Choosing to have a new home built from scratch requires a great deal of money and reputable professional partners who can construct a structure that is safe and comfortable enough for your entire family. If this is something that's new to you, you need to pay special attention throughout the process so that you're not taken advantage of or spend more money than you need to. One way to protect yourself from the start is by asking for bid bonds. Here's why.
Why Ask for Bid Bonds?
When you first set out to build a house, you've got to make what is arguably the most important decision of the process: deciding which contractor to use. Each contractor you speak with is likely to offer a bid that is supposed to encompass all the costs related with constructing the house. Cost is just one aspect of the bid, as you need to be sure that the contractor you select has all the resources and staffing to meet the deadlines they set forth and to be able to handle their own costs so that they can complete the house for you. To make sure this is the case for all the contractors you're dealing with, you might ask for a bid bond.
A bid bond is submitted to you, the client, by each contractor that places a bid. Contractors get such bonds from a surety company that will work to investigate each contractor's financials and background to support their bid; bid bonds are only issued if a contractor's claims about their ability to do the work matches up with what the surety company is able to discover. If you award a particular contractor's bid and they back out of the deal, you will then receive the amount of the bond.
A bid bond can cost a contractor anywhere from a few hundred dollars to a percentage of the entire project's cost, so asking for bid bonds is not only a way to ensure a contractor is legitimate, but can also save you time, as a contractor is unlikely to purchase a bid bond that doesn't accurately reflect their true financial situation. You can be sure that you're getting bids that will result in real work.
Bid bonds can give you some protection as you start the process of building a house. Keep communication lines open between you and your bidding contractor so you can make the best choice for the project.