How Homeowners Can Accurately Compare Custom Home Build & Remodel Offers

Homeowners are used to hearing “get at least 3 offers” before proceeding with a construction project. This is good advice, in addition to getting referrals from friends and family. However, offers are only useful if they come from comparable companies and are structured in such a way that they can be accurately compared. Many homeowners, and even some architects, don’t do a good job of detailing the project.

The most important requirement is a complete set of plans and specifications. If everything about the project is not clearly spelled out, each bidder will make different assumptions about fixtures, appliances, finishes, etc., leading to widely divergent bids. And because each bidder’s assumptions are likely to differ from those of the buyer, the stage is set for conflict during the project. The way to make bidding more productive for everyone is to eliminate guesswork and give each bidder a legitimate chance to succeed.

1) Buyers should interview three to five builders to see who they would like to work with. If a buyer is working with an architect, the architect likely has a list of builders that seem like a good fit for the project. Buyers may also want to call previous clients of each builder for references.

2) Buyers should invite two or three builders to bid. Note that bidders may want to know who they are bidding against. For example, an established professional company may choose not to compete against a smaller, less professional team with a reputation for being substandard.

3) Provide as detailed plans and specifications as possible to each builder; In addition to being necessary for an accurate bid, it also allows builders to search for discrepancies, incomplete items, and other issues. Plans are rarely perfect, so a good architect should welcome this feedback and be willing to make any necessary revisions. This will lead to a more accurate budget for the project.

4) The buyers and the architect must also work to eliminate as many assumptions as possible. Allocations are a good example: If buyers have researched kitchen cabinets and decided their quality level will cost $40,000, they should tell bidders to use that number.

5) Your new construction project or remodeling project is a big investment, make sure surface protection is specified so your interior finish stays looking like new during construction.

6) Set a due date acceptable to all parties: Three to four weeks is typical for a custom home project.

The offer must include the budget and an estimated date of completion. You should also include each builder’s policies and costs, including administrative fees, to make changes once the project is underway. Before making the final decision, the buyer and architect should meet with each builder to review the offer, ask clarifying questions, and confirm the numbers. After all, it wouldn’t do anyone any good to rule out a qualified candidate, or end up in trouble later, because there was a math error in the offer.

Custom home builders say that at least 20 percent of the plans they see are overdesigned for the client’s budget. That’s another reason to work with a reputable builder who can be involved in designing the house from the start, even if they don’t have the lowest bid.