s biggest house-building business has compiled a list of 11 key topics he thinks are crucial to ask before choosing a builder.
Grant Porteous, of Deacon Holdings, master franchisor of G.J. Gardner Homes New Zealand, said these questions ranged from the financial stability of the business to whether defects will be rectified up to a decade after a new residence has been completed.
“It’s absolutely critical with a large amount of money involved you start here, before you commit a cent or sign anything, so you understand not just the financial stability of the business, but you can be confident someone will be there to rectify any genuine issues that can arise in the short, medium or long term with your home,” he said.
Does the builder have a reputation, a brand to protect or do they possibly hide behind shelf companies for each project, or every few years change to a new legal entity and move on?
“That is a frequent practice in the industry by some,” Porteous said.
People will be able to do better due diligence on a building business by putting such questions to the builder, he says.
“In a challenging economy, it pays to ask a few challenging questions, to protect you and your family,” Porteous said.
“Don’t be concerned: the good honest answers will be obvious and easy to understand,” he said.
G.J. Gardner, New Zealand’s largest franchised group house-building business and biggest residential builder for more than 25 years, is planning a 30% growth in franchise numbers in the next year.
But already, it builds the most homes:
That is data from BCI’s What’s On Report which gives the number, value and size of new residences built.
Porteous said he wanted clients to be well-informed before they signed a building contract.
“People making good, informed decisions in selecting a builder will leave them feeling in control and getting the sort of house they expected, for the price they had agreed on and in the timeframes set,” he said.
“This will help all the other good builders out there,” he said.
He outlined the areas he thinks are key to a successful outcome.
Within each category, a number of questions should be put to the business to get the clearest answers, he said.
1. Who owns the building business?
Who are the principal owners of the building company that the contract will be with?
Importantly, have any of these people personally - or any company or entity they have been involved with previously - had any financial problems or challenges?
2. Financial stability
How financially sound is the building company that strikes the contract?
How sound are the associated businesses of the owners, if there are any?
Are all these entities in sound solvent financial positions?
Are they all meeting all their obligations operationally and financially to all external parties and creditors and not involved in any current disputes?
3. Longevity
How long has the company been operated by these owners?
How many successful projects has it completed of this scale/type?
What current projects are they undertaking?
How long will the design and pre-building consent work take?
What will be the actual build time of the home and anticipated completion date?
4. History
Has this business had any failed projects?
If so, what are those and what happened?
Has it had any claims brought against it previously or does it have any current claims against it?
5. Funding
How is the company funded? Is it a self-funded positive cashflow business?
Or does it rely on external investors such as banks or other funders?
Does the business undertake high levels of speculative building work or build to contract?
“Self-funding and build-to-contract are the very much safer options,” Porteous said.
6. Contract price
Please provide an agreed set contract price, with all current costs necessary to complete the contract to that price.
Explain any potential for escalations to that price including provisional sums.
7. Proof
Can I talk with the company’s registered external accountant to get their support to answer all these questions?
8. Complaints
If your business strikes problems, or we are unhappy in any way, is there anyone else we can contact?
Will that party work to assist with any matters?
What is the relationship between the builder and that party?
What influence do they have and what would make them want to help?
9. Customer, contractor references
Please supply the contact details of five past independent customers and five independent contractors to your business.
They should be customers you have built for in the past 12 months.
The trades should be ones that presently work for the builder.
“This is to ascertain the satisfaction levels of customers and the quality of work by trades. To tradies, you should be asking if this a good company to work for, if they are well organised, do they pay you and suppliers on time, would you trust them to build your mother’s house?” Porteous said.
10. Supplier references
Please supply some major merchant suppliers you deal with, for example, PlaceMakers, Carters, ITM, Plumbing World, etc.
Please advise them to give full transparency when questions are put about your building business.
11. Quality
What assurances can you give about managing the quality of the new home?
What after-care service commitment and surety is provided?
Are you committed to resolving any matters for up to 10 years?
Porteous said: “Feeling respected, valued and seeing your builder is genuinely excited about building your new home are keys. You want to be confident and empowered throughout the building project. There are many great building teams in the industry. Just make sure you do a little mahi and find the right one.”
A spokesperson for Consumer NZ said hiring a professional tradesperson might seem like a no-brainer, especially if building and renovations are not in your skill set.
“But you need to know what to look out for. Consider these aspects before you sign”.
Firstly, check whether your project means you need to employ a licensed building practitioner.
Structural work, or work that affects your house’s weathertightness, will require a licensed person.
Decide what kind of contract you want
“Do you want your builder to supply all the materials and the labour themselves, or will you chip in, or will you source some of the required materials yourself? Also, consider whether you’d like to arrange a fixed price or an hourly rate. You might be happy with an estimate if it’s a smaller job.”
Agree on a timeline
“Do you need your project to be finished by a certain date, or are you flexible? For example, if you’re renovating your one-and-only bathroom, you’ll want to establish a clear understanding of how long the work will take.”
Other questions to ask your builder which Consumer listed is:
Anne Gibson has been the Herald’s property editor for 24 years, written books and covered property extensively here and overseas.
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