What Should You Know Before Building Your First Custom Home?

Here are the decisions that really matter to your new home, typically in the order in which they occur. Typically, most custom home projects do not collapse in a dramatic instant. Instead, they simply drift, since the site was never properly tested, the contract did not list out all of the various allowance overruns, and the schedule was never truly controlled by anyone.

Test the land before you commit to a design

The Budget for your custom home project will be influenced by the site prior to any design work. In many instances a site’s natural grade and shallow bedrock can result in a 6 figure increase in costs for site work, retaining and engineered foundation work, none of which will be reflected in the finished home. So a buyer can fall in love with a view and then hire an architect to design a home for them on that site.

To better assess site conditions, have geotechnical borings, a topographic survey, and a percolation test done if the property is not on municipal sewer. Determine where utility stubs will be located for water, power, and gas and include these in the construction cost. Long service runs for these utilities can cost a lot of money.

Zoning and covenant checks that actually matter

Site Constraints & Physical Characteristics of Land typically determine the Design of a Custom Home and hence establish a Budget ‘Ceiling’ for the owner. Typically owners purchase a property with great views and/or a wonderful location and subsequently engage an Architect to design a house for them ‘working backwards’ so to speak.

Selecting a builder on evidence rather than impression

By ‘portfolio’ a builder’s marketing blurb refers to the system of the builder in question. Schedule of trades and other relevant information about how a builder runs his show, documenting changes to the scope of work as well as the various supervisors or subcontractors he uses.

Instead of receiving a quote in a lump sum, it would be in your best interest to review the builder’s proposed general construction contract (GCC) and compare the line item assembly costs for similar items in the bids from the different builders. If you intend to build a custom home in Charlotte, it is worth gathering those comparisons from at least three local builders before you commit. The difference between a proposal that contains realistic allowances and one that lists placeholder figures for the builder’s estimate of costs for items such as flooring, cabinets and countertops can sometimes total $30,000 or more.

• Request references from clients whose homes finished eighteen to thirty-six months ago, when warranty performance is visible.
• Confirm license status, general liability limits, and builder’s risk coverage in writing.
• Ask how many homes the assigned superintendent runs at once. Above four or five, site attention thins.
• Review a sample change order and a sample draw schedule before signing anything.

Contract structures and where risk sits

Building a budget that survives contact with the project

Cost is distributed more evenly throughout the square feet of a typical building. However, the cost of a complex building increases dramatically with the increase in complexity of a building.

One other way to budget a custom home project is by using a three-tier budgeting system, hard costs for the actual construction of the house and finishes; soft costs for the design, engineering, and other service costs such as permits, impact fees, etc. (12% to 20% of the hard costs for the project); and a contingency budget (10% of the hard costs for the project, a floor, not a target amount).

Allowances deserve scrutiny

Allowance language for items like lighting, plumbing fixtures, appliances, tile and landscaping can easily turn into a budget disaster. In the Design Development phase, cost out the “real” products and suppliers. Put that number in the Contract. Allowance language that is pulled from a template is simply placeholder language and will surely be overlooked.

Design decisions that are expensive to reverse

Early decisions define a decorative project. By the time you are deciding on cabinet hardware, the structural decisions and the decisions on where to place windows and the decisions on how to route mechanical systems through a building and the decisions on the roof geometry are far more important. And these decisions can be made by month nine of a 14 month project without any penalty.

Move mechanical and structural coordination from the construction site to the design development phase. By designing a ducted system of ventilation and heating/cooling in conditioned space (as opposed to relying on vents in the walls or high ceilings) and designing the mechanical system in concert with the structural and architectural framing of the building, the architect and builder for a custom home in Charlotte or other humid climate can avoid the inevitability of having to add dropped soffits and furred out walls to support a system that was not contemplated in the design of the house. The wall assembly, vapor control and ventilation strategy for a custom home.

Verifying quality during construction

Verify completion of milestones by independent third parties for a fraction of the value they bring.

1. Pre-pour: Confirming rebar placement, footing depth, drainage, and garden-related site preparation.
2. Post-framing: Checking structural connections, mechanical penetrations, smart home wiring, and planned technology infrastructure before insulation conceals the work.
3. Pre-drywall: Verifying insulation, electrical systems, smart home installations, and decoration-ready wall preparation, with blower door testing where the envelope target is contractual.
4. Final: Generating a punch list covering construction quality, garden finishes, smart home systems, and decoration details, tied to retainage release.

Making payments for completed work rather than for work done over time has far greater value than the listing of workmanship by the home builder.