Sydney,
I'm sorry for your experience. It's all too often that folks get surprised in the same way you have. However, it's avoidable for the most part.
Here are a couple of ways to prevent "surprises" on new home construction projects:
The best way to avoid cost overruns is to have an accurate set of plans produced from which a line-item construction cost estimate can be developed. No back of the envelope stuff--a real set of plans and a real site development plan showing the location of the home, driveway, etc. exactly as it will constructed on your property.
Have realistic expectations about what you'll get within your budget. Don't expect to build a home Liberace would love to live in unless you've just won the lottery. Look at homes under construction in your area and the prices to build them. Be informed rather than surprised.
Get your builder estimating as early in the design phase as possible so the plans to be adjusted when reality meets budget--and before you've spent lots of money developing construction details and doing engineering. Developing an estimate that's worth more than the paper it's printed on takes time. Be prepared to compensate your builder for the time required to produce the estimate. It's a small cost in the overall scheme of things but it will prevent a mountain of stress and potentially a big hole in your wallet.
Choose your builder carefully. If a prospective builder quotes you a cost/SF to build a custom home I suggest you scratch them off your list. Cost/SF is a metric that gets both builders and homeowners in trouble. Lots of builders' business model is to let you believe the dream home can be achieved within the dreamed-up budget and get you to contract. If a prospective builder seems to be telling you exactly what you want to hear, then keep looking or at least ask some more probing questions. If a builder takes a quick glance at your plans and gives you a price to build it, then I suggest you keep looking. If a prospective builder risks selling your job by telling you something you don't want to hear or don't believe, then you've found a potential builder. Ask for clarification. Ask for him/her to substantiate their claim. Look at plans/photos of homes similar to what you have in mind and ask to see the final contract price including change orders and allowance overruns. I've lost lots of prospective clients to $/SF builders and ones who promised a lower cost and didn't deliver on that promise. A home is a large purchase. Take the time to perform due diligence.
Tie down as many unknowns as possible prior to contract. You might not be able to tie down all of the site development costs up front, but there's no reason to be selecting windows, doors, roofing, etc. after construction has begun and get surprised.
For items you simply can't select until sometime during construction, and for which your builder has given you cost allowances. do some shopping recon to test the reality of the numbers. If you've got an appliance allowance of $5K and you're expecting SubZero stuff, you'll get calibrated, and quickly. Ditto for that Baldwin brass entry set that your builder thinks you can buy for $100. Make sure any cost allowances are in line with what you are likely to spend.
Be disciplined when making your selections. Yes, the folks at the plumbing supply house are trained to make you want the $10K infinite edge tub and will convince you that your life will be elevated to some higher level if you bathe in one. Avoid the urge to splurge on items that don't add value commensurate with their cost.
Stick to the plan and minimize changes. Contrary to popular belief, most builders do not salivate at the prospect of a change order. Changes affect both the schedule and cost to construct your home. Changes impose a big administrative burden. Implementing even a small change might require some redesign and review by the building dept. It might involve multiple trades and it might involve rework of some already built portion of your home. They are expensive. The best way to eliminate changes is in the design process. Get it right on paper.
Do not allow any changes to the approved plans and specifications without a pre-priced change order that you approve beforehand. No surprises at the end of the job.
If your contract price includes cost allowances, insist on copies of proposals at the time you make your selections and insist that you approve them prior to the builder ordering the materials or turning the trade loose to execute them.
If your project is cost-plus, insist on regular reports of all costs incurred and copies of all invoices associated with the builder's request for a progress payment.
Have your construction contract reviewed by an attorney with experience in contractor laws in your state. A good builder will make reasonable changes to mitigate your risk.
There is no number 13. Check with Virgil for additional insights. I can't type any more. I think my carpal tunnel is acting up.
Q