This is good.

We are about 9 months in our custom home. Some of the bruises fade with time.

Allowances are the devil. We had very few, but still...wish we had just made that extra push into none.

Have your architect do an electrical plan. Then there are no surprises.

Landscaping. Yes, our one regret. I am doing it now. I'm not that good at it. But small steps... I wish I had budgeted 20 or 30k for a real professional plan. I will be okay doing ot, but it will take a couple years.

Be careful of the money. Yes, it is shocking how much money this process can chew through. You can be house poor in your 20s or 30s and recover within a few years as your career advances. Don't do it in your 50s.

Thanks for taking the time to write this up.

Very insightful, thanks! We are just in the beginning stages but we are in a similar region as you (northern Ohio).

Thanks for sharing all of that. I'm in a similar position, but with a shorter timeline.

We close on our construction financing next week, and just started working with the builder (a highly respected local design-build firm) at the beginning of February. Their owner met with us, we talked about what we wanted, and used some of the plans from houses they had built in our budget range in the past for reference (almost everything they build is custom). A few weeks later they had drawn up awesome plans that addressed everything we wanted, and even did some things that we didn't even know we wanted (like putting the dining room, which we were considering omitting, in the back of the house so that you can see the view of the valley). A few minor adjustments in early March, and then a couple of weeks to get the contract together (fixed with allowances), and then a couple of weeks for financing. It's amazing how it came together so quickly. We've been told the end of the year is a realistic time frame for completion of the house. I'm fine if that pushes a few months closer to spring, as we will be renting our old house. The contract allows them 10 months to build it, but that's a worst case. It helps that the weather will be nice when they are working outside.

We'll see how it goes. I really doubt we'll see much allowance overage until we get to the finishing details (low voltage and lighting are the main ones I'm expecting), because aside from the 8000 sq ft of gravel and asphalt millings, all of the places you would get hit with overages are later in the build. It's also possible (but unlikely) that we need to blast rock to dig out the foundation, which would be a major bummer. Anyway, the thought of hitting thousands of dollars of change orders every month during the build is certainly a little discomforting, I definitely hope that's not our experience.

I'm in a fortunate situation in that there is such a highly respected design-build firm, located just a few miles away from our land. I'm also fortunate in that my best friend is a builder in a neighboring state, and will be able to verify the work at key intervals (foundation, framing, etc) with a level of understanding and eye for detail that I just do not possess. So, since I have an expert in my corner, I feel a lot more comfortable having the architect work for the builder.

Given the things I have read on this forum, I feel like it was a wise choice. I think there's a tremendous value that comes from knowing exactly what things cost when designing a home with a budget in mind, and risky as it can be, I have a general philosophy of putting my trust in people who I believe to be ethical professionals that deliver quality. I'll put it this way...I asked the attorney I've used for settlements for years if he wanted to review the construction contract, he asked me who the builder was, I told him, his response was "I'll look at if you want but you have nothing to worry about with them." That's a rare level of trust for an attorney to exhibit, so I feel like I'm in good hands.

But, we shall see!

Get pricing on EXACTLY what you want/expect before signing a contract (white oak vs. red oak, this brand of flooring or that, etc.). It will save you both time and frustration/disappointment.

I hear so many people burned on this. Go into the budget meeting knowing what you want, costs (your builder may have contacts with better prices!), and work all of this out before beginning the build, while setting the budget. If possible, have bids and pricing in hand for everything (plumbing, lighting, counters, flooring, appliances, etc). We found it so much easier to basically have the house "built" on paper before we signed papers- allowances were then the correct amount for what we wanted- not too little, and "extra" could be spent elsewhere. Or something goes on sale, and your builder cuts you a check at closing- yes, this happened! Our blueprints include electic, hose bibs- everything. I think there were 10 or 12 pages of bluprints, plus the contract, we signed off on. I disagree about landscaping, though... I LOVE to garden. I'll take the plans from the landscape architect, let him do irrigation and seed the yard, and do the rest myself- and I appreciate is opinion on what to plant where! :) We've built 3x with our custom builder- the first time everything went well, but the next two we did as above, and it was very stress-free. All that was really painful (at times) was driving out to check work each day.

Great feedback! Our build was in an existing subdivision where our choice of builders was limited and require use of their subs. Agree with having the architect put electrical and plumbing in the plan. Our builder was good with doing walkthroughs with the contractors which helped eliminate costly change orders. Generally the builder will use their sub contractors so I'm not sure getting bids before hand does much than waste the time of people who won't be working on your home. Of course if you are paying cash or just hiring a g.c. This may not be the case. Totally agree that we should have known exactly what everything was going to cost but quite frankly we had a fairly realistic expectation of appliances, etc. cabinetry is all over the map on pricing as is flooring so spend most of your time on the big items. All in all we have spent an additional 7% or so of the build price over and above the contract.

Wow, I guess we were really lucky or had a builder that was good at setting allowances. We had a fixed price contract with allowances. We had been shopping around so we had some idea of what the costs would be for lighting, flooring and appliances, so we did raise those numbers some from what he had before we signed the contract.

We actually were under on the allowances by a few thousand, but we ended up spending it plus some more on two change orders. We changed how we were finishing out the fireplace, and DH decided we needed the irrigation system in the back yard also. We did have landscaping in the contract since I don't have a clue about that, I'm just trying not to kill anything now that we are living here.

We did go to the site most days but it wasn't very far from the house, and it was fun to see the progress made.

Very insightful and informative. Thank you for sharing.

Can you tell me where you got the engineered floors?

nbonn, thank you. That was so helpful.

I'll have to come back and read - this looks very helpful.

My advice may help someone who is renting a house or apartment during their build. Be sure to inquire BEFORE you sign a lease if you will be able to continue renting on a month to month basis (with sufficient notice, of course) after your lease expires.

Yes, very informative! Thanks for taking the time!

One thought I have after reading -- you can tell me whether you think I'm on track or not.

Allowances vs. overages. You say (as does pretty much everyone else) that allowances never seem to be "quite enough". But overages seem to be worse since they only give you back a pittance ($200 for mirrors, per your example). Sooooo ... since, even if you've done your homework, you're never going to hit the actual amount (because prices change, models become unavailable) ... isn't it better to have a slightly low allowance? I mean, you end up paying more out of pocket ... but you're paying the actual cost for the actual items you want. You're not negotiating "money back" for items not used and getting the short end of the stick.

Well, actually I mean wouldn't it be better for the allowance to be a bit low AND ALSO you'd expect to pay something more out of pocket. Being surprised by a bill is the worst idea.

If I'm wrong, feel free to say so -- but explain to my why I'm wrong!

I'm actually interested in doing as much of my own buying as possible. For example, they can build my kitchen without appliances. I'll buy 'em from Lowes and have them brought in later. I'll buy my own light fixtures, etc. It seems like a way to keep more control over the items and the cost.

In my build allowances were different then what the builder usually uses in his build.

What I mean is our builder had certain things that were built into the bid price and if we chose not to use that, the credit back was not what the actual cost was.

On the allowance items a set amount was set aside for that category, such as appliances. We would chose what appliances we wanted and if the cost was over the set amount we owed that amount. If it was under then he owed us.

In our case, there was a mistake at the store where we were getting the appliances, someone dropped the ball and they didn't get ordered, and when we found this out it would have taken too long to get them in and delay our move in. We decided to get different appliances that were available, and that came out a few hundred cheaper, so the builder refunded us the difference.

I'm sure this is as clear as mud.

Mrspete wrote, "...... isn't it better to have a slightly low allowance? I mean, you end up paying more out of pocket ... but you're paying the actual cost for the actual items you want. You're not negotiating "money back" for items not used and getting the short end of the stick..."

Everyone's preferences and financial situation are different, so there's probably no universal "best" approach, only one in which there are no surprises mid-way through the construction project. If you prefer the way you describe, and you choose an owner-contractor construction contract which is properly worded for your intent, then the situation will work for you. It all depends on the wording of the construction contract!

In my experience, there are many, many folks who sign construction contracts (which are prepared by the contractor and often worded in the contractor's favor) and thereafter become very surprised at how the subsequent construction, administration and finances work out.

The Golden Rule is to have a construction contract which the owner understands and which represents their intentions and best interests.

I always recommend that architectural construction drawings and specifications be fully completed and that there are no allowances. In such cases, the builder bids and furnishes everything that is included in the construction documents. In such cases there may be owner-furnished items or not, which the contractor may install or not. It's up to the owner with a properly worded construction contract.

In the case of tract homes and builder developed homes, most builders have developed the habit of working with their own incomplete drawings and specs (if they even have specs), leaving out the specific definition of a great many things and simply substituting a cash allowance because it makes life simpler for the builder.

Unfortunately, some builders use this approach as a way to initially low-ball the initial project construction costs, knowing that they will get the additional needed monies later during construction, either through change orders and/or through upgrades to allowances.

Again, the Golden Rule for homeowners before and during construction is to have a construction contract which will not allow for surprises during the construction period. Unfortunately, when only working with a builder it may be very challenging to reach agreement on a construction contract which fully represents the owner's intentions and best interests.

I have always assumed the issue of getting "less
back" when not using builder-preference items only applied to a
semi-custom build, not a a fully custom build. If this isn't true, I'm
interested in hearing other experiences.

In our previous
custom build, and our ongoing build, there is nothing in the build that
the builder "normally" includes. Our builds have been custom from the ground up and the contract and the price are based only on what we said we wanted. We do
have allowances, and we will either pay or get money back based on the
actual cost of those categories (some of which we don't control, like
how deep the well will be).

This is a topic worth another thread, but I would not assume that excluding appliances from your build and purchasing and having them installed later is the best path. It might be, but there might be other ways to ensure you control costs and have the end result you want.

I want the builder to bid to *install* -- not tell me how much I'll spend on appliances, cabinets, windows, fixtures, etc. I was also astounded to find that the plumber refused to warranty anything I didn't buy 'through him' -- markup to me, discount to him...nice profit.

I learned the hard way that *any time* you tell the architect to make changes to your plans, you must re-read the entire plans all over again to make sure nothing *else* has been changed. Somewhere during revisions the under-cabinet lighting in my kitchen was dropped from the electrical plans. I never realized it until the cabinets were on the walls. I do have that lighting, but it had to be jury-rigged.

nbonn, I think this is one of my favorite GW threads of all time, thank you. Appreciate your generosity in sharing your experiences. While no one else's experience will match yours exactly, you provided so many details covering so many aspects of your build, that there seems to be plenty of cautionary tales/details for just about everyone! I do hope your healing (financial and otherwise) is both complete and quick! Congratulations on your new home.

I just found this thread and absolutely love the candid perspective. It really makes me consider if this (building) is something we should undertake. Thanks for the thread!

Wow, look at that your first post, happy as a clam with the builder and you throw in a link to the builder's site and everything. What are the odds..............

OMG nbonn, I'm going to print out your post and read it through twice every night before bed! LOL...

This is EXACTLY what I was looking for (I had posted a question in the forum before finding your post).

Thank you so much for taking the time to write this. I am terrified as hell doing into the process.... Like you, my wife likes to remind me: "hey, it was YOUR idea!" when things get rough (and yeah, we haven't even actually started the project now, it's going for bids soon!).