Understanding The Real Costs When Building Your Custom Home

One of the most labor intensive tasks that you will perform as the homeowner building a custom home will be reviewing the construction bids – or, in some cases, multiple construction bids.

Now, first things first, you should be qualifying your builder early in the process and selecting your builder in the early phases of design (schematic design). This is because you are building a team of experts, not a group of commodities. Trust me, you’ll pay more by commoditizing your team. Experts will care about you, they will care about your project, and they will care about each other. Experts will control your budget. Experts will save you money. This is not to say you shouldn’t do your due diligence and interview multiple builders, it is only saying that you competitively bid those builders at schematic design to determine their range of value for construction – you want to confirm that your builder’s pricing is within competitive range of each other and then select the builder that you feel is the best fit for your project. Once your builder is on board, they can then start providing more detailed pricing as the architectural design becomes more developed.

So, let’s assume you’re a smart homeowner and you’ve hired a great architect. Now, you’re looking at bids and…lo and behold…they look nothing alike! What do you do? Well, you turn to your architect who will already have begun organizing the bids in an attempt to get the scope “apples-to-apples” – because you’ve hired a great architect. You should know, however, that you will never get two construction bids to be “apples-to-apples” – don’t be discouraged by this fact, it is still a worthwhile effort to try because it allows for a more natural interview of the builders by evaluating their management style, their ability to effectively communicate, and their interpersonal skills as you ask them to navigate you through their pricing structure.

So, we’re still assuming you’re a spectacular homeowner and you’ve hired a great architect. Now you’re in schematic design qualifying your potential builders with the intention of selecting one as part of your team because you’re a smart, amazing person. You’ve got the scope between bids as closely aligned as you can and you feel like you have a reasonable guesstimate of your ballpark construction budget. Great job! Now what?

Well, you still have one million-dollar question to ask (quite literally!): “Is this the price to start or is this the price to finish?”

The answers may surprise you. Choose the builder who gives you the price to finish. It may be higher in the beginning, but it will surely be lower in the end.

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