Our
theory to Custom Building:
What is a Custom Home?
Custom means “made-to-order.”
Some people think a custom home has to be expensive. Not necessarily! Any kind of home can be custom built, from a mansion full of expensive fixtures and materials to a tiny economical cottage. What they have in common is that the features are specified by the homeowners, rather than by the builder, based upon what he thinks will sell.
When building a custom home, options are evaluated only on the basis of what is important to the homeowners. Any home may be kept from becoming more expensive than necessary, by eliminating wasted space, unnecessary maintenance, and unwanted features. Simple design details, not expensive to build, can change a plain design to a charming one.
There are, of course, degrees of custom. It might be just choosing flooring, cabinets, or where to place extra mirrors. It might be making minor alterations to an existing plan to better fit personal needs.
A fully custom home is designed and built entirely to your specifications. It blends your dreams and heart's desires with the property of your choice and is tailored to fit your budget.
At Stabenow Custom Homes, we collect all the input you can give us and then we all work together, forming an owner-designer-builder team to create your home, with the style and function you've envisioned, no matter how evasive the concept has been!
Who Should Build a Custom Home?
Should you?
To buy all the parts that make up your automobile, you might have to spend upwards of four times the cost. And then you would still have to put them all together! Custom building a house is not quite as bad as that, but it still costs more than a ready-made builder's product. So why build a custom home?
If you answer, “Yes” to any of the following questions, you are a good candidate for considering a custom home.
Have you looked for a ready-made home, but have been unable to find one which fulfills your desires and preferences, your family’s needs, and/or your aesthetic sense?
Do you have very particular and specific desires about what you want in a home? When you look at existing homes, do you seem to want to change everything about them?
Do you have unusual requirements for a home, such as special-purpose rooms, a particular layout, built in major fixtures or systems, accessibility, an accessory dwelling, or out-buildings?
Would you like to make use of alternative energy sources, ecologically sound or non-toxic building materials, or any other fixtures, methods or materials which are not generally found in ready-made homes?
Have you been unable to find a home which works for you in the right location or neighborhood?
Do you wish for a home with particular views, water frontage, zoning, or type of trees or vegetation, and have been unable to find an existing home which has them?
Are you in love with a particular piece of vacant land?
Are you already the owner of a particular piece of vacant land?
Do you own, or are thinking of buying, a divisible lot, with an existing home on one part? If so, you might build a custom home on the vacant part, and then sell the exiting home.
Do you own, or are thinking of buying, a lot in a good neighborhood with an existing home in such disrepair that it should be torn down?
Do you own, or are thinking of buying, a piece of land with a mobile home? If so, you might build a custom home while still living in the mobile, and then sell the mobile.
Do you want to make sure that your new home is structurally sound and has been built under newer building code requirements, such as those which afford precautions for earthquakes, slides, floods, fire or hurricanes?
Competitive Bidding vs. Cost Plus
Competitive Bidding
It is a very common practice for clients who already have a home design to ask several builders to give them “bids.” A bid may be a flat price for the project, or it may be an estimate.
When you shop for price, as you do when you request competitive bidding, you may find enormous variations in the price of labor and material. How are you to know exactly what would be the differences in the final product? Not every stick and nail will be spelled out. You will be given a price, with some specifications, by each builder. But the specifications are likely to be on different items from builder to builder! One builder may be very specific about the type and grade of siding he plans to use. Another builder may be rather vague about that, but be more specific about the thickness of the asphalt drive. Two such bids would not be comparable. It would be like comparing apples to oranges when trying to determine the price of “fruit.” To truly compare bids, you would have to have a full list of specifications and make sure that each builder described each one. This could involve thousands of items.
Since a builder is generally not paid to provide competitive bids, he is unlikely to be able to afford to spend a great deal of time and effort in detailed analysis. To save time, the builder may use reference books, software, or a system of his own to estimate items in the bid.
Specifications in the Bid
The bid will usually include allowances for various fixtures and materials, or a list of specific items upon which the bid is based. To improve the accuracy of the bid, decide what are the actual products you will want the builder to use and provide that data in advance. Still, when you receive the bid, you may find that there are other items specified which you did not think about and even some you did not know about. Whether the specifications are provided by you or by the builder, there may be extra charges later if you decide to use different materials or fixtures.
Specifications not in the Bid
When you accept a builder's flat-price bid, the price of the project is set (with the exception of price variations or homeowner changes which are allowed by the contract). But the only specifications that are set are those included in the final contract. The builder is not committed to use any other particular materials or methods. Any specifications which are not listed in the bid or clearly indicated on the plans will be determined by the builder.
For example, if the bid simply states, “8-inch tight-knot cedar siding,” the following aspects are omitted:
If not specified, these variables will be up to the builder, who must then choose between using more expensive methods and materials on the one hand, or additional profits for himself on the other. He may also make decisions based upon what products he or his sub-contractors find easiest to install, the track record of the manufacturer or the product, or upon his own personal taste. Even if the homeowner later tells the builder what he prefers, the builder is not obligated to provide it within the contracted price.
If the builder has set a flat price for the job, then he has planned a certain portion of that to cover the costs of the project. The remainder will be his own earnings. If the costs are lower, his profit is higher. The lowest bid must have the lowest costs in material and labor. One way for him to keep the costs under control is to compromise on specifications. The low-bid contractor must keep material quality (and therefore costs) as low as the specifications allow. Also, he must hire the cheapest labor available, and then get them to create the product in as few hours as possible.
A truly disreputable builder could cut corners extensively to achieve maximum profit. It would be difficult for most clients to be able to tell what corners were cut. But even a competent, well-intentioned builder may simply choose not to spend more money on a particular specification, because he doesn't see it as important or because it isn't his own preference. What the client wants might not be a factor, if the item in question is not delineated in the contract. Or, if unforeseen factors have caused other costs to be unusually high, the builder might find he must reduce quality in order to complete the job profitably, or in order to complete the job at all. Given the choice between going out of business and down-grading the quality of their work, most builders would prefer to stay in business.
Beyond what is stated in the contract, the client has no control over specifications or quality. Now, in theory, one could write an exacting list of materials and an intense description of structural and craft quality. But such a list would hardly attract the low bidder. Also, who would enforce the criteria? Would it be necessary to hire and pay someone to supervise construction? Some architects and designers will perform inspection services to make sure that their design is being faithfully rendered, but even that would not prevent all possible alterations or affect the choice of all materials and techniques. And finally, if the specifications have been violated, what recourse is there (other than to spend money on a lawsuit)?
Cost Planning “Cost Plus”
More and more builders and designer-builders are adopting a different method of pricing, sometimes called “cost analysis” or “cost planning” or even “value engineering.” (The term cost plus may or may not refer to this system.) In the cost plus method, the builder goes over his rates and fees for general contracting, administration, and labor, including his price for doing a cost analysis. If the client then decides to order a cost analysis, the builder obtains prices, quotes and estimates from subcontractors and suppliers. He gives quotes for those portions of the project that will be built by his own company. This is all put together into charts and compared with the client's budget. If the preliminary project appears to be over-budget, the client alters the specifications of the job or increases the budget. In this way, the builder and the client work together to make the client's expectations and budget meet. With the “cost plus” approach, the builder and the client form a team in building their dream home. This approach makes for easy changes in the project along the way, since the customer only pays for the cost of the project plus the percentage added by the builder. This method is favored by many builder and customers alike because of its "win-win" ending for both customer and builder. Stabenow Custom Homes has always used this method over the years and it has worked positively for both customer and builder every time.
Final Note
Do not make the same mistakes that many customers have in the past while bidding their future dream homes, and that is always make sure when reviewing bids that you read between the lines, so you're not disappointed later. Every builder will bid your job differently unless you have provided a specification list for all bidders to follow. In the home building industry this is not very common and many builder will not want to follow it anyhow. Customers that have been mislead during the building process usually have bad things to say about the building process in the end, so don't allow yourself to be one of them. The building process can be fun and rewarding as long as you and your builder have a clear understanding of the ultimate goal, and that is build the custom home you want and not what the builder necessarily feels you need. You deserve a builder that listens to your desires, needs and wants; not one that just wants to build his/her business. Stabenow Custom Homes has a passion for building the best homes and long lasting friendships with their customers.
Stabenow Custom Homes will provide you with one of the industries most detailed cost analysis offered today, so please contact us. In the end, we will leave you standing with a smile on your face in your new custom home, our guarantee to our customers.