Building a Custom Home

[P4D]

We are in the final stages of choosing a builder now. Does anyone have any more advice?

 

[Brak]

We are in our 4th month of building. What HornTillDeath said is great advice. Selecting the right builder is probably the hardest part so checking references is a must. Our builder has a small business so he is very flexible.

Early on in the process he told us it would take 6 months. We asked him several more times if it would be finished earlier and he said he takes the entire 6 months. Then last week (after 3 months of construction) he said he usually finishes in 5 months. Ours will probably be done in 5 1/2 because of all the rain.

 

[old'un]

The advice to try to anticipate everything up front and get it on the original plans is right on target. While many have stated that the contractor tries to get as many change orders as possible, because that is where he makes a killing, that is not really true. Changes in the original scope are generally very disruptive to the flow of a job, and in some cases may necessitate changes in scheduling of subs, etc. that can cause the type of time lags that will delay the completion of your house. Of course, some changes are inevitable, but you should try to minimize them to the greatest extent possible. Then there are no excuses for delay, or down periods of time, due to anything that you have caused.

Bear in mind too that the builder will be scheduling subcontractors on several jobs concurrently, and a delay on a job ahead of yours may then result in a delay on your house. That is especially true of weather-related delays. That is the reason that some builders are reluctant to agree to a fixed construction duration, or tell you a longer time than they think it will really take just to cover the unforeseen delays.

All builders are not crooks trying to cut all possible corners to make a buck. Most of them rely to a certain extent on referrals for subsequent business, so it is not in their best interest to create unhappy customers. Do your due diligence in checking their references, and try to get a good feeling about their honesty and integrity before signing them up.

 

[Longhorn_Fan68]

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[old'un]

There are no licensing requirements in Texas for General Contractors, or "Builders", so you can't use that as a guideline to indicate professional capability. The best approach is to use an Architect, and arrange for periodic inspections, but also get input from your GC, or Builder. Architects are notorious for drawing things that look good on paper but that are impractical (read expensive) to build. You need input from both.

I would definately recommend an inspection after your underslab SWV and water lines are run (before the concrete is poured), because any damage there will be hard to find and expensive to fix, and rebar tiers are bad about stepping on the copper lines and crimping it, and on the framing before sheetrocking hides it.

 

[Longhorn_Fan68]

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[2xHORN]

Here's a very serious tip.
For legal reasons, most buiidling contractors want to stick you with a "cost plus" contract. This means they provide estimates from subs (this is the cost) and take 15-20% more for themselves for being the general.

This kind of contract accommodates variations in costs easily. But it does so to your detriment. It also keeps the contractor from being liable for the disposition of trust funds, which is the case with non-cost-plus contracts.

If you sign a cost plus contract (many are using the AIA form), be sure to specify a maximum price. Otherwise you literally have no idea how much it's going to cost.

I highly doubt you will find a contractor willing to buiild a custom home on other than a cost-plus basis. But if you can, go for it.

There are some architecture firms that will provide their services as a general contractor.

Also, with respect to payments from a construction loan: always, ALWAYS, seek documentation (ie bills from subcontractors) before making any progress payments from your construction loan. Also, consult an attorney before paying out the last 10% of the loan. You can avoid many mechanic's liens this way.

HOOKEM

 

[Longhorn_Fan68]

Another advantage of hiring an architect is that they can review pay requests. This insures that the owner is not puting more value into the project that is at the site at any one time. If you do not have an architect checking the job there is no real checks and balances process to be had.

 

[BigWill]

Hornge, thanks for the kind words. Did we speak on the telephone? I remember talking with someone on this subject.

As to the pay requests; if your construction lender has their **** together (chances are they don't) then they will perform a good "fund control" of the project.

Some institutions are looser than others.

Should you end up issuing the checks yourself, I urge you to "joint check"; that is, have two or more payees on the checks. If your GC gives you a bill from "Acme Plumbing", make the check payable to both the GC and Acme. Also, you should joint check material suppliers as well. For example, if ABC concrete brings the mud to the jobsite, and Jones Concrete pours the foundation, be sure and put ABC on the check for Jones.

Fortunately for those of us out here, CA has a pretty good set of laws dealing with those things. I'm not too sure about Texas; it's been a while since I did a deal there.

In CA, anyone furnishing material or labor to a project is required to send a "Preliminary Notice" to the owner, as well as the lender. This puts the owner on notice that the party wants to be paid, and has the ability to lien the project if they are not.

I'll reread the thread and see if I have anything to add. Feel free to PM me with any specific questions, or post them here.

One more thing: Spec EVERYTHING to assure that you are getting apples-to-apples bids from your builder. Obvious example; what kind of kitchen faucet are you getting? Do your plans call it out? If not, are you getting the $29 home depot model, or the $300 deluxe pull-out model? One way to get around that is to use "allowances" in a line-item budget. I have found that using the home depot retail price is probably the best way to do that. If your builder gives you a $100 allowance for a faucet, you go to home depot and pick one out for that amount. For less, you are credited the difference, or, you pay the difference for a nicer one.

Be careful that your builder is giving you reasonable allowances. Overruns are your worst enemy.

Also, when figuring your budget, think about the things that are easy to change/upgrade later. Faucets are, sinks aren't. Shower valves aren't. Carpet is. Cabinets aren't. Spend the dough on the stuff that counts.