Tips for Researching Builder Reputation in a Local Market

When shopping for a new-build home in a local market area, it is often difficult to tell which builders are reputable and which are not as reputable. Despite a home being one of the largest purchases a buyer is likely to make in their lives, there are not a lot of informational resources out there to help a buyer determine if they are likely to get a quality product and experience from a particular builder. For the dollars involved, the industry is surprisingly opaque and there are not a lot of objective data sources available in the way that a car buyer can easily consult, say, Consumer Reports or any myriad of dedicated auto magazines for reviews.

The crux of this issue has to do with the fact that despite the increasing likelihood that a new-build home will be bought from a large, publicly-traded company (it is estimated that these companies have a market share of over 50%, currently, up from about 25% in 2005), at the end of the day, homebuilding is a local business. Even if you are buying a home from DR Horton, the largest homebuilder in the nation, it is the local operation that is producing the home using a local trade base under local regulations. Given this dynamic, the competency level of the local team, the capability of the trades that are used, as well as the stringency of local regulations, result in home quality, buying experience and after care, likely varying greatly from market to market. I cannot emphasize this enough as a I have seen it over and over – Builder X in Phoenix may have a stellar reputation while Builder X in Dallas might be viewed as bottom of the barrel.

So when you set out to do research on a particular builder, its scale, the national awards it has won, and non-local customer reviews do not tell you a whole lot as far as what your actual  experience is likely to be in your location. Therefore, to get a sense of whether a builder is reputable in your local market, you need to focus your research on the market you are looking to buy in. Though not plentiful, luckily, there are data sources that can help you do this.

One such source is TrustBuilder (https://www.newhomesource.com/reviews), which is effectively like Yelp for new homes. On TrustBuilder, you can search by local market for reviews on a particular builder with an aggregated score. Note, however, that some of the local, smaller builders in your market might not participate.

Avid Ratings is a company that a lot of homebuilders use to survey their customers across a number of different measures including sales experience, customer care, and home quality. This feedback is typically used to measure the performance of individual divisions of large builders against both other divisions and internal benchmarks. And while most of this data is not available to the general public, each year, Avid gives awards to top-performing divisions of the builders it surveys. To see the local operation of a builder you are considering purchasing from win an award would definitely be a good sign. This information can be accessed here: https://www.avidratings.com/avid-awards/.

Of course, visiting communities and speaking with agents can also help you get a sense of whether a builder is reputable, as well. In general, when a local operation is well-run, you should see clean sites, clean marketing (signage, website, model homes, flyers) and professionally-dressed employees (field superintendents and sales agents). There should be a palpable sense of pride in the work that is being done. A very telling question to ask a sales agent for a large builder is, "How does the local division rank among all divisions of the company in terms of customer satisfaction?" An employee of a high-ranking division will probably know the answer immediately because it is something that will almost always be celebrated and reinforced internally.

Now, a word of caution – when doing your local research on a builder’s reputation, be careful not to put too much stock on one or two good or bad reviews or something that may appear on social media, again both positive or negative. Buying a home is a very emotional process, and we all know that there are loud voices online. One person’s good or bad experience is subjective and should not crowd out more objective data. On the other hand, if you see patterns in reviews, that is certainly a signal worth paying attention to.

In closing, because it is so hard to find objective information about a builder’s reputation in a local market, buyers are often flying blind in this regard, relying on anecdotal evidence and scattershot data points, if they are doing any research at all. Doing  your diligence on a builder’s local reputation can save you real dollars down the line and a tremendous amount of time and aggravation.