You’ve made the decision to build your dream custom home. Now what? From choosing a builder to figuring out financing, there are a lot of steps to consider before breaking ground.
Being knowledgeable about the initial phases of the home-building process will help to make your experience as stress-free as possible, and will ensure that every detail of your dream home becomes a reality.
1. Buying a Lot
Deciding on a site for your new home is one of the most exciting parts of the process. Have you always wanted ocean views, or a remote spot in the mountains? Whether you decide to buy an urban lot or a huge piece of land in a far-off location, there are several things that are helpful to have in mind for the home construction process:
- Will you have access to existing utilities during the building process?
- Is the lot easily buildable?
- Are there any area-specific concerns, such as additional permitting or environmental obstacles?
With diligent research you can find the answers to these questions and more, but it can be helpful to work with a builder during the lot selection stage, as reputable builders will have a more informed idea of these considerations and any other anomalies about building in your local area.
2. Choosing a builder
When it comes to choosing a builder, the options can seem limitless. It’s important to carefully research builders in your area, and find one that best suits your needs. A number of reputable resources can make the search more manageable, such as:
- Canadian Home Builders’ Association’s searchable home builder list
- National Association of Homebuilders (NAHB) regional chapter lists, which gives information on licensed builders in the US
- Canada Green Building Council’s website, which provides extensive information on green building in Canada
- US Green Building Council’s Green Home Guide, which has a list of builders that follow sustainable building practices in the US
3. Developing Plans
You’ll have the option to work first with an architect to develop plans (which will then be presented to potential builders), or to find a builder with in-house architects. The decision between the two is largely a matter of personal preference, but often builders with affiliated architects can provide the advantage of a more streamlined process, as the two parties will have a history of working closely together and will therefore know what options are most feasible for both the design and construction phases. Either way, developing the plan for your future house is where your vision becomes a reality, so be sure to work with an architect who can best execute your ideas.
Whatever route you choose, you should come prepared with a list of questions to ask prospective builders, including their projected timeframe, specifications, flexibility to make changes, and budgeting (extensive question list here). Asking for references and examples of recent work are the most concrete, straightforward way to get a feel for the builder’s aesthetic and management style. Past clients can paint a detailed picture of what their experience was with that builder, and can bring up any pitfalls to be aware of before you sign a contract. Other great sources of reference can be found in local lenders and realtors who have either worked directly with the builder or who have a good idea of their reputation.
4. Budgeting and Vetting
Talk to and get quotes from a number of builders. Finding a competitive price is important, but you’ll also want to get a breakdown of what the quote entails – builders should be budgeting for a reasonable schedule, and should have some cushion added into the final price for unexpected events. Some builders can seem more appealing at face value because they quote a lower price, but finding a builder who you know won’t cut corners will prove most valuable in the long run. After exploring the options, you’ll be able to make an informed decision on who is the best fit for the job, and get a solid estimate for what your new home will cost.
DO your homework, and DON’T hesitate to ask questions.
Once you’ve narrowed down the list to the final round, make sure to run each builder through the Better Business Bureau (US) or the Council of Better Business Bureaus (US and Canada) which will pull up any lawsuits or complaints that have been filed.
Financing the construction of a custom home requires a different approach than obtaining a mortgage for an existing home. There are several options available, but all will require finalized plans, a signed agreement with your chosen builder, and proof to a lender that you are a desirable loan candidate. Often, home-building clients obtain a short-term loan that is paid out in disbursements to finance the actual construction of the home, and then have this short-term loan transferred into a standard, fixed-rate, long-term mortgage.
The most important thing to remember is that you’ll be working closely with your builder throughout the entire construction process, which can take up to a year. Finding a builder with whom you can develop a trusting relationship with is the key, and will give you peace of mind that your home is in good hands.