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Before hiring a builder for a custom home, there are several important factors to consider. Firstly, research the builder’s reputation and experience in the industry. Look for testimonials and reviews from previous clients. Secondly, ensure that the builder is licensed and insured to protect yourself from any potential liabilities. Additionally, discuss the builder’s communication style and availability to ensure a smooth working relationship. It is also crucial to establish a detailed contract that outlines the project scope, timeline, and payment terms. Lastly, request to see examples of the builder’s previous work to assess their quality and style. Taking these steps will help ensure a successful partnership with the builder.
While older homes have their appeal, they often come with significant issues such as asbestos, outdated wiring, and foundation problems. If you’re interested in a new home with modern appliances, custom designs, and updated plumbing, there are four things you’ll need to start the project: a piece of land, a source of funding (usually a lender), a home designer, and a custom builder. Surprisingly, it’s essential to find the builder before securing funding because lenders typically require a builder’s involvement before financing land sales.
But where can you find a reputable home builder? And what other factors need to be considered when designing and constructing your dream home? Here’s what you should know before making a hiring decision.
The Role of Custom Homebuilders
You may have experience in construction, but it’s still advisable to hire a custom homebuilder who is well-versed in local building codes, land-use laws, and zoning regulations. This ensures that your project doesn’t encounter unnecessary obstacles and end up draining your finances. In addition to freeing up your time, a custom builder provides crucial services, including:
- Collaborating with the designer or architect to establish floor plans and other structural details.
- Serving as a liaison between the client, building authorities, and the lender.
- Managing the flow of funds throughout the construction process, handling payments for subcontractors, materials, permits, and inspections.
- Securing necessary permits and scheduling inspections.
- Coordinating subcontractors, overseeing building material deliveries, and managing all aspects of the construction process.
- Adapting the design as needed during construction, working closely with the designer when modifications arise, and keeping the homeowner informed.
- Obtaining the certificate of occupancy upon project completion and educating the homeowner about proper use and maintenance of the new home.
The role of a liaison between the homeowner, lender, and designer requires excellent communication skills and expert knowledge of the construction process. Since a custom home is unique, it’s crucial for the builder to handle any issues that arise and keep the homeowner updated on design changes and resulting budget adjustments.
Conducting Research
If you decide to hire a custom builder at the beginning of your homebuilding process, you won’t need to do much in terms of design and budget planning beforehand. The builder will guide you through these steps. This approach is beneficial because you may discover that the extra features you desire exceed your budget. It’s important to have a clear idea of the design parameters, but you can work out the details with the builder and the subsequent designer you hire.
An alternative approach to constructing a custom-style new home, especially if you already own the land, is to engage an architect to conduct research on relevant building codes, land-use laws, and other regulations, as well as environmental factors such as soil quality and topography. The architect would then complete a design before you begin searching for a builder. However, the drawback of this approach is that the input from a reputable builder, who possesses expert knowledge of home construction techniques and material costs, is crucial during the design phase. Waiting until after the design is completed to hire a builder could result in unforeseen change orders, which would increase both the time and potentially the cost of the design process.
If you choose to initiate the building process by hiring a custom homebuilding contractor, the primary task is to find the right contractor. While you can also hire an independent architect, it is often a better idea to allow the builder to guide you in selecting one since the builder and architect need to work closely together and should be compatible. If you contract with a design-build firm, they usually have in-house designers available. Even larger, reputable building contractors who do not specialize in design often have their own network of designers with whom they regularly collaborate.
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Design-Build vs. Building Contractor
To turn your dream home from a concept in your mind into a reality that you can live in, you will need the right professional team by your side — and you have a couple of different options. When working on a high-level design, it often makes sense to hire an independent architect. However, this also means that you will need to hire a separate building contractor to actually construct the design. On the other hand, with a design-build firm, which is a company that has in-house designers who closely collaborate with construction crews, there is no need to search for one or the other. Both options have advantages and disadvantages for homeowners.
A design-build firm handles both the design and construction aspects, and the most significant advantage of working with one is the assurance that the builder and designer are in good communication with each other and can collaborate effectively. A skilled designer oversees the project from start to finish, ensuring that the design is implemented accurately. This is easier when the designer and builder work under the same roof. However, a potential downside is that when the designer and builder work too closely, they may forget to keep the homeowner informed about design changes and budget overages.
On the other hand, if you desire a truly unique dream home, you may be willing to sacrifice the efficiency of the design-build model for an architect who specializes in designer homes. In this case, you would hire a custom building contractor after you start working with the architect, perhaps following their recommendation to find the builder. Similarly, you might find a builder with whom you want to work and that person might recommend an architect or designer.
When the builder and designer work for different firms, it is unrealistic to expect them to collaborate as closely as they would if they were employed by the same company. However, a little creative tension often leads to more interesting results. A healthy amount of creative friction also ensures transparent negotiations and, most importantly, keeps the homeowner at the center of the construction process.
How to Choose the Right Custom Homebuilder
Local custom homebuilders often don’t advertise because they are busy with their construction projects. The best way to find them is through referrals from friends, real estate professionals, other builders, or home designers. If you can’t find any leads locally, you can use the directory of the National Association of Home Builders (NAHB) to search for homebuilders in your desired area.
Take your time when choosing a builder, as your dream home is a significant investment. During the initial stages of your search, use a set of questions to narrow down your options. Some important questions to ask are:
- How busy are you? A builder who is overwhelmed with work may not be the best fit for your project. Similarly, a builder who is available immediately may not have the expertise you’re looking for. Ideally, you want a contractor who is actively working but has enough availability in the near future for your project.
- What percentage of your projects are custom builds? It’s important to choose a builder who primarily focuses on custom builds rather than conventional projects.
- Are you licensed, bonded, and insured? It’s crucial to hire a builder who is properly licensed, bonded, and insured.
- What are your building values? You want to find a builder whose values align with yours.
Once you have narrowed down your list to two or three potential builders, you can conduct a more detailed interview. Ask for references, pictures of past projects, and specific details such as license numbers and insurance information. Check the builder’s website, social media pages, and any other online presence they have. Don’t forget to contact the references provided by the builder and inquire about their attention to detail, work ethic, and communication skills.
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The Cost of Hiring a Custom Builder
Unlike tradespeople like plumbers or electricians, custom homebuilders don’t charge a flat fee or an hourly rate. Instead, their fees are included in the overall construction costs of the home. The quote you receive will cover the entire project, including materials, labor costs, permitting fees, and incidentals. The builder’s profit typically makes up 9.1 percent of the total cost of the home construction.
The average cost of building a home is around $150 per square foot. However, if you choose to build a custom design with high-quality materials, the cost will likely be higher. Getting a rough estimate during the interview process is important because it helps you identify problematic builders who may submit lowball bids to win the project. Quality builders will generally provide quotes that are in the same range as one another. Once you have selected a builder based on reasonable estimates and are ready to start the project, make sure to get all agreements, including the final quote, in writing.
Licensing and Certification for Custom Homebuilders
Custom homebuilders, who function as general contractors, do not necessarily need to obtain a license in every state. In states where licenses are not mandatory, the responsibility often falls on local entities, such as cities, counties, or a contractors’ board, which typically require business licenses. Bonding is generally required by state and other licensing authorities. While insurance is not obligatory, it is advisable for builders working on large homebuilding projects to have both liability and workers’ compensation insurance to provide coverage in the event of any injuries on the job site. The most reputable builders are affiliated with national builders’ organizations, such as the NAHB, the Associated General Contractors of America, or a local association.
