Custom Home Building 101

What Realtors Must Know About Working with Custom Home Builders

The Realtor's Role & Responsibilities

Through Discovery/Buyer Consultation Determine Client's Budget and Type of New Home (Custom, Semi-Custom, Production)
Assist in Locating Community or Home Site; OTP on Lot; Due Diligence on Lot; Financing if needed for lot and home

Recommend/Refer Appropriate Builder(s) and/or Architect(s)
Guide Client Through the Design and Proposal Process
Represent Client in Execution of Building Agreement or Contract
Act as Liaison between Builder and Client for communications if Builder doesn't have someone in place
Manage Selection Process and Allowances if Builder doesn't have a Designer
Coordinate Walk-thrus and Punch Lists
Handle any concerns of the client during the building process

Custom

Unique Design Features
Specifications based on preferences and budget of client
Choices are endless
Higher Cost because of uniqueness,types of materials, and labor cost of more specialized subcontractors

Semi-Custom

Some Design Features based on builder preferences
Specifications solely set by Builder
Limited Choices
Moderate Cost because of limitations on materials and features available to customize

Production

Fewer Design Features - designed for economy
Many times no choices or maybe 1 or 2
Low Cost due to limited choices and builder's use of economy materials
Same design and features built over and over again add to efficiency and economy

What is Design/Build?

Most custom homes require that the home be designed before building. Some builders have their own Designers on staff and offer Design services. Some Builders even have their own plans that clients can modify and customize to have a starting point. Some builders will build plans that the client purchases online (stock plans).

Other builders work with an independent architect or build plans the buyer brings to them that have been designed by an architect.

Working with Architects

Get information on the pricing before the architect begins; they should offer a consultation to explain how the process will work and how they will bill for their services

A complete custom home design will likely cost a minimum of $10,000. Make sure your client knows this upfront. The time to design the home can also take a couple of months or more depending on the complexity of the design and the number of revisions needed. Also be aware that some Designers are not Architects and plans need to be complete working drawings and will need to be engineered before they can be built. A builder cannot build from concept drawings or may not even be able to quote a price accurately.

All About Dirt!

Know the Community and Restrictions - Get a copy of the Architectural Guidelines
Get a Topographical Survey if Possible - setbacks, easements, landscape buffers, waterfront buffers, protected wetlands
Look at the topography - slopes mean basements; gullies mean fill dirt; trees need clearing; all lots need to be graded
Where will the driveway and garage go? Cul-de-sacs may mean courtyard driveways and garages
Utilities - Well, community water, public hook-up; Septic or Sewer hook up; propane or natural gas; electric, cable, internet
Get the Builder involved Early - Will he/she do a drawing with the footprint of the house (Lot Fit)? Estimate of Site Fees?
Provide adequate Due Diligence Time

Just the Basics

Specifications & Pricing

Compare Apples to Apples
It's all in the Details
How will the House be Built?
With What Materials?
At What Price?
Price per SF - how relevant?
Allowances - Pros & Cons
Finishes can be 25% of the Cost
Who will help your client stay within their budget?

Pros

Easier for the Builder to Price
Less Risk for the Builder
Can get a quick price quote

Cons

Without Allowances a Builder Must Price All Line Items; Takes more time to do a Price Quote
The Buyer is Responsible for Keeping Selections within Budget
Difficult to Know Your Final Price for the Home before Contract
Difficult to Compare builder to builder