Building a Custom Home

For many people, building a custom home can be an overwhelming process. There are so many steps involved, and coordinating designers, contractors, engineers, surveyors, real estate agents, and lenders can be tricky. Here is an explanation of the general process and some tips that may help to make your custom home building experience positive and enjoyable:

1. Meet with a lender that is an experienced construction loan specialist. Your loan officer will assist you in determining what loan amount you will qualify for and can provide information on the different types of land and construction loans available. There are many options available including a “one time close” that will allow you to purchase the land, build the home, and convert to a standard mortgage upon completion of construction. Your loan officer can provide you with a pre-qualification letter that can be helpful when it comes time to submit an offer on a property. Apply for a Construction Loan >
2. Once you have determined your total budget, you may want to meet with several general contractors to determine what type of home you will be able to build within that budget. Often times, the lot you choose may drastically affect the cost to build a home, so meeting with a contractor for suggestions specific to your area can be helpful prior to purchasing a lot. Before selecting a contractor, check with the Registrar of Contractors or contractor licensing department in your area to check the license status of a contractor, find out if any complaints have been filed for specific contractors, and to check for bond and insurance status. You may want to ask for references, or ask a friend or family member for a referral to a contractor they have done business with and trust.
3. Based on the cost-to-build information you receive from local contractors, you can determine how much of your budget you are able to spend on your lot. Look for a local real estate agent that specializes in land and lots for assistance in choosing your property. Agents have access to listings that you may not be able to find on your own, and they can provide information on pricing trends, comparable sales, area information, zoning and HOA restrictions, available utilities, contract negotiation & recommendations, and other expertise. Visit the local building planning/zoning department for more information on zoning, and ask for information regarding requirements to obtain a building permit in the area a particular lot is located in. Make sure the requirements will allow for the type of home you are interested in building.
4. Once you have selected a lot, it’s time to decide on a house plan. Consider your climate and location, the slope of your lot, building envelope, zoning restrictions, CC&Rs or HOA restrictions, sun orientation, neighboring homes, views and other location-specific information when choosing or designing a house plan. Your contractor may also be able to assist in determining any special costs that may be associated with building a particular plan in your area.
5. In most cases, you will need to provide an itemized budget detailing every cost you will incur during the construction of your home in order to obtain a construction loan. If you have chosen a contractor, they should be able to assist you in creating an itemized budget based on the house plan you have chosen. Be sure to discuss any special requirements with your builder. For example, if you would like to install marble tile throughout your home, your flooring budget will need to be much higher than a budget for ceramic tile. The same goes for most line items including insulation, plumbing and lighting fixtures, cabinetry, landscaping, etc. The more specific and detailed your contract with your general contractor is, the more likely you will be to get the finished product you want.
6. Before you can begin construction, you probably need a building permit. Depending on local requirements, this may involve obtaining a survey, plan engineering, a state-licensed architect or engineer’s stamp on the plans, and other location-specific information. After you submit your plans for a building permit, you will likely recieve “Redlines.” Redlines are changes to the plans or other missing information that your building department requires prior to issuing a building permit. In some cases, this might involve obtaining other permits, such as a septic permit or dust control permit.
7. Once your building permit is issued, you are ready to break ground. A good general contractor will coordinate all of your sub-contractors and will keep your project moving ahead as quickly as possible. Expect some delays, and try not to stress out about things you can’t control. Bad weather, shipping delays, holidays, supplier stock delays, and other unexpected things will pop up and delay your project.
8. You can do your part to keep things moving ahead by asking your contractor what decisions he or she will need you to make before the next phase, such as choosing faucets or paint colors, and finalize those decisions before materials need to be purchased or rough-ins are scheduled. Do your best to take your time when making selections and decisions for your home, weighing options and choices ahead of time. Even changes that seem simple, like switching to a different brand of built-in refrigerator, can require plumbing and electrical lines to be moved, which in turn costs you time and money and can frustrate your contractors.
9. If you do need to make a change, be as specific as possible and ask your contractor to note the details of the change, including drawings if applicable, and the cost in writing. If you’re visiting the jobsite and notice something that’s not quite right, call your general contractor or project manager rather than giving instructions to the employee working on the job.
10. Once the house is completed to your building department’s standards, a certificate of occupancy will be issued and you can then move in to the home. Call your utility providers a few weeks in advance to make sure you will be able to have services connected by the time you move in.