How to Select the Right Builder for Your Beach Home

Sunday, May 16, 2021   /   by Jay Lesko

How to Select the Right Builder for Your Beach Home

Let's face it, not all builders are the same.  From quality, responsiveness, craftsmanship, cost, and long-term value, each builder offers a different value proposition.  When I assess a builder, I look at three major factors knowing that most builders can only deliver on two of the three.  

Of course every homeowner wants a quality built home.  Buyer expectations for a new build are much higher than a resale.  Buyers expect perfection when constructing their new home and they shouldn't sacrifice quality regardless of price.  There's always a builder that's willing to do it cheaper, but the long-term effects of a lower price will likely result in headaches in the future.  Take Ryan Homes for example.  They sell bundled packages to keep their costs down and tout their responsiveness for warranty requests.  Last time I checked having a quick response time to warranty requests correlates to an excessive number of defects.  A builder that claims to be responsive to warranty requests likely has very few controls in place to monitor the quality of the build process.  This a red flag.  Here are some questions you should ask regarding the quality process when meeting with your builder along side of your trusted Iron Valley Real Estate agent:
  • How many warranty requests have been submitted for this community?
  • What is the average number of days to address a warranty claim?
  • How many project managers are onsite to oversee the build of my home?
  • What is your quality control process when building my home?
  • What are your builder tolerances for defects?  (Believe it or not, a recessed stud may not even qualify as a defect!  I learned this the hard way personally!).

Time to Build
Don't plan on your new home being built in 3 months.  In our current market conditions, the average new home is taking approximately 12 months to build from the time of contract to delivery.  This poses another risk for buyers; will interest rates fluctuate too much over the next year?  The answer to that is unknown.  We assess market conditions and can predict whatever we want, but no one was planning for a pandemic at the end of 2019, which completely changed the real estate market.  

Look out for escalation clauses in builder contracts.  We are seeing more and more of this as materials, specifically lumber prices, have skyrocketed over the last 12 months.  A 4x8 sheet of plywood cost around $19 in February of 2020.  That same sheet of plywood is close to $98 today.  As builders and buyers go under contract, there is a risk to the builder that price fluctuations for materials could result in those additional costs being passed on to you as a buyer.  Read your contract carefully to understand what risks are being passed to you. 

You want the best price, but price is not everything when negotiating a contract.  You pay for what you get and your low priced home may be a ticking time bomb.  Focus on quality of build and know that paying a little more to have it done right will save thousands of dollars in the future.  

Also, keep in mind that home price alone is only one consideration in the home building process.  For example, some builders such as Ryan Homes, passes the full transfer tax amount and impacts fees to the buyer.  In Delaware, our transfer tax is 4% of the sales price and impact fees for water and sewer could be near $10,000.  These fees are typically paid at closing and sometimes results in sticker shock for buyers at the settlement table.  Also, be cautious of incentives to use a preferred lender.  In most cases the interest rate will be slightly higher and over time you'll be paying more in interest when taking the builders incentive.

To get our perspective on which builders deliver for our clients reach out to us directly.  Our agents have tremendous experience in new construction and are here to guide you through process.