Most folks assume their builder has everything under control, but sometimes, you can’t really tell if your builder is financially stable…
When the trucks look new, the office looks professional, and the website has a few shiny testimonials, the thinking goes, “They must be financially solid. They’ll look after us if something goes wrong.”
I wish that were always true.
Many builders are constantly hustling, moving from job to job, just hoping the next deposit arrives before their existing bills are due. You don’t see the risk that they might not have the financial stability to handle a serious, unexpected problem years from now. One bad month could be enough to sink their business—and potentially jeopardize the completion of your home.
Let me tell you a quick story to put this into perspective:
A Couple Of Months Ago, I Wrote A Check For Tens of Thousands of Dollars To Fix Termite Damage On A House I Built Nine Years Earlier…
In Texas, builders are required to warranty structural work for ten years. This client’s house was over nine years old, and with just 2 months of the warranty ending.
I took care of the payment. Not out of obligation, but because it was the honorable thing to do, and I was financially able to handle it without distress.
Most builders wouldn’t have done that. And honestly? That’s exactly why you need to ask the hard questions before you ever sign a contract.
Because when the soil shifts, the market tightens or something unexpected happens, character and financial stability are what determine whether your home gets fixed or you get a lawyer.
So before you hand over a deposit, ask these three questions. And yeah, these questions might feel awkward to ask. But they’re a whole lot less awkward than finding out your builder can’t finish your house because they’re broke.
Question #1: Can I Have Your Banking and Accounting References?
Everyone asks builders for customer references. And sure, those are helpful. But you know what’s more helpful?
Asking for references from their bank and their accountant.
Think about it: A builder can handpick three or four happy customers to put you in touch with. But their banker? Their accountant? Those are the people who actually see the numbers. They know whether this builder manages money well, pays their bills on time and has the financial stability to weather a rough stretch.
So when you’re interviewing builders, don’t just ask, “Can you give me the names of a few past clients?”
Ask this: “Can you provide references from your bank or your accounting firm so I can verify your financial status?”
A solid builder won’t blink at that question. A shaky one will deflect or get defensive.
Question #2: How Many Bank Accounts Do You Have?
This one sounds simple, but it’s actually one of the most important questions you can ask.
The correct answer is two.
By law, builders are supposed to have separate accounts – one for construction funds (your money) and one for operating funds (their business expenses, payroll, overhead, etc.). Your construction money should never touch their operating account.
Why? Because if a builder’s using one account for everything, that means your funds are getting mixed in with their day-to-day business. And if they hit a rough patch, run into cash flow problems, or just get sloppy with their bookkeeping, your money could end up paying for someone else’s project – or worse, keeping their business afloat while your house sits unfinished.
So ask the question straight up: “How many bank accounts do you have and how do you manage my construction funds separately from your operating funds?”
If they can’t give you a clear answer, or if they only have one account? That’s a red flag. Walk away.
Question #3: Have You Ever Had Any Real or Potential Litigation?
Now, this one makes people nervous. But here’s what you need to understand:
If a builder tells you they’ve been in business for 15 or 20 years and they’ve never had any legal issues, they’re either lying or they’re brand new.
Construction is inherently complex, and in today’s litigious society, issues arise that can lead people to seek legal counsel. Consequently, I don’t know a single builder with long-term experience who hasn’t faced at least the potential for litigation.
What matters isn’t whether they’ve had legal problems. What matters is how they handled them.
Let me give you an example.
A few years back, I built a home and the swimming pool deck started moving. Then the house started shifting. We tore out the pool foundation, ran tests and couldn’t figure out what was going on. It was a nightmare.
Finally, the pool guy figured it out: The next-door neighbor’s pool was leaking. Every time their pump kicked on, water was running into my client’s yard, making the soil swell and pushing everything up.
I was familiar with the builder of that neighbor’s house, he was reputable and established. We convened everyone— the other builder, the pool and foundation crews and myself to resolve the issue. The unified goal was simply: “Let’s fix this.”
But instead, it turned into a lawsuit that dragged on for years, with 22 people pulled into the mess. I ended up settling for $10k after spending over $100k in legal fees.
The situation wasn’t my fault, yet if you had Googled my name at the time, the incident would have certainly appeared. However, after I explained the circumstances, everyone would say, “Oh, okay. That makes sense. You weren’t to blame.”
That’s the point. Litigation happens. What you’re looking for is a builder who communicates, steps up when there’s a problem and has the financial ability to do what’s right.
The builders who get sued and stay sued? They’re the ones who won’t return phone calls. The ones who think if they hide long enough, the problem will go away.
Spoiler: It won’t. It just gets worse.
Bottom Line? Ask the Hard Questions Before It’s Too Late
Look, I get it. These questions feel awkward. You don’t want to offend someone or come across like you don’t trust them.
But when you look at it realistically, you’re about to hand a builder control of hundreds of thousands of dollars and trust them to build the most expensive investment of your life.
You have every right to know they’re financially stable, that they’re managing your money properly and that they’ll step up if something goes wrong.
So ask the questions. A good builder will respect you for it. A shaky one will make excuses.
And if you want to go even deeper into what separates great builders from the ones who cut corners, I put together a free guide that covers the eight biggest mistakes I see homeowners make, and how to avoid every one of them.
Download The Texas Home Build Playbook here
Inside, you’ll learn:
- How to protect your budget from hidden costs and overruns
- What to look for in contracts that most builders leave out
- How to spot red flags early, before you’re locked in
- Why comfort and efficiency matter just as much as finishes
- The design tools we use to prevent layout regret
Grab your free copy now and make sure you’re asking the right questions from day one. Because once you sign, your leverage is gone.
Whether you’re ready to build or just doing your homework, I’m glad you’re here. And I’m happy to help when the time comes.
Read about the journey of Victor. Victor Myers Custom Homes proudly partners with NAHB, TAB, and Dallas BA.
