INFO
5910 Courtyard Drive
Suite 160
Austin TX 78731
Suite 160
Austin TX 78731
Phone: 512.900.8797
Copyright © 2024 Rivendale Homes
What to Look for in A Custom Home Builder
Home Construction
Building a custom home in Austin is an exciting and complex process. One of the most important decisions you will make is selecting a homebuilder. Here are some tips to help your homebuilder selection process go smoothly and reduce your stress.
Key Takeaways
· Define Your Budget: Establish a clear budget before engaging with designers or architects to avoid costly overruns.
· Find a Reputable Builder: Research builders' credentials, experience, and reputation to ensure a smooth and successful project.
· Prioritize Communication: Regular communication with your builder is essential for a stress-free construction process.
· Understand Contractual Obligations: Familiarize yourself with the contract terms, including payment schedules, change orders, and warranties.
· Consider Design-Build Firms: Explore design-build firms that can handle both the design and construction phases, streamlining the process and ensuring budget adherence.
Define your budget, interior and exterior specifications, and expectations. When building a custom home, many people consult a designer or architect before setting a budget and discussing costs with a builder. As a result, one-third of custom home designs never get built because the construction costs exceed the client’s budget. Therefore, it is imperative to start by understanding what you can afford in a monthly payment, get prequalified by a construction lender, and zero on the overall dollar amount you can spend on a new build. Then, talk with a few builders to see what level of interior and exterior specifications you need and how much square footage you can get for your budget. How do you find a knowledgeable builder to speak with about your custom homes? Follow these steps.
Most active custom home builders in Austin have open houses or model homes available to tour on the weekends. Tour these homes to inspect the quality and finish out and set up a meeting with the builder to discuss your budget; they can explain the different levels of finish out and costs associated with each in a home. If you already have a lot or piece of land purchased for your custom home, the builder can address the costs of your lot. If you don’t have a lot, most builders can help you find one or refer you to a good realtor who can. The budget process is the most essential step in your custom home-building journey; once you have that settled, here are seven more steps to keep you on the right track.
Research your builders’ credentials. Building a custom home is a journey. It's imperative that you find a builder that you will enjoy working with and that you can trust to help make the trip easier. Start by asking and verifying previous new build customers’ opinions. Every builder should be able to provide 2-3 contacts of recent (within the last 12 months) custom home clients. Ask for banking references; banks see and know builders’ financials; you do not want to work with a builder who is not financially strong and will not be around to service your new home.
Of course, check online reviews for clues. As stated earlier, seeing is believing; shop their model homes and open houses, and talk to their sales representative and staff. In building a custom home, you will spend more time working with the builder’s staff than the builder, so ensure the whole team is a good fit for you. Research a builder’s experience, how long they have been in business, and how many homes they have built. Ten years of experience should be the minimum, and at least 50 homes completed should be the baseline.
Transparency and frequent communication will be vital for your project to flow smoothly. Review the builder’s pre-construction and construction process and ask, “How long is each projected to last?” Essential considerations are their communication rhythm and how frequently you meet on the job site. Review their quality inspection process both internally and externally. This would include considerations such as what third-party construction inspections you can inspect.
Other aspects to consider include if you plan on building a stucco house, then having a stucco inspection is unique, but it should be done to ensure correct application. Review and discuss the builder's risk policy and general liability carried out by the builder. These policies protect you and your home from liability fire, theft, and construction defects and check the financial rating and strength of the carrier.
Most builders will require a deposit upfront upon signing a contract. This deposit typically secures your home's place in the builder’s schedule and prepays for items in the first draw. Review this process with your builder and ensure this deposit goes into a separate dedicated account for your home only. Make sure the builder is not commingling your funds with someone else’s. Review the statement for this account monthly to see where all the funds from this account will ensure that they are going to your job. Transparency is critical for a homebuilder. If their processes are not transparent, this should be a red flag.
If you already developed a set of plans or are working with an architectural designer and do not have a builder on your team, you have put the proverbial cart before the horse. One-third of designed custom homes never get built because of budget issues and challenges. Architectural designers often underestimate the cost of building the house they and their client’s design. Find a good builder and get them on your team. If you do not have plans, a good builder can help you design a home that will not exceed your budget. If you already have plans, they can provide you with a budget estimate and value engineer your plans to reduce costs if necessary.
Design/Build firms do precisely that; they can design your house to fit your budget and build it to your specifications. Combining this process gives more assurance of being on a budget. It also shortens the overall design/build time as both the designer and builder are already on the team, ensuring smooth project coordination.
Size does matter. More prominent builders generally have purchasing and estimating departments. This is where money can be saved. If a builder builds numerous luxury homes per year (10 or more), they generally attract the best tradespeople and sub-contractors because of this volume of work. A builder who has full-time purchasing and estimating staff can save your job money by doing the following: 1) bid the plans and job correctly per the plans and specifications, 2) negotiate the best service and price with each subcontractor, 3) ensure a smooth process with proper contracts and insurance in place 4) recommend alternative material or vendors if a bid comes in over budget 5) ensure your project stays on schedule by tracking ordered material and labor and making sure it’s available when needed.
You have two options for contracts that impact the pricing of your custom home:
a. Cost-Plus Pricing Contract
A cost-plus pricing contract involves the builder billing the homeowner for the actual costs of labor and materials used in constructing the custom home plus an agreed-upon markup. This markup typically covers labor, overhead, and profit, usually around 22%.
b. Fixed Price Contract
As the name suggests, a fixed-price contract establishes a set price for the construction. There may be allowances for specific items, like foundations or selections yet to be made by the homeowner, which could lead to additional costs beyond the fixed price. Typically, this type of contract includes a markup of around 28%.
When it’s time to begin constructing your custom home, a lot of planning and preconstruction work has already been completed, including design engineering, estimating, and bidding. Now, your home is ready to take shape. To ensure a smooth process, it's crucial that everyone on the team—both the builder and the owner—are on the same page concerning the following aspects:
a) Project schedule
b) Timely selection of any remaining finishes by the owner
c) Construction draws schedule and approval process
d) Construction performance standards
e) Inspection protocols and owner acknowledgment
f) Updates for the building owner and job site meetings
g) Final inspection by the owner, builder touch-ups, and home delivery
h) Builder warranty services and responsibilities
Review and understand each of these steps, and don't hesitate to ask questions. A well-organized custom home builder should provide written materials that cover each of these topics.
Very little new home build goes 100% to plan. There almost always will be changes. Communication and transparency are crucial to resolving plan changes as effortlessly as possible. As you can see, this is a very complicated process, and that’s why the most important decision an owner can make is selecting a builder that checks all the boxes and is one that the owner trusts and feels confident in. Do not make your decision on price alone. Remember, “the satisfaction of a low price has long faded; then you are left with the dissatisfaction of poor service and quality.”
When building a custom home, many go to the designer or architect before establishing their budget and discussing building costs with a builder. One-third of all custom homes designed for clients are never guilt-built because the home designed costs more to build than the client has in their budget.