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Due Dilligence - Questions to ask BEFORE you sign a contract

Okay, after talking to a number of potential builders - and quickly crossing a BUNCH of them off my list! - and then getting 3 bids and carefully comparing them, etc, my DH and I have FINALLY decided on a GC.

Everyone says "do due diligence" before selecting a GC and I looked in vain for guidance on what sorts of questions to ask... both of the potential GC and his references. I finally came up with my own lists - based in large part on what I learned from the problems shared by other on this board and, in the interest of "paying it forward", thought I would share:


Business History:

1. Legal Name, address, etc. of the GCs company? Names of Officers of the Company?

2. How long has GC been in business under this name?

3. Prior to starting this company, did GC own any other companies (in whole or in part) or do business under any other name? If so, what was the name of that company? How long was it in existence? Was it also a general "building" company or a specialty company (eg. Concrete or Framing only)? Why did GC cease doing business under that company name? [Be sure to follow up and ask about ALL business names the GC has used in the past.]

4. If your state requires residential builders to be licensed or registerd, is the GC licensed/registered? What is his license/registration number? How long has he been licensed? [Note: if your state requires builders to be registered or licensed, they are likely to have a website that provides at least some information regarding previous complaints against the builder.]

5. Has the GC ever been licensed by the State under any other business name? What name(s)?

6. Does the GC register every home he builds with the State?

7. How many homes has he/she served as GG on while in business under this name?

8. How many of those have been custom homes as opposed to spec or tract homes?

9. Of the custom homes, what has been the price range of the homes?

10. Has the GC ever been involved in a dispute with a client that went to arbitration? What was the outcome? [Note: arbitration settlements often require that both sides not talk about the settlement afterwards so the GC may not be able to tell you very much.]

11. Has the GC or any company owned by the GC in the past ever been sued by a customer? If so, when and where was the case(s) filed? What was the complaint? What was the case name and docket number? What was the outcome? [Note, court records are public documents. With a case name or docket number, you can go to the court house and get the records if you want to.]

12. Has the GC or any company owned by the GC in the past ever sued a customer? If so, when and where was the case(s) filed? What was the complaint? What was the case name and docket number? What was the outcome?

13. What building and/or business associations is the GC a member of? (BBB? Etc.?)

GC's Solvency

14. What is the net worth of the GCÂs company?

15. Is the GC willing to provide us with the companyÂs audited financial statements for the last three years? (signed by an independent CPA)

16. Will the GC allow us to doing a credit check on his company?

17. Will the GCÂs bank verify that he has a line-of-credit available that is equal to at least 10% of the build price of my home? If the GC is currently building other projects as well, does he have a line-of-credit equal to at least 10% of the total build price of all projects he is currently involved in?]

18. What is the GCÂs typical pay cycle for his subcontractors? May I have the names of 3 subcontractors he uses regularly to verify that they are timely paid for their work?

Current Availability

19. How many other projects is the GCÂs company currently involved in building?

20. Will the GC personally supervise the building of my home (i.e., arrange for subcontractors, order materials, check the quality of work performed, etc.) or will he turn it over to an associate to handle? If an associate will be supervising, who is the associate? What is his/her experience level? Can I meet him/her? [NOTE: if an associate will be responsible for day to day management of my build, I will want to ask him/her many of the questions that I would otherwise direct to the GC.]

21. How often will the GC visit my home site? Daily? Every couple of days? Once a week? Less often?

22. If I contact the GC, how quickly will he return telephone calls? Emails?

Business Practices

23. Does the GC prefer to work under a fixed price contract or a cost-plus contract?

24. Does the GC have a list of subcontractors that he generally uses? If so, prior to accepting his bid, will he provide me with that list so that I can run BBB and other checks on them? Will I have the option of refusing the use of particular contractors with the understanding that such refusal may increase the total cost of the home. [The bid will need to be broken down by subcontractors so that, if I nix a particular subcontractor, the new cost will be adjusted only by the amount that a different sub bids on the particular work.]

25. Does the GC insist that all contracts include a mandatory arbitration clause? If so, will the GC agree that, in the event of a dispute, arbitration will be by a mutually agreeable arbitrator or, in the event that we cannot agree on an arbitrator, each side will submit that name and qualifications of one arbitrator to our mortgage officer  without indicating which party submitted which name  and the mortgage office make the final selection and that the arbitrator shall also have the power to impose all costs of arbitration on the losing party? Alternatively, will the GC agree that arbitration will be non-binding and that, in the event of a suit, the court may award the costs of arbitration, as well as court costs and attorneys fees to the winning party?

26. Does the contractor carry liability insurance? How much?

27. Does the contractor carry workmanÂs compensation for all his employees?

28. Does the contractor require that all his subcontractors carry liability insurance and workmanÂs comp for their employees?

29. How are "change orders" handled? Does the GC differentiate between customer-initiated change orders and contractor initiated change orders? What counts as a "change order"?


30. Can we get a list of addresses of all other homes currently under construction so we can drive by and take a look at them?

31. Can we get a list of all other projects completed in the last 5 years with a brief description of the project, its contract value, and the physical address? [NOTE: Tell contractor "WeÂd like to be able to drive by and get an idea of the range of the GCÂs experience". Check county tax office records to get name/address of property owner then use reverse search on addresses to find telephone numbers. This provides additional "references" that have not been cherry-picked by the GC.]

32. Can we have the names of ____ prior clients that would be willing to provide references? [The number of reference I requested depended on how many custom homes the GC claimed to have built.]


1. Did you have an established completion date before construction started?

2. Did the contractor finish the project ahead or behind schedule, and if so, by approximately how many days? If there was a significant delay, to what do you attribute the delay?

3. Did you enter into a fixed price contract or a cost plus contract?

4. Was your final contract amount more or the same as the accepted proposal price? If it was more, how much was the percentage difference?

5. To what do you attribute the differences? Do you feel any additional costs were justified?

6. How often did the GC visit the site of your build? Daily? Weekly? Less Often?

7. How easy was the GC to contact when you needed to discuss a problem or issue? Did he return phone calls/emails promptly? Were problems/issues actually resolved to your satisfaction or did you just "give in" in order to get the build completed?

8. What would you say this contractorÂs greatest strengths were? I.e., what did he do very well?

9. What would you say this contractorÂs greatest weaknesses were?

10. If you were going to build again, would you use this contractor again or choose someone else? Why?

11. What are you happiest about with your home?

12. What are you unhappiest about with regard to your home?

13. What would you have done differently with regard to building your home if you had known ahead of time everything you learned along the way in the process of building your home?

14. Is there a question you NOW wish you had asked the contractor ahead of time but didnÂt?

15. Is there anything else about this builder or your building experience that you would like to tell me that I haven't already asked?

16. Do you know of anyone else for whom this contractor has built a custom home that I might talk to? [Again, this may lead to references that haven't been "cherry-picked" by the builder.]

Just so you know, the due diligence was a real pain and seemed to take forever. A bunch of builders balked at answering some of my questions but I'm convinced that the better ones were all happy to respond and ultimately, those were the only ones we solicited bids from. We also talked to innumerable references. I made copies of my questions, with space for answers, so I could keep clear who was saying what about which GC.

The fellow we ultimately selected came in rather higher than the other two but we chose him anyway because every single one of his prior customers that we spoke with (including people that weren't on the reference list he gave me but that I "dug up" via other means) all said that he was scrupulously honest, did great work, and that they would hire him again in a heartbeat. Several actually had! including one fellow who had had him build three custom home for him -- ex-wives got the first two! Plus another lady who is currently on her third build with him and insisted I come out and see both her current home and the new one that is "in progress" so she could point out the quality of the work done. I asked why she was building again when she was so happy with her current home and she said she found the new piece of property while helping someone else look and "fell in love" with it and decided she just had to live there. She said she figures she will clear enough on her current home to nearly pay off the new one.

So, while I'm scared spitless about the amount of money we're fixing to sink into this, I'm actually looking forward to the process.

Anyway, hope the questions help...

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