1. Check in with your lender(s) to understand what they accept or check if the cost plus builder has recommended lenders. Due to lender requirements most of the cost plus work in our region are projects without lenders.

2. Materials escalation clauses are the new standard.

3. Comparing projects is good, but the cost of each project plays a heavy part in the perceived quality. $100K difference may have purchased all those fancy ceilings or maybe it was spent on a large retaining wall. We placed third in a "home of the year" contest for a $1.5M project (#2 was $2.5mil, #1 was $4.6mil).

Having been that small guy, you want to make sure they are aware of current issues & lead times with materials and products. Most products, vendors & trade contractors need more notice and some lead times have doubled & tripled. I just watched a builder loose 75 days for windows due to late changes coupled with a notoriously slow brand.

Either business model works. Either contract type works but you might find the small builder only does it one way with out a cap. My experience with cost plus contracts is clients often immediately engage in changes that create delay and cost more money. Fixed price contracts are a tool, and favored by lenders, to deliver a completed project within budget.

With any type of contract and/or project, the best way to keep it within schedule and budget it to get all your decisions completed prior to breaking ground.

I like builders that pay attention to detail.

I don't think my builder has any real employees, other than his office/billing manager. One guy who does odd jobs and some carpentry might be on payroll. Oh, his father works for the business too, but helps with the remodeling side of the business.

What is most important is the personality of the builder and the feed back from previous customers and subs/vendors he works with. We are a year into the build and still haven't found anyone who has anything bad to say about our builder. If anything, most go out of their way to say what a nice person he is and how they like doing business with him.

We are going to be way over budget, but all along we emphasized having a good quality house and not made it all about keeping to a budget, so that is more on us than the builder. In hindsight we might have asked him to, once in a while, question us about wanting to spend that much more on something. The current market didn't help that in many cases we didn't have many choices in materials (selection and supply) and/or didn't have multiple subs to compete for bids.

Thank you all, this is very helpful information!

@chispa, your builder sounds like his organization is a lot like the one we prefer. Our architect seems apprehensive about someone with no employees...but this guy has done by far the best work we've seen and has the best word of mouth.

@Jeffrey R. Grenz, General Contractor thank you for the wisdom! Good to know about materials clauses. I think this builder (the smaller one) is pretty on the ball as far as lead times and price changes. What seemed to bother him the most was when someone changed their mind completely about a thing ("does a 180" is how he put it), b/c that causes delays, etc. Both builders indicated that their clients sometimes bring on a fancy interior designer a little late in the process, and then the finish items become a lot more expensive than was planned for. (I do not plan to use an interior designer...)

Yes, @Mark Bischak, Architect- attention to detail is so important! A long time ago we did a kitchen remodel, and everything the electrician did was crooked or out of alignment the first time, and I'd have to ask the GC to have him correct it (why did i have to ask??). Fast forward to last year, when we reno'd our family room. Wonderful (different) GC with exacting electrician who pointed out the screws in our kitchen lightswitch plates were turned all different directions and it was driving him crazy. He fixed them. He wasn't even working in the kitchen...

@2rickies, funny about the screws ... I lined up the screws in all the switches and outlets in our old house! I'm sure my DH never noticed either way!

My builder was complimenting some of our selections today, saying how we built a high quality house compared to our neighbors who used production builders. We appreciate the quality, but not sure people who buy in the area really care. The family who is building next door, one of which has a position where their very large salary and compensation are published, could have put in the best windows money can buy, instead they went with the builder basic vinyl windows that you find in houses 1/5 of the price they are paying.

We had mediocre vinyl widows in our last house and we swore we would never make that choice if we built, so we probably spent four times what our neighbor spent for windows and sliders.

That's great that the builder appreciates your choices! I am planning some high end finishes and will spring for the best windows we can, partly for insulation because our design has so many large windows and sliding doors. Our current windows are 50 years old, so not very efficient, and I really want to have a tight house this time. We might be doing geothermal heating and cooling, so I want a builder who is comfortable with all the latest systems, too.

We went with a "different" hvac system and it cost 2.5 times what a normal system would have cost. It even confused the city inspector that came by last week! We have always complained about the standard systems in every house we have owned, so decided to try something different. DH and I have very different comfort temperatures, so we zoned the house accordingly.

Project mgmt is so important - there are so many moving pieces building a home that you want a detail oriented person managing all those pieces. Great that you’ve been able to see in-progress and finished products of the one builder so you can get a sense of the quality of the work.

There were a few builders we looked into. We were given a list of builders that had built homes in the neighborhood from the developers sales guy who showed us the lot we bought. We only actually met with one.

We chose our builder because I felt comfortable with him which was important. He spent a lot of time with us. Walked our lot with us. Took us into a home he was currently building in our neighborhood. Answered all our questions. Everyone knew him and had good things to say about him. He lived nearby. He lived in a log cabin which is what he would be building for us. When driving the neighborhood I could always tell which houses he built. They just looked better and not because they were bigger or fancier.

2nd builder we never even got to the meet in person stage. One look at some of the houses they built and it was a big nope. They had a waiting list and I couldn’t understand why being the quality on their houses was horrible. I assume they were the cheapest. A few months back someone spray painted on a sign on the road coming into our neighborhood that said the builders name and that they were crooks. They are no longer in business.

3rd builder we never got to the meet in person either. Their houses looked ok. We stopped by a home they had built in our neighborhood and talked with the homeowner. The homeowner was very reluctant to say anything at first and it got real awkward. My husband is pretty persistent and the guy finally opened up. The more he talked the more worked up he got. He told us how no one ever seemed in charge on the project. That he had a leaking masterbath shower for months. Had to have fans running to help dry part of his downstairs out due to leak. Builder sent a guy over in the middle of the night to look into it. Told them it was fixed when it wasnt. They had to pester the builder and at some point the builders wife got involved and told them it was fixed and they werent going to do anything else about it. There were other things as well. The minute the homeowner said no one seemed to be in charge that was it for me. I didnt need to hear anymore. The homeowner did say that there was one builder who did things right in the neighborhood and brought up the first builder we met with.

This 3rd builder ended up in jail for bilking customers out of millions of dollars. Our builder took over finishing a few of the houses that were left half done.

https://wlos.com/news/local/marion-builders-accused-of-bilking-people-in-6-counties-out-of-millions

I think we made the right choice. Everything was not 100% perfect but we are happy with our house.

Honestly communication is key and making sure you know who is on the team and what they are doing for you and with you. Who will you connect with most? We found the hard part was at the start of the relationship everyone is trying to woo you and do well, but as it goes along you become less of a priority as are already committed. We met with several builders and really considered two very specifically. Sometimes I wish we had gone with the other one as I think his overall ethics would have been a better match for us. He lives in our community and would have cared how we felt in the end. Despite us loving our home by the end the relationship was super hard with our builder and his team. It’s only gotten worse since as they yanked us around managing deficiencies. I would never recommend them to someone moving forward but we still love our house. I also don’t even know how we would have avoided this all. They were amazing and communicative initially, helpful and transparent, once work started we worked through issues together and it felt like a team, then at some point it shifted and we started to hear less and get more excuses. We didn’t know what we didn’t know and I still don’t. It’s so hard. But again we do love our house.

Thank you all, this is so helpful!

@chispa did you get minisplits to solve the temp control issue? your comment about that reminds me of the thermostat scene from Family Guy: https://youtu.be/5fr-IBiJ3Ts

@vinmarks wow it looks like you dodged a bullet with that crooked builder. Good on your husband for being persistent with questions!

We got our referral list initially from the realtor who sold us the land. He's lived in the community for 20+ years, and he basically said, if they're not on this list, don't use them. Two of the three we interviewed had been mentioned by several people, and they do lots of work in the community. It's a very small community, and everyone knows or has heard of everyone else. (We don't even live there yet, and people already know which place we bought...and probably how much we paid!) One acquaintance who has lived in the area for 40 years recommended two builders to us--one who he admitted is his best friend, and the other who he said does the best work. The latter is the one I described who we like the best, and he lives about 15 minutes from our build site. He brought us to his house, a historic house he renovated, we met his wife, etc. The other one (the "best friend") is also popular in the area and he's a really nice guy, but he didn't seem up on the latest/high end building options, so that gave me pause, plus I didn't care for the work of his that we saw.

@WestCoast Hopeful so true about communication! that is so important. And i guess it's not surprising that it falls off somewhat after the sell, but it is disappointing. Seems like it should be the opposite.

@Emily Thank you for laying out the ups and downs of the small builder and the cost plus contract. I hear you about the price increases. I'm sure we will end up having to make some hard decisions along the way. I am good at making decisions on details, so I'm hoping to do as much as we can in advance. If I could get a fixed contract that was really fixed, I would be interested at least in comparing it, but I'm not sure it's possible right now.

How did you keep track of the decisions that needed to be made during the budget phase and throughout the project? Did your builders give you a list with calendar benchmarks? How did they let you know what work had been completed and what was happening next?

One thing I haven't been able to figure out is how much of a custom home project, percentage-wise, is labor vs materials? 40-60 is my guess, but maybe it just depends. I have found some breakdowns that show what the largest pieces of the cost are, eg framing and finish work, but nothing that breaks out labor separately. I'm curious if there's a rule of thumb for that, or every project is different and there's no way to know.

@2rickies, we went with a VRF system from Mitsubishi. No "wallwarts" in our design, as I hate the look of mini-split wall units. Our VRF system has a mix of ceiling units and ducted units in the attic. The ducted units can serve several spaces fed by one unit placed in the attic. We have two handlers outside. They also have flush wall units too. It was much more expensive upfront to design and install than a standard system. Hopefully we will see quick payback, when we don't have to freeze the whole house, because a couple of rooms need to be much colder.

Here is a photo of the ceiling unit in DH's office. He got his own unit as he will keep the office much colder than I would want any of the other rooms.

Our builder used builder trend and we had a cost plus contract. We saw every invoice and labour charge. We also had a job costing sheet that was constantly updated and showed how close we were to each line item budget.

@2rickies, "How did you keep track of the decisions that needed to be made during the budget phase and throughout the project? Did your builders give you a list with calendar benchmarks? How did they let you know what work had been completed and what was happening next?"

Our builder didn't give us anything formal. We had already visited many vendors, done a lot of online research, and made most decisions up front, as I mentioned, and he provided us with a 20-page detailed cost estimate based on those decisions and bids from his preferred vendors and subs. However, he did double check (and sometimes triple check) with us before ordering anything, to make sure we hadn't changed our minds. Since there was so much time between our initial picking of finishes and the actual implementation (over a year, in some cases), there were quite a few things we did change, and a lot we didn't. He always asked, and sometimes I felt like I had to make a snap decision if he asked on a phone call, but normally if I told him I'd have to get back to him with my answer soon, he was fine with that.

We also asked him periodically "when do you need to know about x", whether "x" was paint colors, doorknob choices, or siding style, etc., and he would tell us if he needed to know soon, or if we had lots of time to decide. We were not given any written list (other than all the line items on the estimate) or any calendar. Pinning him down on dates was the hardest thing and something we struggled with the entire build. His attitude seemed to be "it will happen when it happens", and ultimately, that is very true, given the demand for sub-contractors and the supply chain issues in the past two years. He didn't slack off at all, but a lot of things were out of his control. He did stay on top of things, checking with vendors on orders and dates, and relaying this information to us.

How did he let us know what had been completed? Through photos, texts, and phone calls. We lived 20 minutes from our build so could see for ourselves and discuss in person with some frequency, up until this Nov. 1, when we were forced to move out of our rental (it sold) and into an Airbnb over two hours from our build until it is complete (looks like Feb.) We could have found a closer place, but it would have cost more (there wasn't much available that was furnished and pet-friendly), and the one we found is right around the corner from my mother, where we have our "stuff" stored, so we are able to receive packages, work on projects in her basement, and pack everything up.

Once we knew we were moving, I asked him to send us a weekly status report and also put photos on Dropbox at least once a week, and he's been good about doing that. There have also been texts, calls, and a few emails in between each weekly report. So we always feel that we know what is going on and what is coming up. Communication, through any and all means, is the key. A builder who doesn't mind emails in the evening is a huge plus for me, as I would much rather have things in writing than on the phone -- I forget some of the things he tells me on the phone if we cover too many issues. 😅 With emails, I've saved every single one from him, and I can always go back and double check what he's told us.

@chispa Interesting to see what the VRF system looks like. Much better than "wallwarts"! One house I visited had minisplits in a few rooms, and they were the size of radiators--i'd never seen them that large. Our architect went through all the possible systems with us, and we will be deciding between VRF and ground source heat pump/radiant floors. We'll probably also have a solar field, though all of this seems like such a big up-front investment, as you say, which makes it a little scary. It was pretty clear that some builders we spoke with were used to working on those systems, while others are most comfortable with dual fuel (electric heat pump w/propane to supplement), which we don't want.

@WestCoast Hopeful I think one of the builders mentioned Builder Trend to me (I think that's what it was called), and it sounded like a very efficient approach--apparently we'd get all the updates that way, see what had been done, and what if any decisions needed to be made, with deadlines, etc. I wondered if this was a standard way of doing things, but it sounds like there is no standard way, exactly....

@Emily I'm hoping that whoever we choose has a system in place so that we're not constantly surprised at decision times, even though i expect to make most of the decisions in advance, I'd like to know when they're going to be implemented in real time. I wonder how I'll know if there are items left off the bid (especially things I might not think of, like door stops--which I saw someone talking about on another thread). As you say, we'll be deciding things so far in advance that we may need to make some changes. We had a reno last year where the GC usually met with me (since they were working in my house) at the beginning of the week to tell me what was coming up, so for instance I had several days' notice before I had to make final paint color decisions, and that was very helpful. With a project this big, I'd love to have a calendar that shows me due dates and dates certain aspects of the work will be performed, even if those dates will inevitably change.

We are currently building with a contractor who sounds like the one @Emily described above. A one man show, no employees, hardly even an office. However, he was recommended by friends, and we were impressed by his prior work. He generally takes on custom builds by referral, so is interested in doing the job well. We are on a cost-plus contract, but since he is managing everything himself and doesn't need to pay anyone else his fee is relatively low, so overall we feel we are getting a better value than some of the bigger builders. Also, compared to bigger builders, I think communication is easier because there aren't that many links in the chain when trying to get something across to subcontractors. The downside is that it's a bit more difficult to schedule subs. Getting materials is also bit more difficult, since he doesn't have the constant pipeline like a large builder would.

We interviewed several builders. We could easily tell one was overwhelmed by the size of the project, though he came recommended by someone I know. One flat-out said no, its too much for him to manage. We got it down to our top two. I already knew which HVAC company I wanted to use. We asked them about each of the builders. We also had our architect interview them both. In the end, one of them seemed less interested in doing things the way we and the architect spec'd out and wanted to do things more like he always did. The other, instead, was more than happy to learn about a new technique or material and vowed installation to manufacturer specs, along with copies of the specs for us to review. Additionally, since we live nearby, I said I'd be the annoying homeowner on site almost daily. He encouraged that, has made sure to repeatedly ask us to call out anything that seems off. He returned calls, texts, and e-mails in a timely fashion and seemed very organized. He has been great thus far and I'd recommend him to anyone building in this area.

@doc5md, may I ask, what area are you building in? your builders sounds great!

North, central PA

Oh well! I'm a little far...