At the risk of sounding obvious, you should ultimately be choosing a builder whose work aligns with your own vision of what you have for your new home.
If you dream is to live in an Acadian style house, picking a contractor who specializes in building log cabin homes may not be the right choice. That being said, lets take a look at some of the factors that should weigh in your choice.
Any contractor or builder you choose should have insurance policies which cover potential losses they would incur. We want to ensure you know that additional coverage is needed on a construction loan. For the protection of the borrower (and the lender's interest), a financial institution will typically require an insurance policy to cover any potential losses that would occur during construction. This coverage is called "builder's risk insurance" and offers protection while the home is being constructed. Typically, the borrower pays the premium, but the policy can be in the builder's name. The actual policy may not always be required to get the loan, however it will be needed prior to closing.
Check References
Heard the old proverb, "trust, but verify"? Contractors -- just like any employee interviewing for a job -- are going to put their best foot forward by focusing on the good, and downplaying the not-so-good. So you should read any available reviews about the contractor...or even take time to speak with past clients.
Verify Qualifications
At a minimum, the State of Louisiana requires that your contractor be Licensed by the Louisiana State Licensing Board of Contractors (LSLBC) which will ensure that they carry the proper insurance. Contractors are required by law to provide you with both a copy of their license as well as copies of their insurance.
- Contractor's License: Verify that they are who they say they are. There have been incidences where a contractor was using someone else's license - which is illegal.
- First look up the name of the company they are representing using the contractor search (http://www.lslbc.louisiana.gov/contractor-search/). (Note: this Louisiana-specific site requires EXACT spelling to return the information you are looking for so be sure to get the correct spelling from the contractor.)
- Not sure about the requirements for contractors in your state? Here is link to a list of state by state requirements (https://www.homeadvisor.com/r/state-by-state-licensing-requirements/).
- Second, look for the names of the "qualifying parties" on the site and ask for proof of identification from you contractor to be sure they are the individual who is listed on the license. This is not offensive and will begin to establish the trust necessary for you to complete the project successfully.
- Insurance Certificate: For the insurance we recommend calling their insurance company directly and asking for a current copy of the insurance statement. This will ensure that the certificate is not fabricated.
The Distinction Between "Licensed Contractor" and "Licensed Builder"
"All builders are contractors, but not all contractors are builders" is a simplified way to state the difference.
When you are evaluating people to build your house, make sure you are speaking with an actual Licensed Builder, as opposed to someone who may only have a Home Improvement Registration. A bona fide licensed builder will have the qualified expertise to handle all aspects of building the home to code, as well as have adequate insurance to cover any issues that may arise.
Share the Feasibility Review With Your Top Choice
You'll want to provide the chosen builder with the Feasibility Review -- essentially all the information you've compiled thus far -- BEFORE you begin designing house plans [See the Designing House Plans article]
With that information in hand, the building contractor should be able to give you a ballpark estimation of costs based upon other plans they have recently completed bids on. Keep in mind that pricing in the custom home market is highly subject to current market prices of labor and supplies. If you are comparing notes with friends and family that have also built custom homes, don't expect the numbers to match up, especially if their homes were constructed 2 or 3 years prior.
At this point the contractor may be able to suggest considerations to keep in mind when consulting with the designer. The contractor should also be able to suggest designers that will best fit the style of home you desire. Please be aware that a final price cannot be given until the plan has been completed, however you will be better equipped if you understand the ballpark pricing.
Article by Robert Carroll
Robert is a NAHB Certified Graduate Builder with Carroll Construction. Robert joined the team in 2007 after graduating from L.S.U. with a degree in Construction Management. Now as Chief Operating Officer, Robert Carroll is extremely active in the local builder community, a leader in the LHBA, and is an avid supporter of charity and community causes inside the Greater Baton Rouge area.
