How to assess a builder before you buy

You are giving a builder a six-figure deposit and three or four years to deliver a house that does not exist. The builder is the single largest variable in the transaction, and nothing about their track record appears on the price list.

Why it matters more than people assume

Your deposit is partly uninsured. Tarion freehold protection caps at 10% of price up to $100,000 (or $60,000 at or below $600,000). A 10% deposit on a $1.2M home already exceeds the cap, and a 20% deposit leaves roughly $140,000 riding on the builder’s solvency. Deposit protection.

Delay compensation is capped at $7,500. That does not make you whole for a six-month delay, and it will not cover a lost rate hold. Delays.

Warranty coverage depends on responsiveness. Tarion backs the warranty, but the builder does the work. A builder who returns calls makes the first year tolerable; one who does not turns every item into a claim with a deadline.

If the project dies, you get your money but not the market. Prices moved while you waited. Cancellations.

The checks worth doing

1. The Ontario Builder Directory. Maintained in connection with Ontario’s new home regulatory framework (HCRA and Tarion). Look up the builder and check their licence status, how many homes they have built, and their record of warranty claims and conciliations. A builder with many homes and few conciliations is a different proposition from one with the reverse.

2. Visit a community they delivered three to five years ago. Not the current sales centre, a finished neighbourhood. How does it look once the marketing has stopped? Are the streetscapes holding up? Is the landscaping finished? Does it feel cared for?

3. Talk to owners. The most useful research available and almost nobody does it. Knock on a door, or find the community’s residents’ group online. Ask:

• Did you close on time, or how late?
• How was the pre-delivery inspection handled, were items fixed?
• How long did grading, sod and the driveway take?
• Did warranty items get dealt with, or did you have to escalate?
• Would you buy from them again?

That last question gets you more than any brochure.

4. Look at completion, not just launches. Some builders launch communities faster than they finish them. Ask what they have delivered in the past five years, not what they have announced.

5. Check the specifications against competitors. Two builders at the same price point can include materially different things. What’s included.

Signals worth weighing

Reassuring:

• Long operating history under the same name
• Multiple delivered communities in the same municipality
• Servicing and approvals already in place
• Later phase of a community already under construction
• A reputation among local brokers for hitting dates

Worth more questions:

• A new corporate entity with no delivery record
• First phase of a greenfield site with approvals pending
• Specifications noticeably thinner than nearby competitors
• Repeated rebranding
• Local brokers who hesitate when asked about them

Note: a numbered or newly incorporated entity is normal in development, projects are commonly built in single-purpose companies. The question is who stands behind it and what they have delivered.

The practical shortcut

Prefer a later phase of a community already being built by a builder with local delivery history over the first phase of a new site by an unfamiliar name. Less upside in the marketing, considerably less risk in the outcome.

What you cannot get from the internet

Which builders are currently reliable on dates, which have slowed down, which handle warranty well, and which are flexible on amendments this quarter. That is current, local, and changes, and it is a large part of what representation is actually for.

Ask me about the builder before you buy from them.