8 Best Practices for Working with a New Custom Home Builder

Building your dream home should be exciting, but it can be tricky. There are new levels of anxiety as your house is built, decisions are being made all the time, and you may be working with someone you just met. It’s an unfortunate fact of the industry that custom home builders are good at what they do, but they don’t always tell you everything you should know.

At All Building Construction, we work every day to live up to our reputation as the best custom home builder in Oregon. This includes overcommunicating our plan, being explicit about what is happening in this phase and the next, and always trying to do right by the customer’s intent.

However, not every customer has had that same experience working with other companies or trying to do it themselves. Navigating the world of real estate and construction can be daunting, especially for first-time homeowners. So, whether you are our customer or working with another custom home builder, this article is designed to help. If you find yourself working with a less reputable builder, this article will be your armor to make sure you get out of the project as safely as possible.

In this article, we’ll uncover the top 8 bits of advice that a bad custom home builder doesn’t want you to know.

1. Don’t Trust Your Custom Home Builder Blindly

When building your dream home, remember that not all custom home builders are created equal.

While many are honest and reliable, others may prioritize their own interests over yours. Just like when applying for a mortgage or loan, it’s essential to do your due diligence before trusting a builder with your hard-earned money.

From the foundation to the roof, every aspect of your home should be constructed with integrity and transparency.

Don’t let a builder’s smooth talk or flashy brochures blind you to potential red flags.

Take the time to thoroughly vet your builder, ask for references, and ensure they have a proven track record of delivering quality homes on time and within budget.

Remember, a little extra caution upfront can save you a lot of headaches and wasted water down the line.

Don’t Assume the Builder is Always Honest

It’s important to remember that not all builders are entirely honest about things like down payments, taxes, cash-out refinancing options, insurance requirements, or potential flood risks. Protect yourself by thoroughly researching potential builders and getting everything in writing, including contracts.

2. Don’t Overlook the Importance of a Realtor

When building a custom home, many people assume they don’t need a real estate agent since they’re working directly with the builder.

However, having a Realtor represent you during the buying process can be invaluable.

A skilled agent can help you navigate the complexities of home insurance, ensure the plumbing and other systems meet standards, and even help you secure better credit terms.

Most importantly, they can negotiate the best possible price on your behalf, potentially saving you thousands.

Have a Realtor Represent You During the Buying Process

A Realtor can guide you through the financing process, helping you explore options like refinancing existing debt or improving your credit score to secure a better interest rate.

3. Don’t Fall for Low Prices

“The bitterness of poor quality remains long after the sweetness of low price is forgotten” – Benjamin Franklin.

One of the unfortunate ploys of the industry is when custom home builders lead with a low price and then you get hit with an unduly large amount of hidden fees. It might end up leaving you with a much higher bill than expected.

From unexpected material markups to inflated escrow fees, there are many ways builders can sneak in extra expenses.

Be cautious of builders who push you to use their preferred lender or promise unrealistically low prices on materials or electricity.

Remember, if a deal seems too good to be true, it probably is.

Be Aware of the True Costs

When planning your custom home, be aware that the initial budget may not reflect the true costs. Builders may lure you in with low prices, only to reveal hidden expenses later, such as upgrades to the kitchen or design changes. Carefully review all contracts and ask questions to understand the full scope of costs, including any potential VA loan fees.

Here’s a breakdown of some common hidden costs:

4. Don’t Ignore the Need for an Inspection

Even if the builder assures you that everything is perfect, from the basement to the carpet, it’s essential to have an independent architect or inspector review the work and ensure it meets the standards outlined in your contract.

Get an Inspection Done Before Moving In

Before moving into your newly built custom home, it’s crucial to have a thorough inspection performed by a qualified professional. This inspection should cover everything from the foundation to the roof, including the electrical work, plumbing, HVAC, and other key systems. Don’t leave it up to luck or trust the builder blindly; an independent inspection can identify any potential issues or areas that don’t meet the agreed-upon specifications, saving you from costly repairs or renovations down the line.

A comprehensive inspection should include the following areas:

• Foundation and structural integrity
• Electrical systems, including wiring and outlets
• Plumbing, including water pressure and potential leaks
• HVAC systems, ensuring proper installation and functionality
• Insulation and ventilation
• Windows, doors, and weatherproofing
• Flooring, walls, and ceilings
• Bathrooms and kitchen, checking fixtures and appliances
• Exterior elements, such as siding, roofing, and gutters

If any issues are identified during the inspection, work with your builder to have them addressed before closing on the home or moving in.

5. Don’t Assume the Builder Will Fix Problems

When building your dream home, it’s natural to assume that the builder will promptly address any issues that arise during construction or after you move in.

However, this isn’t always the case.

Builders may drag their feet on repairs, blame subcontractors, or even deny responsibility altogether.

It’s crucial to understand your rights and options when it comes to addressing problems with your new home’s construction, from the foundation to the interior design finishes.

Don’t let a builder’s excuses or lack of action leave you living in a house that doesn’t meet your expectations or the agreed-upon specifications. Negotiate repairs in advance of awarding the contract. If they are a quality builder responsible for the whole home, it might be an easy discussion point.

Knowing how to advocate for yourself and hold your builder accountable can make all the difference in ensuring your dream home becomes a reality, not a nightmare.

Know Your Rights and Options

Homeowners should familiarize themselves with their rights and options when dealing with potential issues in their custom-built homes. If problems arise, such as water damage to floors or other assets, it’s essential to review the contract and warranty to understand the builder’s responsibilities and the homeowner’s recourse options.

Seeking legal advice or involving a third-party mediator may be necessary to ensure the builder addresses the issues and minimizes the risk of further damage or financial loss.

6. Don’t Overlook the Importance of a Contingency Fund

When embarking on an investment in custom home construction, it’s crucial not to overlook the importance of setting aside a contingency fund.

Even with meticulous planning and a detailed budget, unforeseen expenses can arise, from unexpected issues with the foundation to the need for upgrades to the air conditioning system.

According to Bankrate, experts recommend allocating an additional 10–20% of your total budget for these potential surprises, especially if you’re working with a listed building or incorporating high-end finishes.

Set Aside Extra Funds for Unforeseen Expenses

When planning for a custom home build, it’s wise to set aside a contingency fund to cover unexpected costs that may arise.

Based on the information from experienced builders, allocating an extra 10–20 percentage points of the total budget can provide a helpful cash cushion.

Much like having extra funds available when paying off a student loan, a contingency fund ensures that surprise expenses won’t derail the entire project.

7. Don’t Ignore the Need for Specialized Contractors

When building a custom home, it’s essential not to ignore the need for specialized contractors, especially in areas that require specific expertise.

While your builder may have a team of professionals, certain aspects of the project, such as installing high-end cabinetry or designing a state-of-the-art HVAC system to regulate heat, may benefit from the knowledge of specialists in those fields.

Although it may require additional income, investing in specialized contractors can ultimately enhance the quality and value of your custom home.

Know When to Bring in Specialized Professionals

For certain aspects of a custom home build or home maintenance project, such as intricate tile work in the shower or specialized paint finishes in the bedroom, it’s often best to bring in contractors with niche expertise in design. Your general contractor might be able to complete the work but unless they can show examples of completing the work on other projects, the fastest way to ensure success is to hire someone specialized with a portfolio of similar projects. This ensures that these high-end details are executed flawlessly and covered under the appropriate warranty, whether the home is a standalone property or a condominium.

8. Study and Know Your Contract

When building a custom home, it’s crucial not to assume that the builder will handle every aspect of the project.

From selecting furniture to dealing with property tax, there are many elements that may fall outside the builder’s scope.

Just like maintaining a car engine, building a home requires a team effort.

Don’t hesitate to consult with a financial adviser or ask about the role of subcontractors in the process.

Know What’s Included and What’s Not

When building a custom home, it’s essential to clarify with the builder what’s included in the contract and what’s not. From tile selections to privacy features, many elements may be considered upgrades or fall outside the builder’s scope. Failing to understand these distinctions can lead to unexpected costs and delays, ultimately impacting the builder’s profit margins and your satisfaction with the final product.

Here’s a breakdown of some common areas that may or may not be included in a builder’s contract:

To avoid misunderstandings, review the contract carefully and ask questions about what’s covered. Don’t hesitate to negotiate or seek upgrades, but be aware that these may impact the total cost and the builder’s profit margin.

By being proactive and informed, you can ensure that your custom home meets your expectations without breaking your budget or causing friction with your builder.

Looking for the right partner for your custom home project?

Finding the ideal partner for your custom home project is pivotal to transforming your vision into reality. All Building Construction LLC stands out as a premier general contractor in McMinnville, Oregon, offering different residential construction services.

With their experience and commitment to quality, they ensure that every aspect of your dream home— from the house design to the interior design to construction— meets local building code regulations, your expectations, and your budget.

Owner Mark Prine, at the helm of All Building Construction, brings years of home-building expertise and a hands-on approach to customer service coupled with forthright supply chain structures. His dedication is mirrored in the exceptional referral network the company enjoys, attributed to the enduring quality of their construction projects and the personalized customer experience they provide.

Frequently Asked Questions