If you haven’t read Part 1 of this series, I highly recommend visiting that blog post prior to this one. The first blog post covers different home and builder types, which this post will build off of:
Once you’ve chosen a build type (tract, spec, or custom), now it’s time to choose the builder. If you’ve chosen to go the spec route, you will likely choose the house rather than the builder, since these are houses that are built and then listed.
If you’re going the tract or custom route, now is the time to start reviewing your builder options.
Choosing a Tract Home Builder
If you’re going the tract home direction, search the location you’re interested in living rather than searching for a builder.
Tract homes are built in specific neighborhoods and locations. If you start looking at builders and then find that the builder doesn’t have a neighborhood where you’re interested in living (and they don’t do “built on your lot”), then you’ve just wasted a lot of time.
Searching in the location you’re interested in can mean physically driving around or conducting a web search of new subdivisions in that area. I highly recommend driving around the subdivisions to get a feel for what the entire neighborhood layout is/will be, and to see the other homes. Hang around the neighborhood for one or multiple days to see how the builder and their subcontractors treat the site and the houses that are in progress.
Tract home builders will often have model homes to show you, but also ask the neighbors how satisfied they are with their build. Tract home builders often build multiple neighborhoods in different locations, which gives you options to see the same homes in other locations and at various ages.
You obviously want to buy a home that keeps over time. That’s why I recommend driving around neighborhoods that were built 1, 5, even 10 years prior by the same builder, if they exist. If you drive around a neighborhood of the same builder, and the homes are just 5 years old, where the siding is falling off, the roofs have not aged well, gutters are sagging, etc. it could be a sign of poor craftsmanship if it’s repeated on many houses.
You can also search the builder online and read reviews. Ask coworkers, family, and friends. It’s worth spending the additional time and effort upfront to be happy with the building process and the finished product.
Questions to Ask the Builder
Financing: what loan options are available? Do you provide financing options? Are there incentives to choose the financing you provide? Do you offer a rate buydown?
If you’re curious what a rate buydown is, reference to my blog post on the topic:
https://www.whitewalnut.co/post/how-you-could-potential-reduce-your-monthly-payment-on-a-new-home-us
Building design: what options will I have for cabinets, countertops, hardware, floor layouts, exterior colors, flooring, etc.? Are there limitations on what I can change, how many changes I can make, or charges associated with the changes? Are appliances included and which ones? What walk-throughs are conducted during the building process and are we able to make any changes or additions during these? What brand/material of windows and doors are included? Will you give me the opportunity to schedule inspections at intervals during the building process?
Closing: what are the logistics of the possession process? Do you offer a warrantee and can I get a copy of the full details it covers? When can I schedule the final inspection?
Neighborhood: are there existing HOA covenants and can I see a copy of them? Are there plans to build community areas, such as ponds, pools, etc.? What are the HOA fees? What do the fees cover?
References: can you provide contact information or reviews from prior homeowners?
Ask these questions upfront prior to signing a contract. This prevents you from being disappointed later.
Choosing a Custom Home Builder
With custom builders, they are likely not building all of the homes in the same neighborhood. This makes them a little harder to find. Because of this, I recommend finding the builder and asking if they build in the area you’re interested in.
Other than conducting an internet search, driving around locations near where you’re potentially building and contacting the builders of the homes in progress is a great way to meet a builder. We did this several times in different neighborhoods.
We found our builder because they were working on a house that we really liked and had passed by it multiple times. We contacted them from the sign in the front yard, he showed us that house and another that he was working on, and we started to negotiate details from there.
Viewing the houses they are currently working on and houses they have completed is key. Notice details, such as trim joints, tile work, and even cleanliness of the building site. This gives some insight into how much pride the builder takes in their work and the quality they expect from their subcontractors. When talking with the builder, listen to their thought process: are they thoughtful in what they recommend? Rather than just adding upgrades that don’t add value to the homeowner.
This is where the builder brings value! They have experience. They know what works. You’re putting a lot of trust in them, so you want to know that they have your best interest in mind and have a similar view on how the building process will go.
With a custom home builder, you’re going to be interacting directly with them a lot. They may have a few others on their team, but the teams are usually very small. Because of this, personality and overall working relationship with this type of builder is important.
We prefer a straightforward approach, with all information (good and bad) shared immediately. Not all builders are this transparent. We also like to be very involved in the building process, and our builder is very good about keeping us in the loop of what’s going, providing options for next steps, and giving their opinion while still letting us make the final decision.
Red flags to watch out for: the builder won’t let you be at the building site of your home any time. They change the cost multiple times or are not transparent about their fees. They disagree (or don’t agree) with details of the build that mean a lot to you. They have bad reviews from previous clients.
Questions to Ask the Builder
Cost model: is it fixed cost, where the builder quotes everything and the homeowner pays a fixed price that is agree to at the first closing? Or, is the cost flexible, where the builder quotes everything, we agree to the cost at the first closing, but the cost is subject to change during the building process?
There are pros and cons to both models. Obviously, with the flexible cost model, any money spent over the original quote, you’re liable to pay at the final closing (prior to possession). If this was 2020, when the lumber costs multiplied, this would be a less than ideal option. But, if it was 2022, when lumber costs were dropping, this may be worth a gamble to save a significant amount on your lumber package. It comes down to: how much risk are you willing to take on? And are you willing/able to pay the difference if the costs increase?
Communication: what is the best way to reach the builder? Will they contact the homeowner before making decisions? How often should the homeowners expect to hear an update from the builder? Will the builder give us a heads up on what to expect for the coming week?
Financing: what loan options do they accept? How much does the builder need to start the permitting process prior to the first closing?
Building design: do you have floor plans to start from and have a draftsman contact? What does the draftsman or archatect charge? Can we use our own subcontractors or do some of the work ourselves? What is included in your quote?
Here are a few examples of detailed questions/considerations prior to the builder generating the quote. This ensures the initial quote is as accurate as possible: ask about flooring, tile, and carpet and locations. Fireplace façade material. What will be stained vs. painted (interior and exterior). Have the cabinet design quote nearly complete. Garage door style, color, and windows. Window and door package details. Door, trim, and door knob styles. Review the allowances for each category, especially appliances. If you want high end appliances and want to include them in the loan, make sure they are included in the budget.
References: can you provide contact information or reviews from prior homeowners?
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