The average person or couple will often start out buying what is now called a Starter Home. Something nice perhaps, but not the dream home, not yet. First-time homebuyers are often individuals’ that range in age between the mid-thirties and early forties.
Let’s use a young married couple as our example. If they are part of the vast majority like me, chances are they came from modest means, and before they purchased a home, they either rented an apartment or lived with family members, until they could scrimp and save enough money for a home purchase.
Let’s call them Sally and Marty. Sally, who started out as a hairdresser decided to go back to school and became a Physician’s Assistant. As Sally’s career progresses, chances are she’ll get to a six-figure salary, but not yet, she’s a newbie, and it will take some time to get there. After getting a master’s degree in business, Marty decided to become a real estate investor. He has cash flow from some of his properties, but he has to keep reinvesting the money he’s earning from rentals in order to buy and develop more properties to create a much larger cash flow for living expenses and business expansion.
Marty and Sally purchased a home in the suburbs. Nothing large or extravagant, but something within their means. It sat on a large pie-shaped lot, and Marty figured there was lots of room for expansion should they need more room as they had children and grew their family.
Sally got pregnant a little sooner than they planned. Of, course they were both happy a baby was coming. The problem was the house only had two bedrooms. Marty used the second bedroom as an office, which he was reluctant to give up.
They discussed at length what they were going to do. Where would they keep the baby when it arrived? They kept going back and forth between different ideas. Marty could rent an office, or maybe they should move and buy a bigger house. But they loved their house and the neighborhood, they had no reason to move other than lack of space and they wanted to stay.
After much deliberation, they settled on building an addition on to accommodate the newborn. Marty knew something about construction, but he didn’t have the time to build the addition on his own. So, they hired a contractor who came highly recommended through a close friend.
Unfortunately, the friend didn’t know the company he referred to Marty had been sold, and two young, somewhat inexperienced brothers owned now. Marty hired them, and the brothers along with a crew of workers wasted no time laying the cement slab and erecting the framing. They finished the walls and stucco, and windows fairly quickly. They then began on the inside. The plumbing, electricity, and a good portion of the drywall and painting were done, leaving the interior finishes to be completed. There was still a lot to do.
The hoses and air ducts had to be installed for the extra HVAC unit that was placed on the roof. That unit had to be attached, then wired up and tested. The doors, flooring, bathroom, closet, light fixtures, floor molding, and a whole list of final touches still had to be completed.
Then, suddenly everything came to a crashing halt. For several days no one was showed up to work on the job. By this point, Sally was due to have her baby in three months. Marty called the contractors to find out what was going on. They said they were working on a really big job now, but not to worry, they would send a fresh crew over to finish everything in a matter of days.
The next day two workers showed up. Marty came home early that day and found the guys sitting on the floor with their backs against the wall, drinking beer, laughing, and talking on the phone. The only thing they had done the entire morning was frame out the entrance door.
Marty eyed that door, measured it, and found it was out of square. He called the brothers and started yelling and screaming about the shoddy workmanship. He gave them a clear reminder they had a deadline, and heavy per diem fines if the job wasn’t finished by the agreed date. Marty made sure to include that term as a rider in the contract and made the contractors sign it in front of a notary.
Both brothers got on the phone and started backpedaling, swearing up and down how they were going to take care of everything, and finish the job before the due date.
They sent another crew, and it was more of the same. Marty was at the end of his rope, infuriated. He was getting ready to fire these guys. He was smart and had only given them a small portion of down money for them to get started and held back on the rest. Once he fired them he figured they could go sue him for what they believed they were owed. But the brothers pleaded with Marty to have a sit-down so they could work things out.
They came over to the house all humble and apologetic, knowing Marty was in control and they were the ones who had money to lose. Marty told them he would not let another sub-contractor through the door. It was their job and they had to finish it now. The brothers said they would come back with some helpers and finish the job. A couple of days later only one brother came with two decent workers, and the job seemed to be rolling again. A couple of days later Marty came home one day and saw the workers had drywalled, painted, and finished where the HVAC vents were supposed to go. Then he looked back towards the back end of the addition and saw the brother sitting at a makeshift desk, with one ear to the phone and his eyes on some paperwork.
Marty confronted him about the vents, and the brother went into a song and a dance about how it was just a minor mistake, and that he would take care of. It was never taken care of. Nor was the job ever finished completely. It dragged on and on, with the brother making the back of the addition his personal office.
One day Marty was driving home thinking to himself enough was enough. He could finish the job on his own without constant aggravation. He figured he could hire a couple of his own guys and finish the job at least a month before Sally would give birth. When he got to the house, he told the brother to clean up, take his tools and get the hell out.
Marty dropped everything and worked on the addition with a couple of helpers nonstop until he finished it, just a few weeks before the baby was born. The brothers sued Marty for $25,000. He was tied up in court hearings for months until the judge finally made his decision. Because Marty included an end date, and a rider that would fine the contractors per day if they did not finish the job on time, the judge sided with him. He asked Marty how much he had to spend to finish the job and took into consideration the time he had to take off from his own job to finish the work on the addition. The judge found the brothers in breach of contract. Between the daily fines they accrued, and the difficulties and hardship they caused Marty, the coin flipped, and they wound up owing Marty a substantial sum of money. Marty tried to collect but couldn’t. He threw a judgment on the company, but he never got anything. The brothers had skipped town, and no one could tell him of their whereabouts.
All in all, it was a happy ending. Just when Marty did all the final touches to the addition, which was the baby’s bedroom, Sally gave birth to a six-pound blonde-haired Babyboy. I can only hope they lived happily ever after. The moral of this story; make sure you have everything in writing before entering a business relationship with anybody. When it comes to a contract try and write it yourself. If that’s not possible, make sure you go over it line by line and insist on making any changes to terms and conditions that do not fall in your favor. Be smart. Be like Marty and learn from him. The one place he failed was taking his friend's word on a referral. He should have checked the company out on his own before he hired them. But we are only human. Most of us are all guilty of trusting a close friend without question.
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