Due Diligence in 10 Easy Steps. Due diligence is defined as an investigation of a potential investment (such as a stock) or product to confirm all facts. These facts can include such items as reviewing all financial records, past company performance, plus anything else deemed material

For clients who want to hire a builder/contractor, I recommend some due diligence before signing the contract. I saw so many nightmares that could have been solved with these simple steps.

Let's be very clear about this. There are many many outstanding builders and contractors out there. The problem, as with any profession, is that you only need to get one bad one to live through a personal nightmare. Use these practical rules to find and hire a good builder, and you'll save $1,000s in attorney's fees, not to mention other costs, stress, and sometimes even divorce (yes it has happened).

  1. Do not simply open the Yellow Pages and pick a Builder.
  2. Do not choose a Builder simply because he seems nice.
  3. Do get a reliable referral to a good Builder. That means the referral comes from someone who is known to be reliable and who knows the Builder.
  4. Do your due diligence on the prospective Builder. Investigate thoroughly.
  5. Look at some of his houses, inside & out, and talk to previous customers. Be careful. You can still be fooled here. You can find one or two happy customers with every builder.
  6. Check on his state license/registration, which can easily be done on the Internet Here (New Jersey) Use the State's checklist, also, but notice they don't tell you what NOT to do, which is where many of the traps are.
  7. On the same State Internet resource, you can check the Builder's status, infractions, bond, and pending lawsuits. DO IT! Believe it or not, the vast majority of people do this only after they get into trouble with the Builder.
  8. Check your local county superior court clerk's office for pending lawsuits against your prospective Builder. This can be done on the Internet by searching his company and personal name (in most counties in the U.S.)
  9. After all this, interview your prospective Builder/Contractor, and see if you like him. If you don't, I strongly recommend you keep looking. Gut feelings are important. You've spent a lifetime learning how to read people. Don't ignore that lifetime of experience now. Here you should judge the book by its cover.
  10. Ask for a copy of his standard contract and take it home to review it. Get a professional opinion on that contract. It seems every Builder uses a different contract, and many of them are grossly one-sided. There are several critical contract issues you want unambiguously addressed in the contract.
  11. and last , always get 3 quotes before picking one and do your best gut feeling analysis and yes, do listen to your wife
  12. Last don't write check or give check till job is done.
  13. Take picture of ID

Rest good luck


Anil Aggarwal

Realtor Vylla Home

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