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How to Select a Custom Home Builder

Select someone you can trust.

Undoubtedly the single most important factor in selecting a company is the trustworthiness of the individuals that you entrust your resources to.  Character and integrity are core values that impact every facet of your project.


This is usually the single largest investment of your personal or business life. Select a company with a good reputation.  Talk to local suppliers in the industry and get referrals.  Be certain to check local county court sites to search for any lawsuits – it’s quick and easy to do today.  Personal references with past clients are the best way to predict what your experience will be.


Make sure the budget is realistic.

Determine how pricing is calculated with your builder and agree to a budget at the very onset of the process.  A common strategy is to create a price that has unrealistic and lower cost allowances.  The client thinks the project can be built at a budget number that will, in the end, need to be increased.  It’s legal to do this but this is unethical.  Sadly, this is a common practice in our market.  To complete the project, you’ll need cash out of pocket to finish the home the way you envisioned it.  One local builder has had dozens of law suits over this single issue.


Talk to several companies in order to confirm the budget is realistic.  Ask for a preliminary budget estimate before the contract plans and documents (blueprints) are planned.  A common complaint we hear: the plans that were drawn up are $150,000 over our budget.


Select a company that has the exact experience building the type of home you want to build.

If you’re looking for an entry level starter home, or a mid level move up on a moderate budget, there are builders that specialize in that type of product.  If you want a finely crafted custom home, select a firm that has the trades people available and the core capability to execute a highly detailed custom home.

Everybody advertises that they are a “quality” builder, and modest homes can be built quite well.  But take the time to be certain the builder you select has the experience building the exact type of home you want.

Select a company that is financially sound.

A company’s reputation for integrity and business dealings is earned over decades but can be lost in a single year.  Select a company with many years of reputable business dealings.  Talk to past clients, people you know in the building trades, and local associations.

A bank approves a builder because it’s on your financial backing, not the builder’s.  Banks release construction funds to the builder and once those funds are in their checking account, the money can be spent on other projects, or however they wish.  You will be responsible to complete a home with your funds if the builder gets into financial trouble.  

Many builders didn’t survive the recession, but have changed names and are in and out of business.  Companies that have changed names to hide a spotty past won’t get the best tradespeople or best pricing on projects.


Know how pricing is determined.

How is pricing determined – fixed price, cost plus, or fixed cost with allowances.

Does the company belong to any buying groups that help reduce the net cost to you?
Does the company use multiple tradespeople and vendors which help reduce costs?
Is the project bid to the marketplace or given to pre-selected vendors?

Change orders and cost variations can occur.  What is their policy on change orders?
How and when are these communicated to you?

Select a company that communicates well.  

You’ll be spending a lot of time with their contact people.  Make sure the person you buy from remains involved in your project, and ask to meet any key personnel that you will be dealing with during the life of your project.  These people will be greatly and intimately involved in your life for the next year – find out who that is before you sign the contract.


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