How to protect yourself when you are building a new home

There are multiple ways to protect your investment in a new home. It helps to ask the right questions.

ADOBE

By Michele Lerner -- Boston.com correspondent

July 15, 2020

When you purchase a newly built residence or hire a custom builder to design your dream home, you’re making a huge financial investment and taking a leap of faith by trusting that it will stand the test of time. But you don’t have to go just on faith: There are multiple ways to protect your investment, including choosing a reliable builder.

“Most builders know their reputation is important, and they want to make sure their customers are happy,’’ said Brian Perry, a real estate agent with Gibson Sotheby’s International Realty in Boston. “They’ll fix something even 18 months or more after the house is complete just to take care of their customers.’’

Choosing a reputable builder

While price is clearly important when comparing builders, it’s also wise to take the time to look into a builder’s reputation and ask questions about how he or she conducts business.

“When you start the process of looking at new construction, it’s smart to work with a local real estate broker who is very familiar with the town where you want to buy,’’ said Melissa Dailey, a real estate agent with Coldwell Banker Residential Brokerage in Wellesley. “Local brokers have their boots on the ground and know how builders are viewed in their area.’’

The builder will pay a commission to a buyer’s agent as long as the agent is involved with the transaction and identified as the agent from the beginning.

Checking reviews of builders on your own can reap some information, but it’s best to have a real estate agent with expertise ask around for you, suggested Christopher Arienti, a real estate broker and owner of RE/Max Executive Realty in Franklin.

“Your agent can call the building inspector from the town and ask local home inspectors if they have seen any of the builder’s properties,’’ Arienti said. “The benefit of staying local is that if something goes wrong, the relationships between your realtor and inspector and the builder can result in a higher level of customer service.’’

National builders often hire local people to work on their projects, which also provides that personal connection, Arienti said.

In addition to searching Google or Yelp for builder recommendations and complaints, you can check the builder’s rating with the Better Business Bureau.

Another option, said Perry, is to call the city/town offices to make sure there are no complaints against the builder. Also, go to the Massachusetts Office of Public Safety and Inspections to be certain that the builder is licensed.

You or your real estate agent can request references from builders and call recent clients to ask about their experience. “You can also ask local attorneys whether they know anything about the builder,’’ Dailey said.

Your builder won’t be doing the entire job alone, so it’s important to ask about the other contractors who will work on your home, said Barbara Venincasa, a real estate agent with Casa Builders & Developers Corp. in Westborough.

“A builder who has a loyal group of subcontractors or employees that are trustworthy is likely to do a better job than one who hires subcontractors individually based on price,’’ Venincasa said. “You should ask about whether all of the subcontractors are licensed.’’

As you should with any major investment, keep meticulous notes on every discussion and phone call. Get written confirmation of all oral agreements.

Warranty coverage

Even with the best research and a good builder, sometimes things go wrong. A variety of warranties are in place to provide you with protection that may pay for repairs or adjustments. While Massachusetts law does not require a builder to provide a one-year warranty, some offer warranties that cover structural issues, foundations, plumbing and electrical systems, and heating and air conditioning, Dailey said. “Massachusetts has what’s called a three-year ‘implied warranty,’ which means that builders may be held liable for good workmanship for up to three years after the home is complete.’’

In addition to the one-year warranty, some builders offer a 10-year structural warranty to protect against major defects. Beyond that, each manufacturer of materials such as the roof and the appliances has warranties that should be provided to you at the closing.

“It’s smart to hire an attorney who is knowledgeable about new homes,’’ Dailey said. “That attorney can make sure you’re protected when you make your offer and can look over the warranties provided by the builder.’’

Multiple inspections

In addition to the mandatory inspections that take place throughout the building process, Arienti recommends that you hire your own home inspector.

“It’s worth spending $200 to $400 for a home inspector who can check that everything has been built to code and may notice something that you won’t see on a walk-through,’’ Arienti said.

Some new-home buyers opt for two home inspections, including one to check out the systems before the drywall is installed and a second one when it is complete, Dailey said.

Town inspectors will also check out the house at multiple stages of construction — from the foundation to the framing to the plumbing and electrical work — to make sure everything is in compliance with Massachusetts building codes, Venincasa said. Construction can’t move on to the next phase until each inspection has been completed.

“The final walk-through with the homeowner and the builder generates a punch list of items to be addressed,’’ Venincasa said. “It’s important to get in writing the punch list and when the items need to be fixed. For example, if you buy a home in winter, you need to have it in writing when the landscaping and sidewalk will be completed.’’

Resolving an issue

If you notice anything wrong with your home, particularly during the first three years of residence, the first step is to contact your builder directly, unless you purchased a condo or the issue is with an appliance that is under warranty.

“If you have purchased a new condo, the first place to contact with any issues is the professional management company that handles the building,’’ Perry said. “Most of the time, that company will contact the developer, who will send a plumber or other contractor as needed.’’

If an appliance is malfunctioning, you can contact the manufacturer according to the warranty instructions.

If the problem is with your house or its systems and the builder doesn’t resolve the issue, call your real estate agent and your real estate attorney.

“Your attorney can talk to your builder’s attorney to try to resolve the issue,’’ Dailey said.

Ultimately, the issue could end up in court, but that’s rare, she said.

“A good builder will give you a business card and tell you at the closing to call with any concerns and that he will fix anything as fast as possible,’’ Arienti said.

Questions you should ask

Before you hire a builder for your custom home or choose a builder in a development, it’s wise to gather information about the warranties offered and how he or she conducts business. Some questions to ask include:

What warranties do you provide?
What is your team like? Do you use licensed subcontractors or have employees that provide services such as plumbing and electrical installations?
Can I see some of your finished homes and get references from recent customers?
How long has your company been in business?
Do you meet or exceed code requirements for things like insulation and the number of zones for heating and air-conditioning systems?
What is the process for home inspections and a final walk-through of the home?
What is the process if something goes wrong in my home during the first year or later?
Can you provide a copy of your builder’s license?
Has the state ever taken legal action against you?
Are you bonded and insured with general liability and workers’ compensation insurance?
Are there any liens on your business that could affect my home construction?
How often can I visit the job site?
Will there be a professional cleaning when the project is complete to make sure the property is germ-free?

Michele Lerner can be reached at [email protected]. Subscribe to the Globe’s free real estate newsletter — our weekly digest on buying, selling, and design — at pages.email.bostonglobe.com/AddressSignUp. Follow us on Facebook and Twitter @globehomes.