The world of finance and property loves a caveat.
Whenever an investment advisor is about to launch into a passionate discourse on the relative merits of their particular philosophy, it will inevitably come with some justifications.
And among the most common is this:
“Past performance doesn’t guarantee future success.”
It’s a get-out-of-jail-free clause allowing them to cite historical statistics supporting their world view, safe in the warm embrace of 20/20 hindsight. If their predictions come true, they’ll be hailed as genius. If not… well, “Past performance doesn’t, etc.”
Now, I don’t begrudge this backdoor escape because it’s true in most instances. Relying on historical evidence to support future predictions comes with risk. Sure – let’s learn from history, but until the perfect crystal ball is built, there’s no reliable way to hang your predictive hat on past results.
Still – wouldn’t it be nice if there was at least one facet of investment where looking back keeps you moving safely forward on the road to success?
Well… there is!
When repeated history pays
I believe the most important piece of due diligence you can do when selecting a builder is to look back on their past performance.
As one contractor told me, “The industry is saturated with builders full of promises using inferior products, terrible warrantees and making poor depreciation decisions.”
The only way you can be certain of not signing on to one of these is to look at their past performance.
Having a builder with a track record of responsibility, reliability and scruples is all important.
Past performance demonstrates the builder’s drive to create a reputation of successful outcomes for their clients. Good builders grow their success and want to gather repeat business because of their abilities.
Checking in on past performance sounds simple, but there are really no short cuts to identifying rolled-gold contractors. It takes time and effort.
Here’s how professionals like us sift through the array of builders on offer and select the very best for our client’s projects.
There are two main elements to tackle:
1 – Where to find the information
First up, you need to know where to go when you’re gathering the info. There are several sources:
· The builder
When you meet with the builder, don’t be coy. This is a major investment of your time and money. Be sure to ask the right questions and get informed.
· Past clients
Great builders will give you access to past clients – although if they are supplied, then expect most to give a glowing review.
That said, talk to these clients and make time to inspect their property – particularly if they’re six to 12-months old. It’s during this time that you can gauge the level of ‘after-sales service’ the builder provides.
This is where having an independent property expert on hand is essential. They will have a network of contacts and can source some of the builder’s past clients – including some who’ve possibly had a less positive experience.
· Online
There’s a wealth of information available online. You can check for general client reviews – although some may have been written anonymously by the builder’s competitors of course.
Other online sources include regulatory bodies and industry associations. Online contact is the gateway to further enquiry with these groups.
· Site visits
Take time to inspect some of the builder’s work – both while it’s under way and just prior to handover. An inspection tells a thousand tales because you can view the calibre of materials used in the build and the manner in which the worksite operates.
A pre-handover inspection also lets you see the standard of workmanship in the finished product.
2 – What to look for
· Look for substance over style
I know style is important in design. Aesthetics mean something when appealing to homeowners or tenants – but don’t get too caught up in skin-deep beauty.
Check on the quality of fittings and fixtures. It’s possible to have good quality, beautifully finished elements that don’t cost a bomb, but it’s also easy for bad builders to cut corners and boost their margin.
Just make sure your builder has a track record of looking at longevity rather than the bottom line.
· Check on warrantees
Warrantees and how they’ve been applied are key. Most new things need a ‘warm up’ period which can sometimes reveal shortcomings – and houses are no different.
You want a builder with a track record of standing behind their work, and who takes reasonable steps to ensure any errors, omissions or faults will be corrected.
Also – look for those who make seeking rectification easy for their clients. They must have a defined process that involves a reasonable approach to queries.
· Look for smooth handovers
Use builders who understand the importance of the handover. It’s an exciting time for clients and shouldn’t be just a rudimentary walkthrough and tick-list check with little time or effort devoted to it.
Good builders make all reasonable efforts to ensure a hassle-free handover, too. They clear up defects and will even be in contact with banks, valuers, building inspectors, etc. to make sure everyone is on the same page.
· Lines of communication
When it comes to common lists of complaints about builders, somewhere near the top will be ‘lack of communication.’
This is one of those items you must check via previous clients.
Are the lines of communication open and clearly defined? Is the builder on hand at most times and how easy is it to raise concerns? What is the follow-up process once they’ve been raised?
· Activity levels
How many builds do they tackle each year? Are they a high-cost, low-volume type of contractor?
Doing too many jobs each year can mean lack of attention from the builder. Too few each year and you might be dealing with someone who is finding it hard to get work (which obviously leads to the question, “Why?”)
Knowing what to ask and where to get the right answers takes effort, time and experience. This is why having an expert ASPIRE Property Advisor member pays dividends. They are skilled in sorting through the field and finding builders with exceptional reputations. Best of all, your advisor is working for you, not the builder.