Choosing and working with a custom home builder

Choosing a custom home builder is a hiring decision, and buyers run it like a shopping decision.

What to verify first

Licensure and insurance. Colorado regulates at the local level for general contractors, so requirements differ by jurisdiction. Verify what applies where you are building, and get certificates of insurance directly from the carrier rather than from the builder.

Completed homes, in person. Photographs are chosen by someone who wanted them to look good. Walk finished homes, preferably two years old, where the settling and the shortcuts have had time to show.

References who are past the honeymoon. Ask for clients who closed two or more years ago. A reference from someone still in construction has not yet learned what the warranty response is like.

What to read in the contract

Three provisions determine most of the disputes that follow.

Change orders. How they are priced, who authorizes them, and whether the builder can proceed without written approval. Verbal change orders are how budgets grow.

Allowances. The amounts set aside for selections not yet made. Allowances set unrealistically low make a bid look competitive and produce overruns that were structurally inevitable. Compare allowances between bids before comparing totals.

Warranty. What is covered, for how long, and what the response process is. Typical structures run one year on workmanship, two on systems, and longer on structural, but read the actual document.

The question that reveals the most

Ask a builder how they handled a project that went badly. Every builder has one. The ones worth hiring will tell you what happened, what it cost them, and what they changed. The ones who claim it has never happened are either new or not being straight with you.

On comparing bids

The lowest bid is frequently the least complete. Before comparing totals, compare scope, allowances, and what each bid excludes. A number that is 15 percent lower because it excludes site work is not lower.