What To Know Before Building A Custom Home

Are you planning to build a custom home? First, you need to choose a competent home builder who will guide you through the construction process.

But there's more to the process than simply choosing a builder near you.

To build a home that suits your style, you need to know more than just the builder's name. You must involve yourself in decisions about the design and materials, too.

This guide sets you up for success by sharing everything you need to know before building a custom home. We've broken it into two parts. The first addresses common questions that we receive as builders. The second part of this article covers important factors to understand before you begin building.

Read on to learn more.

How Long Does The Construction Process Take For Custom Homes?

Typically, constructing a custom home can take anywhere from 10 months to two years. This broad range is because each custom home is completely unique. The size and complexity of your design directly influence the build time.

Factors That Can Affect The Timeline

The factors below can add time to the home-building process. A good custom home builder helps manage them to keep your project moving smoothly.

  • Land Prep: The condition of the land you choose in Central Texas or elsewhere makes a huge impact as you start your project. Land needs clearing, leveling, or any other specialized preparation can add weeks or even months to your timeline. For tips on how to choose the right lot, see this related blog post.
  • Permits and Regulations: Securing the right permits is non-negotiable. But it can be time-consuming. Houston has fairly simple permitting requirements and local regulations, but in other areas compliance may be more complex.
  • Weather Conditions: Poor weather can delay construction phases. In South Texas, for example, heavy rains can halt work, especially when laying concrete for things like your home foundation.
  • Material Availability: Delays in sourcing specific materials like special flooring or appliances can push back the schedule. Consult with your builder and choose carefully based on local availability to keep your timeline on track.
  • Customization: The more complex your design decisions and custom features, the longer the build. Work with your architect and interior designer to finalize the details of your custom Houston home. They'll let you know what to expect, especially if you make changes to the plans once construction begins. If you would like to work with an architect but you're unsure of how much it costs, see our write up on what it costs to work with an architect. We've documented everything you need to know to save you time.
An elderly couple inspects their construction site in Houston, TX

How Much Can I Expect To Spend On A New Custom Home?

The cost to build a custom home typically ranges from $100 to $500 per square foot throughout the country. As of 2024, the average home cost in Houston is about $150 to $200 per square foot. The variance depends on many factors including location, materials, and the level of customization.

A modest home in a less expensive area leans towards the lower end. High-end custom homes in Central Texas or other popular areas could cost much more.

See this blog post for a detailed explanation of what affects pricing.

Cost Variables to Consider

Below are some of the variables that contribute to higher costs. To avoid unexpected spending, work with a reliable team and be clear about your vision and budget.

  • Land Costs: The first major expense is the land. Prices for property change depending on location. Finding land in the desired area may require a substantial investment before construction even begins.
  • Design and Architecture: The more complex your design, the higher the costs. Custom features from an architect or interior designer will drive up costs.
  • Construction Complexity: The more detailed and complex your construction project, the higher the labor and management costs. One-of-a-kind designs that require specialized craftsmen or rare materials can quickly drive up the project's cost.
  • Financing Costs: If you’re not paying cash, the interest on construction loans is another cost to consider. These loans often have higher rates than standard mortgages.
  • Unexpected Delays: Delays increase costs. Especially if you have to extend rental agreements or pay for temporary housing while waiting to move in.

How Do I Choose the Right Custom Builder?

Selecting the right builder is arguably the most important step in the journey to your custom home. Here's how to ensure you pick a professional who will bring your vision to life effectively and efficiently.

Criteria For Selecting A Builder

Choosing the right builder for your custom home involves careful consideration and due diligence. Take the time to find someone who not only fits your budget but also shares your vision and commits to turning it into reality.

  • Experience And Reputation: Start by looking at the builder's track record. A builder with extensive experience in constructing custom homes similar to the style you want is a good sign. Check their portfolio, model homes, and client testimonials.
  • Transparency in Pricing: A trustworthy builder provides clear, detailed quotes without hidden fees. They should be upfront about costs and willing to discuss how different choices affect your overall price.
  • Communication Style: Your builder should be someone you can easily communicate with. They should understand your ideas, provide practical input, and keep you updated throughout the design and construction process.
  • Quality of Workmanship: Inspect some of their previous projects or model homes if possible. Look for signs of quality craftsmanship and attention to detail. Ask about the materials they use and the standards they adhere to.
  • Financial Stability: Do your research to make sure the builder has a solid financial background. This reduces the risk of them running out of funds mid-project, which could leave you with an unfinished home.
  • Location: We absolutely recommend choosing a builder near you. It simplifies communication and makes it easier to get in touch in case phone calls or text messages slip through the cracks. You can learn more about why you should work with nearby homebuilders in this post.

Red Flags To Watch Out For

Knowing what to avoid is just as important as knowing what to look for. Here are common red flags to look for in prospective builders. If a prospective builder shows even one of these signs, it may be worth considering other options.

  • No References: If a builder won't give you references from past clients or show you their previous projects, be cautious.
  • Poor Communication: Builders who struggle to answer your questions often cause misunderstandings. If this happens too often, you may be unhappy with the finished home.
  • Pressure Sales Tactics: Look out for builders who pressure you to make quick decisions or choose the most expensive options. A good builder will respect your timeline and budget.
  • Unusually Low Quotes: Low prices might be tempting. But they often signal that you're working with an inexperienced builder. They may use subpar materials, rushe their work, or have hidden costs that will emerge later.
  • No Proof of License or Insurance: Always verify that the builder is licensed to work in your area. Also check that they have insurance so that you aren't on the hook if they make a mistake.

What Are The Drawbacks To Custom Home Building?

Building a custom home is exciting, but it comes with unique challenges compared to purchasing a pre-built or model home. Here's what you need to watch out for and how to steer clear of common mistakes.

Potential Setbacks

  • Unforeseen Design Flaws: Your custom home has floor plans designed from scratch. That means some features might look great on paper but prove impractical in daily life. For instance, an open kitchen next to the living room might seem ideal until the noise and smells disrupt your relaxation space. It may be a better idea to choose from modifiable floor plans to avoid this.
  • Land Issues: Even with a perfect design, the land you build on can cause problems. Issues like poor soil stability, unexpected underground utilities, or zoning laws can delay or disrupt construction.
  • Budget Overruns: Custom builds are notorious for exceeding initial budgets. Unanticipated costs usually come from material choices, design changes during the build, or complications in installation processes. For tips on how to stay within budget while designing your dream home, see this related article.
  • Delays in Material Delivery: Selecting unique materials can sometimes backfire if there's a delay in their delivery. This can push back your timelines and affect other scheduling.

Tips For Avoiding Common Mistakes

  • Invest in Thorough Planning: Spend adequate time during the design phase. Work with your architect to simulate how each space will function. Consider factors like natural light, flow between rooms, and storage solutions.
  • Conduct a Detailed Land Survey: Before you finalize your purchase, have a professional survey the land. This can reveal critical information about the soil quality, topography, and legal boundaries, helping you avoid costly mistakes.
  • Set a Realistic Budget: Include a contingency fund in your budget to cover unexpected expenses. Typically, adding 10-20% extra can give you enough cushion to handle surprises without stress.
  • Choose Reliable Suppliers: If you choose your own materials, work with suppliers known for timely deliveries and good customer service. This can minimize the risk of delays.
  • Regularly Communicate with Your Team: Maintain open lines of communication with your builder, designers, and contractors. Regular check-ins can help catch issues early, ensuring that the project stays on track and adjustments happen swiftly.

Building a custom home should be a rewarding process, but it takes careful management and foresight from both you and your builder. Planning carefully and considering challenges helps you build a home that lives up to your expectations.

How Involved Should I Be In The Custom Home Building Process?

Deciding to build a custom home means you're not just a buyer, but part of the creation team. Your role as a homeowner is to provide vision, make decisions, and provide oversight. Here's how to strike the right balance between getting involved and trusting your team of professionals.

Expectations For Homeowner Involvement

  • Choosing Materials and Design: You need to decide on aspects like the type of flooring, the fixtures, and the overall style of the rooms. This is where your personal touch turns a house into a home.
  • Regular Site Visits: Making regular visits to the construction site is helpful. It allows you to see progress, understand challenges, and provide input before any issues become too expensive to fix.
  • Decision Making: You'll have to make many decisions throughout the building process. Your active involvement helps ensure that the finished home lives up to your expectations.

Balancing Involvement and Reliance on Professionals

Your input is vital, but it's still important to trust the expertise of the professionals you've hired. These professionals are the ones with the experience to guide your project to success.

  • Delegate When You Can: You don’t need to manage every detail. Delegate areas like permit acquisitions and material procurement to your builder. They handle these things all the time, which means they have contacts who can streamline processes.
  • Communicate Clearly and Regularly: Maintain clear and regular communication with your builder and designer. If you have questions, ask them! The whole point of a custom home is to provide you with the environment of your dreams. If something looks off or doesn't match up with your expectations, speak up!

Trusting your professionals to handle their specialized tasks while you focus on the big picture will make the process smoother and more enjoyable. Actively participating without overstepping lets you strike a perfect balance that turns your dream home into a reality.

Part 2: Essential Things to Know

Understand Your Contract

Signing a contract for a custom home build sets the foundation for the entire project. It’s crucial to understand every clause and condition to protect your interests. Here are the key components of your contract to keep track of.

  • Scope of Work: This section details the project's full scope. It includes every task from the initial land preparation to the final touches. The scope should clearly outline the materials to use, the design process, and expected outcomes broken down into phases.
  • Timeline and Schedules: The contract should be clear about the start and completion dates. It should also be clear about benchmarks for progress reviews.
  • Payment Schedule: Instead of a single lump sum, payments are usually structured around project milestones. Each payment's timing and trigger should be crystal clear. For example, it should specify if you need to pay after the foundation is poured or the roofing is complete.
  • Change Order Agreements: Changes to the original plan are common in custom home projects. The contract should outline how you and your builder manage, approve, and bill for changes. This helps prevent unexpected costs and disputes on both sides.
  • Warranties and Guarantees: Make sure your builder includes information on the warranties for materials and workmanship. This way any issues discovered after moving are easy to address without additional expense.
  • Dispute Resolution: The contract should have a clear process for resolving disputes. This could be through mediation, arbitration, or legal action. Hopefully you won't need to take action, but knowing this info in advance saves time and money if disagreements arise.

What To Look For (And What To Question) In A Construction Contract

Vague Language: Be wary of any vague descriptions or undefined terms that could be open to interpretation. Ask for precise details if any part of the scope of work or material specifications is not clear.

  • Penalty Clauses: Look for penalty clauses that protect you if the builder can't meet deadlines or the work does not meet the agreed standards. Check for fair compensation for significant delays.
  • Builder’s Obligations: Make sure the contract outlines the builder's responsibilities. These may be things like obtaining permits, adhering to local building codes, and managing subcontractors.
  • Right to Visit: Don't let your builder try to negotiate your right to access the construction site. This is the easiest way to monitor progress personally and interact with the builder regularly.
  • Cancellation Terms: Understand the conditions that let either party terminate the contract. Note any financial penalties or obligations involved in cancellation.

A well-drafted contract provides a legal safety net if things go wrong. It also ensures that you're getting the full value of your investment.

Take the time to discuss every component with your builder and legal advisor before signing. This is the only way to know that your builder will respect your vision for your custom home.

Know Your Budget

Creating an initial budget for your custom home is about aligning your financial resources with your dream home goals. Here's what to think about when budgeting.

Considerations for Creating an Initial Budget

  • Assess Your Financials: Start by evaluating your current financial status. How much can you realistically afford to spend without compromising other areas of your life? This will guide the scale of your home design.
  • Estimate Land Costs: If you haven’t purchased land yet, include the cost of the land in your budget. Prices can vary based on location, so factor this in early to avoid surprises.
  • Factor in Design and Construction Costs: The complexity of your home’s design and the quality of materials you choose can impact costs. Energy-efficient materials and appliances may cost more at first, but they can save you money over time.
  • Include Permitting and Fees: Don’t forget to add local government fees for permits and inspections to your budget. These keep your home compliant with local building and safety standards.
  • Plan for Contingencies: Always include a contingency fund of about 10-20% of the total budget. Use it to cover unexpected expenses during the construction process.

Resources for Budget Setting

If you're not sure where to begin assessing your budget, you can use resources (both local and online) to get you started.

  • Local Builder Associations: Contact your local builder’s association for data on average home building costs in your area. They can provide insights into recent trends and cost factors.
  • Online Cost Estimators: Use online tools that estimate building costs based on your zip code. These tools can offer a rough initial estimate that helps frame your budget planning.
  • Consult with Professionals: Early consultations with architects and builders give you a clear picture of what your home design costs. They can also suggest where you can save money without compromising on quality.
  • Financial Advisors: A financial advisor experienced in construction projects can help you align your home-building plans and financial goals so that you're comfortable throughout the project.
A middle-aged couple discusses their budget before building a custom home

Create A Contingency Budget

A contingency budget is an additional amount of money set aside to cover unexpected costs during the construction process. These funds help you can handle unforeseen expenses without derailing the entire project.

Why Is A Contingency Budget Important?

Building a custom home often comes with surprises that increase costs. For example, you might find you need additional site work like grading or soil stabilization once excavation begins. Or you may decide to upgrade certain materials to achieve a certain level of energy efficiency. A contingency budget helps manage these unplanned expenses without compromising other aspects of your build or causing financial strain.

How Much Should I Set Aside For Contingencies?

The typical recommendation is to reserve about 10-20% of your overall project budget for contingencies. The exact percentage depends on lots of factors. These include the complexity of your project, the condition of your building site, and more.

If you’re building on a site that’s already prepared and has no issues, your cost will be on the low end of this range. But if your design includes lots of custom features, it's wise to set aside a larger contingency. The same is true if you’re building in an area where land conditions are unknown.

Carefully Consider Design And Architecture

Design and architecture are about more than just looks. The right balance between aesthetics and functionality is crucial.

Design your home to make it as livable as it is beautiful. Thoughtful design means thinking about aspects like natural lighting, the flow between rooms, and storage. All of these make everyday life easier and more enjoyable when carefully considered.

And the importance of good design extends beyond the present. It also impacts your home’s value over time. Homes with timeless architecture and adaptable layouts tend maintain their appeal (and their value) over time.

Investing in quality design and architecture from the start lays a solid foundation for your home. It means your space meets your current needs, but also means it's easy to adapt if you want to make future changes.

If you're interested in designing a custom home in the Houston area but are unsure of where to start or who to trust, schedule a call with Dunn & Stone today. With over 30 years of new construction experience, we're ready to build you the home of your dreams.

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