Custom Building
Choosing Your Builder
Choosing the “right” builder can mean the difference between a building process that is an exciting adventure, and one that’s a never-ending nightmare. How do we know who is the “right” fit? Good research will help determine if the builder is ethical, reliable, and knowledgeable. Gut instinct will tell whether the builder is someone that we can interact with on an almost-daily basis for the next several months. Here are some steps to consider when selecting a builder.
Application
The process involves trusting the builder with large amounts of money and with the quality of construction of the new home. Shouldn’t we want to know enough about them before we make a decision? Ask them to fill out a Builder’s Application, and then follow through.
Check References
This can be done by the buyer, or their real estate agent can do it. Call past and present homeowners. Check bank references. Talk to his subcontractors. Visit a present construction site. Is it clean, orderly? A messy construction site generally means that there is not enough supervision by the general contractor.
Narrow the List
Ask an architect, real estate agent, friends, and homeowners in the area for the names of several good and reputable builders. If there are other homes that appeal and are under construction, jot down the builder’s name and telephone number. Then do a brief phone interview of five or six, and narrow the choices to three.
Personal Interview
Prepare questions to ask. Discuss communication and expectations. Ask the builder what he or she thinks are their strong points: reasons one should choose them over another builder. If there is trouble communicating in this first interview, realize that it won’t get any better and move on.
Set Expectations
If there is a timetable that must be met, discuss how this can be achieved and what penalty occurs if it is not. A promise to finish by a set date is easy to make prior to the commencement of construction, and hard to deliver after the start. The builder should also discuss his or her expectations: areas such as timely payment of draws, no interference directly with the subcontractors, and making selections by specified deadlines.
Clarify Selection Process
When should one make these decisions and where should one go to look at the choices? How will one know what products are within the budget and which would go over?
Review Change Order Process
It is very easy, as construction progresses, to make choices in flooring or tile that exceed allowances. Ask the builder how change orders are handled and paid for.
Bid Prices
Once the plans and specifications have been sent to the builder, they in turn will send the plans and specs to their subcontractors. The builder will assimilate all of the bids, factor in his expenses and profit, and present an itemized bid for your review. Review the bids with the architect, determine what can be cut or adjusted to fit the proposed budget, and compare the offerings of the builders.
Builder’s Contract
After you select the builder, he or she will prepare a legally binding contract that outlines the builder’s responsibilities, buyer's responsibilities, and any rewards or penalty for timely or tardy completion. It will also outline what methods are acceptable should the buyer and the builder get into a dispute. The contract will also reference the plans and specifications and the total cost to build the project.
Construction Commissions
Many states have organized commissions to provide oversight to the construction process. Although too long to list here, we recommend that the buyer research the particular state commission. As an example, the Texas Residential Construction Commission was established to "Provide Texas homeowners and the residential construction industry an opportunity to resolve differences through a neutral dispute resolution process and ongoing education."
The builder and the home building project must be registered with the Commission.
Go to their website for information and education.
Guide to Interim Construction Loans
Building a home is an exciting, but sometimes overwhelming, process. Once the lot has been identified, house plan and builder, the next major decision is choosing a lender.
Learn how we can help by calling 800-476-8409
