A favorite question for home buyers is “who is the builder of this house?” Depending on the age of the home, the answer may have little relevance on owning or reselling a home. It can also be a difficult question to answer.
Who actually builds a home?
The word “builder” is a misnomer for the vast majority of homes that get built. Almost all home builders are general contractors, meaning they hire subcontractors to complete the various tasks when building a home. A foundation subcontractor pours the foundation, a framing company builds the structure, a plumbing company is hired to install plumbing, a roofing company installs the roof, a drywall company installs the walls and so on. None of these subcontractors is employed by the builder, and the builder likely has a network of preferred subcontractors that they regularly use.
The builder often does have a small number of employees involved in building the home. The most obvious one is the foreman who schedules and supervises the work of subcontractors and is often responsible for ordering materials. Builders also employ a small number of laborers and their own carpenters that take care of random and smaller tasks along the way. It is not uncommon for an employee of the builder to install trim around windows or install door handles, but it is safe to say that the bulk of the work in building a home is carried out by other companies that are hired by the builder.
Can you even figure out who the builder is?
Figuring out who built your home isn’t always possible. If you are buying a home in a large, recently-built subdivision, there may be clear records or common knowledge that your home was built by one of the handful of large home builders that have been around for many years.
Homes built by smaller, independent builders can be more problematic. Often each separate building project for these smaller builders forms a separate company to own that particular project, so ownership records simply say “123 Main Street, LLC” was the original owner of the home. That tells you nothing about the builder who built that home. Permit history may or may not give more details about the actual builder. Often you may have to rely on the knowledge of the previous owner or historical real estate listing information to gain any information.
What does the builder actually control when building a home?
The builder’s largest impact on building a home is the selection of the floor plan and decisions on how much or how little to spend on building the home. They make the call on whether to install cheap carpet or fancy hardwood floors, vinyl or wood siding, cheap or expensive roofing, etc.
The builder also has an obvious impact on quality based on their selection of the various subcontractors. They are not going to do detailed checks of the work of each subcontractor, but they do make choices along the way that either favor cheap, quick construction or more expensive craftsmanship, depending on the end product that they are trying to build.
Builder quality can change over time
Many builders respond to market conditions by varying the quality of homes that they build. In a tough real estate market, they may spend more on fancier finishes to entice buyers. When the market improves, they may opt for cheaper construction methods to improve their bottom line. I’ve helped buyers purchase a home from the same builder in the same subdivision just a few months apart that were noticeably different in their finish levels.
Does the builder matter in the short term?
If you are buying a brand-new home, who the builder is matters quite a bit. They provide a positive (or negative) customer experience when building and possibly customizing a home. They are also responsible for implementing any warranty, which in our state usually lasts for one year after a home is built for single family homes.
When reselling a home in the first years after it is built, the builder reputation also impacts the buyer’s perception of the home. For example, Builder A has a reputation for cheaply built homes, while Builder B is know for more expensive craftsmanship. That reputation can last for a number of years, and certain large builders may have sufficient name recognition that it continues to impact the perceived value of a home for some time.
Does the builder matter in the long term?
At some point, who built the home becomes irrelevant. Yes, the original choice of finishes may still be present in the home, but it is more important on how the home has been maintained and updated over the years, which have nothing to do with who built the home. The reputation of the builder will also fade over time. The reputation of a large builder may impact buyers perceptions of home value for 10-20 years, but the reputation of a small, independent builder may fade away immediately in the minds of buyers.
The home I’m buying was built by a builder who I can’t find out more about. Should I be worried?
In the age of internet research, people love to dig up historical details about a home. I recently had a buyer who was buying a 5-year old home constructed by a small builder, let’s call them “Seaview Homes.” There is no website for Seaview Homes, and no information on whether this company still exists. The buyer was worried about how this may affect their ownership of the home.
We just went through a massive real estate market bust, and many, many small builders simply went out of business during the downturn. That is a simple economic reality that says little about whether they were a “good” or “bad” builder. Even in stronger markets, smaller builders may enter or exit the business or merge with other builders. You need to make your own judgement call about the quality of a home based on the finishes used and the results of a thorough home inspection.
Small independent builders may have little in the way of a public presence or even a website to gauge who they are, yet may build the best houses out there. A friend of mine has an absolutely amazing multi-million dollar home, probably one of the highest-quality homes I’ve ever seen. While originally constructed over 100 years ago, it has gone through two major renovations using a small team of artisans. Most of the home has been rebuilt in the last 7 years, but you’d be hard-pressed to find out anything about the builder, since they operate via word-of-mouth only.
Ultimately the home itself matters more than the builder
A builder’s involvement in the home is short-lived. While you may be stuck with the choices that the builder made on siding/roof/cabinetry/etc, you are not going to interact with the builder unless you buy new construction. The reputation of the builder will fade over time for your house, sometimes as quickly as a year or two, or maybe up to 10-20 years for a few well-known builders.
Homes need to be maintained and updated over time to maintain and maximize their value, and a thorough home inspection is going to tell you a lot more about a house than who built it 10 years ago.