How To Choose a Home Builder

The most challenging part of building a custom home is how to choose a home builder. You must consider the builder’s experience, licensing, and warranty.

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The most challenging part of building a custom home is how to choose a home builder. You must consider the builder’s experience, licensing, and warranty.

Building a custom dream home is a monumental task for anyone, and choosing the wrong builder could derail the project or make it cost significantly more. The quality and experience of the home builder is just as important as their bid;  homeowners are advised to consider more than just the cost of their home when choosing a builder.

The first step to choosing a home builder is to consider what type of builder you need for the project. Spec, production, and custom builders offer different features and pricing. It is important to consider a builder’s experience, work quality, how they are licensed, and the warranty they offer.

As tempting as it may be, homeowners are advised to prioritize quality over the desire to price shop. Before you choose a home builder, be sure to see examples of their work in person. Most home builders have a show home that you can tour and photos of previous builds. The right builder can make your dream home come to life in time and on budget.

Sources include the Washington Post, Angi’s (formerly canned Angie’s List), Home Builder Digest, and New Home Source.

Table of Contents

When Should I Choose a Home Builder for My Dream Home?

The process of building a custom dream home involves many different pieces and parts. It is important to work with the right team to make your dream home a reality. The sequencing of building your team is also important because you will need to compete with spec developers and other builders.

Most people think that the home building process goes like this: find the perfect lot for the new home, hire an architect, take the architect’s plans to a builder, then let the builder turn the plans into a reality.

In reality, it is best to choose your builder as soon as possible, even before the plan for the home is fully finalized. In some cases, it may be right for you to hire builders before you have selected and purchased the lot. Most homeowners won’t find the perfect lot for their home, so the builders and the architect will be able to offer valuable guidance for the best lots and the adjustments that may need to be made.

3 Advantages To Choosing a Builder Early

Having a builder lined up makes it easier to compete with spec builders

Most buyers who are building a custom home face an uphill battle finding the right lot because they have to compete with spec builders. Spec builders typically build homes that will be sold after completion, so they make their money only when the home sells. Spec builders are normally established elements in the real estate market, so they are well-organized, have a reliable building team, and can move more swiftly to secure construction financing.

By lining up a builder early, buyers will be able to move faster to land their desired lot before a spec builder snatches it up.

Builders can help evaluate plots

If a buyer is unable to find a lot that perfectly matches their vision, it can be beneficial to have a builder involved. A builder will be able to see potential in a parcel of land that a buyer might overlook. Builders will also do a better job of evaluating a lot and foreseeing future concerns, so having a buyer on board early can save a buyer money in the long run.

Having a builder on board can make it easier to secure financing

Since not all buyers are able to pay cash for their new home build, choosing a builder early can smooth the process of securing funding. Most lot owners prefer when buyers utilize construction financing instead of a traditional mortgage loan. This is because most traditional mortgage loans require the buyer to live in the residence, which buyers are unable to do if they are building a new home or if they need to tear down existing structures on the parcel.

Most construction financing loans require the buyer to already have a contract in place with a builder to ensure that the home is completed on time. When buyers show up to the financing table with a builder waiting in the wings, they will be able to secure a lot and quickly start the construction process.

Who Should I Hire First, a Builder or an Architect?

It depends on your needs, what the builder requires to make a bid, and what your area’s market is like. If lots in your area are quickly being purchased by spec builders or if there is a shortage of available lots, it may make sense to hire a builder earlier rather than later. If you do not face competition for lots, it makes more sense to start with a lot then hire an architect.

Most builders require as much information as possible about the project to make a bid, so it is usually best if your architect is nearly done with the plans before you request bids. Most architects will be able to recommend when the best time is for you to choose a builder. If you choose a builder before the plans are finalized, the builder will be able to offer suggestions and predict future problems.

What Are the Different Types of Home Builders?

There are 3 different types of home builders: spec, production or tract, and custom home builders. Not all builders do individual custom homes, so it is important to look for builders who can meet the needs of your project.

Spec Builders

“Spec” is short for speculation because spec builders buy land, build houses on it, then sell the houses to buyers. Spec builders normally do entire subdivisions at a time and the homes they build normally follow set blueprints. Most spec builders do not build individual custom homes. In fact, spec builders are often owners’ competition for buying lots of land to turn into a home.

Production/Tract Builders

Production builders, also called tract builders, do build individual homes for interested homeowners. However, tract builders do not offer as much customization. Owners can choose between several set options for layout, features, materials, finishes, and styles, but they cannot fully customize the home.

When owners work with a production builder, they will not need to hire an architect to make their vision come to life. Tract builders can normally build a similarly sized home for less than a custom builder because they have established supply lines for sourcing materials.

For some owners, this is a desirable option because it is simpler, faster, more affordable, and more manageable than building a fully custom home. However, production builders may not do certain features that are must-haves for you and your family.

Custom Builders

Unlike tract and spec builders, custom builders do build completely custom homes with any features you want. While the customizable element is desirable, it comes with a bigger price tag. Compared to tract and spec builders, working with a custom builder is the most expensive way to build a new home.

When you work with a custom builder, you will need to hire an architect to make the plans. Some custom builders may have an in-house architect, but that option will also cost you money. However, one benefit of working with an architect is that you get to be involved in every step of the process.

If you have unique needs for your home that cannot be accomplished through a production builder, then a custom builder will be your best option.

What Do I Need to Hire a Builder?

Before you can start collecting bids, there are a few pieces of information that you will need to give your builder a good sense of the project:

  1. Clear plans. The architect’s plans do not have to be completely finalized, but the scope of the project, the size of the home, extra features, and the requirements of the lot must be clearly communicated to the builders.
  2. What kind of builder you need. Builders have different specialties and skill sets, so you will want to pick a builder who will be well-equipped for the project.
  3. A clear delineation between must-have features and “I want” features.
  4. Necessary information like your budget, location, and your preferences for building materials. For example, if you want an eco-friendly home, that is information that a builder needs to draw up an appropriate bid. Most green home features cannot be add-ons.

How to Find Experienced Home Builders

The best way for homeowners to find qualified builders is through word of mouth, the local builder’s association, and by networking. Most real estate agents will have a good idea of which local builders produce quality work that gets completed on time. Similarly, if you know someone who had a custom home built, they may refer you to their builder if they were happy with the results.

What to Look for When Choosing Builders

When you evaluate builders, there are a few things you can look at to determine if they are a good fit for your home.

The first thing you should check is the builder’s reviews. Are other homeowners generally pleased with their work? If a homeowner is unhappy with that builder’s work, they will probably say something by leaving a negative review.

Most builders will also have a show home to tour and examples of their work. When you tour a show home, pay attention to the small details and the general quality of the home. When you choose a home builder based on their portfolio, you should only choose a builder who has lots of experience in the style and type of home that you want.

The next consideration is licensing. What kind of license do they have? Most states require builders to have a certain kind of license. If a builder is not licensed in a state that requires it, then it would be risky to hire them because they may not produce quality work or finish the job.

The third consideration is the volume of their communication and if you “click” with them. A builder is your touchpoint for information on the project. Owners need a builder who is responsive, clear, communicative, and who is excited about the project. Some builders will also want more involvement with the plans than others.

Finally, there are hard facts that can help you choose a builder. Homeowners should always ask about the number of years that the builder has been in business. Established builders will have better execution than less experienced builders. Homeowners are also advised to evaluate the safety of prospective builders. You can easily check if the builder has any OSHA violations or citations. It is also worth asking how the builder handles team safety.

How to Review Construction Bids

Many homeowners find requesting bids from builders daunting. It is a very common mistake to go with the lowest bid because buyers don’t know how to properly vet the builders.

When you go to request bids, you should get 3 to 5 bids from builders who specialize in the type and style of home that you want. This allows you to compare apples to apples. During this process, it is very important to give the potential builders as much information as possible. You must be on the same page with the builders as you make your dream home into a reality.

Some builders may ask clarifying questions or submit an RFI (request for information). This is a good sign. If a builder is asking questions, that means that they will be communicative during the process and that they are writing a thorough bid. Good builders will factor contingencies into their bid in order to account for contingencies, meaning that there will be fewer unforeseen gaps.

As you compare bids, you should compare the areas where the different potential builders are spending more or spending less. Some bids may be more because the builder will use higher-quality, longer-lasting materials. Even if a lower bid is more appealing to your wallet, it may be more expensive in the long term if you need to do repeated repairs or replacements.

Why Should I Choose a Builder Who Offers a Home Warranty?

It is recommended that owners choose a builder who offers a thorough home warranty. A warranty for a custom home is important because it gives you recourse if anything breaks prematurely. Warranties are also useful if it turns out that the builder used inferior materials.

Builder warranties are pretty standard for both custom homes and repairs. Warranties can only cover permanent parts of a home, such as the flooring, electrical work, plumbing, HVAC, windows, and load-bearing walls.

The specific length of certain warranties depend on what they are covering. For example, warranties for drywall, paint, trim, doors, and siding only last for a year. HVAC, electrical, and plumbing warranties are usually covered for 2 years. Builders also typically cover 10 year warranties for anything extreme that would impede living conditions in the home. For example, if the roof caved in after only 4 years, it would be covered under the warranty.

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