The process of building a custom home is often misunderstood by home buyers. Most home buyers start out thinking they may want to build a custom home but then end up buying an already built “spec” home or working directly with a builder to modify a home that is in the process of being built.The reason is most would-be “custom home buyers” have the basic progression of the homebuilding process wrong. They think that they should find and buy a perfect lot, then hire an architect to design the house plans for their dream home, then take the home plans to custom builders who will eagerly bid out the project, then choose the builder with the lowest bid. Truth is that the order should be reversed. That is, a home buyer should choose a builder, and then together identify the lot and build the house. In the end, the process is usually faster, smoother and less expensive for the buyer. Here’s why:
Buyers typically do not have the necessary expertise and resources to evaluate a lot’s potential. Not all lots are the same and there may be hidden problems or challenges. Some examples are setbacks (which determine how far from the property boundary the house can be built), storm easements, topography, soil quality, title issues and lack of public water and/or sewer hookups. Unexpected land-related costs can create additional costs or delays and may prevent construction altogether. For a buyer not familiar with these issues, it can take 30 days (or more) to assemble a team and get to a point where they can move forward with a purchase.
To be considered as well is the fact that frankly, it is difficult for a typical buyer to look at a lot (whether bare or with a tear-down home on it) and see the potential. For example, most buyers look for a lot that is perfectly flat. Some of the best lots can have a gentle slope up to the house front and then a gentle slope toward the back lot line, and from one side to the other. That lot tends to be better for drainage, allows for the entrance for the house to be at (or slightly above) street level, and may even allow for walkouts on main and lower levels. Some lots that appear to have topography issues (for instance, too sloped) may in fact be great lots. Builders can also do wonders with regrading and retaining walls.
On one hand you may hold the deed to a flat suburban lot with in-ground utilities already available at the curb. Such a finished lot is ready to build on. On the other hand, you may be considering wooded, rural or steep hillside property. While such land is no doubt scenic, the upfront costs of preparing previously undeveloped rural land for construction is typically a significant additional cost in addition to the purchase price of the land. Site prep — building a driveway, bringing in water, electric and sewage lines, and excavating the foundation — can be quite expensive. Your builder and architect can help you estimate those costs, too.
Even if you’re building on already developed land, you and your architect and builder need to carefully research zoning or deed restrictions. To avoid surprises, have an attorney clarify all restrictions and get estimates on site work (either via the builder or on your own) before completing a land purchase.
You can expect to pay more for a custom home than a production model of similar size and floor plan. The reason is the custom builder doesn't enjoy the savings of scale and labor efficiencies that a production builder does. Of course, the actual price will depend on a number of variables — the most obvious being the size of the home, the complexity of the design, the building products and materials you select, and the land you purchase.
When building a custom home, your choices are nearly unlimited. The main constraints are your budget and any building code or zoning limitations. The key to working with a custom builder is to establish a realistic budget and to stick to it, even when you’re tempted to go astray by a lovely but higher-cost option.
Because the process of building a custom home is, not surprisingly, truly customized, you’ll typically spend a lot more time designing and constructing your new home than you would if you work with a production builder.
That said, knowing what to expect at each stage — and especially what choices you’ll make and when — can make your custom home process smooth and result in the home you've always dreamed about.
Buyers often fear that by allying with a builder too early in the process, they are losing their negotiation leverage with that builder. We, like other reputable builders, value loyalty, and like them, love having a buyer contractually commit to building with us because it takes the “speculative” risk out of the picture. Taken together, a good builder will reward you with some cost savings. Given the advantages and perceived disadvantages, the most successful course for a buyer wanting to build a custom home is to first choose the builder they will be working with, and then work with that builder to identify and acquire the lot and build their custom home.
At the end of the day, you need to choose a builder you can trust (having a well-thought, well-written contract is not a bad idea either). Builders with strong reputations, builders who keep you involved in the building process — this is who you want to look for in building your new home. If you’re just looking at price, you’re making a big mistake. Also, you should look for compatibility — building a home should be a fun and enjoyable process. Choose someone you trust and will enjoy working with.