Building a new home is a massive emotional and financial commitment, so you want to get it right the first time around! Choosing the right builder to partner with is an essential key to success, with the potential to make or break the journey of creating a new home for you and your family.
Unfortunately, the last few years have increased the risk of builders declaring bankruptcy – insolvency in the building industry is on the rise, with statistics from ASIC showing that from July 1 2023 to March 17 2024, there has been 1987 insolvencies, up from 1495 in 2023 and 782 in 2022. With so many stories of clients getting caught out, it’s vital that you do your due diligence to ensure that any builder you engage with won’t go bust during your build.
RoomFour has been in operation since 2012, so we know exactly what to look for when it comes to reputable builders and subcontractors.
Here are our top tips for researching your builder to make sure you’re not caught out!
Stability
Longevity is a key indicator of success within the building industry, but it’s not the only element to look at. When researching builders, consider not only their years in operation, but their online reviews and company collateral (including website and printed materials), as this will give you a good idea of the type of business they run. Ask for evidence of industry memberships and review any contract templates to understand required payment schedules and milestones.
Current activity can also provide hints – it’s worth asking how many projects they are currently working on and the numbers of their team, so you can build an understanding of their capacity and resources.
While most reputable builders will readily share requested documents with you, there are additional ways to assess their stability. Builders must hold a valid building license to operate in Victoria. The Victorian Building Authority (VBA) offers a public register where you can verify a builder’s license status and confirm they hold the necessary insurances, such as domestic building insurance.
Red flags
When researching which builder to go for, it’s good practice to shop around for a few quotes so you can compare the pricing and communication styles of each business. If one builder comes in dramatically lower than every other quote with unrealistic pricing, that’s a huge red flag – it shows they either haven’t done their research properly, or are unable to cost up their services correctly. Their communication style can also spell problems – if they are vague, slow to get back to you, or skirt around questions, stay away.
With a project as large as building your first home, the last thing you want is a lack of transparency. In initial discussions with any builder, pay attention to how they answer your questions and what information they provide – any reticence could be a huge red flag that things are not as they seem behind the scenes.
Education
Building your new home isn’t a project to go into blind – it’s essential to arm yourself with the right information so you know what kinds of questions to ask, what green and red flags to look for and what is ‘standard’. At RoomFour, we have created a database of resources that aim to educate clients in all aspects of the building industry, spanning from a breakdown of our current projects to guides on preliminary agreements and cost analysis.
We’ve also introduced a build cost estimation workshop, which aims to take some of the guesswork out of the building process. We dive into the specifics of your project, assessing every factor to provide a comprehensive and realistic cost estimation, giving you the confidence any steps you take from this point on are grounded in financial viability. Our experienced Director and architect will visit your site and create a detailed Return Brief to understand your needs and vision. This will inform the Build Cost Estimate, which outlines the financial implications of the build and sets you up for success.
At RoomFour, client protection is paramount. We verify domestic building insurance before you make your full deposit. This means you receive the policy certificate upfront, guaranteeing financial security in the unlikely event of builder insolvency. It’s a proactive measure that reflects our commitment to responsible building practices and your peace of mind throughout the entire journey.
For added transparency, we typically request the cost of the domestic building insurance, which is generally around 1% of the total build cost. Once secured, we obtain the certificate and provide it to you before you make your 5% deposit.
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Want to know more about our build cost estimate workshops, or have general questions about building your dream home? Get in touch with the team today!
