Step 1: Plan your Budget

As you prepare to start the homebuilding process, your first step should be determining how much you can afford to spend. Although it seems obvious, many people do not start by nailing down a budget. You will likely need a construction loan and a mortgage and it's never too early to find out what size loan you qualify for.

Don't depend on the advice of friends or family. Talk to your banker, accountant or financial adviser.  They can simply and quickly let you know how much you can safely spend.

As you prepare your budget, in general expect that 20 to 25 percent of your new home project will go toward the land. And don't forget to account for the hidden expenses that aren't included in the building contract (furniture, appliances, landscaping, etc.) Knowing your limits will help you modify your building plans to meet your budget. 
Planning your budget is a critical step in starting off on the right foot with an architect, builder, or any other vendor you will need to work with in the homebuilding process. Doing your upfront research will save headaches later.

Step 2: Choose your lot

Whether you are building your home in a suburban development or a site with sweeping ocean views, you will almost always need to choose the land before you select floor plans or other details. You (and any pros you hire) will need to investigate factors such as site conditions, ledge, high water tables, drainage, zoning and building codes in the region.

Another important consideration is if the lot has town sewer or septic system. If the lot requires septic, you should find out: Will soils be suitable for septic system? Will percolation rates be fast or slow? Does the lot have a high water table? Will septic system need to be filled or pumped? In Massachusetts, the answers to these questions can mean a difference of up to $50,000 on a single family house lot. Never buy a lot without an accurate estimate of the septic system costs!

We recommend choosing your lot BEFORE you go too far with your home plans. It is important to have an idea of the architectural style you prefer to determine the size and characteristics of your building site.  You may run into problems, however, if you select a specific floor plan too soon.  You can always design a home to suit a landscape, but you may not be able to alter a landscape to accommodate the specifications of predetermined house plans. The configuration of rooms, the placement of windows, the location of the driveway and many other design elements will be affected by the land you build on.

Step 3: Choose Your Team

You'll need a team of experts to design and construct your house. Key players will include a builder, an excavator, a surveyor and a home designer or an architect. Many homeowners begin by selecting the builder or contractor. That professional then selects other members of the team. However, you may also opt to hire an architect or designer first (more on this in Step 4!).

When choosing your builder, we recommend the following:

Finding a builder Do a Google search for builders using key words relevant to what you are looking for. For example, you might search for custom home builders in Massachusetts. Review their websites, look at their portfolios and look at what customers are saying about their work.

Get referrals from real estate agents, friends and family. Someone who has dealt directly with a home builder can give you good advice on things to consider when you choose a builder yourself.

Checking credentials A home builder is someone you'll have to work with closely for an extended period of time -- usually several months to a year or more between construction and the warranty phase. So it's important to do your homework and look for a builder who's reliable. When you check credentials, look for the following:

  • Experience: Look for a builder who has a large portfolio of residences like the one you want to build.
  • License status: Contractors building new homes are required to have a Construction Supervisor License (CSL) in the State of Massachusetts. You can verify a builders CSL Status on the Dept. of Public Safety's website. Contractors performing renovations or home improvements are required to have a Home Improvement Contractor (HIC) license with the state of Massachusetts. Check on that status here:  
  • Affiliations and rewards: Has the builder received special certifications, industry awards, or membership in professional associations?
  • Permanent business address: A permanent business address and good record with local banks and suppliers indicate that a home builder has a stable, successful business.

Look for a builder who has been in business for at least three to five years. It usually takes a business that amount of time become financially sound. Your home builder's financial stability is important because you need to know that he'll be around to finish your construction and then handle any issues that pop up later.

When you're sure that a home builder has both a stable business and the expertise to build your new home, interview him. Ask about his current projects and have him provide references.

Be sure to follow up with the builder's references because these clients can attest to the builder's strengths and weaknesses. Ask the clients if they are happy with their new home. Were there any problems with the home? How quickly were problems fixed? Be sure that a home builder will be responsive to your inquiries.

The final step in choosing a trustworthy home builder should be to examine his work firsthand. Have the builder take you on a tour of a recently completed home or model home. Look at the quality of construction features and the durability of building materials. Look at every detail and ask the builder plenty of questions to get a good idea of what to expect from the home building process.

Step 4: Create your plan

When it comes time to develop the plan for a custom home, many of our clients come to us and ask – do I really need an architect? The answer is – probably. A custom-designed home is created specifically for the family who will live there. In most cases, custom-designed homes require the services of a licensed architect.

You may find stock building plans that are drawn by architects and home designers for mass marketing through magazines, catalogs, and websites. The main advantage here is that you can easily find stock plans for houses in a wide variety of sizes, styles, and budgets. If you are able to find a stock plan that works for you, you could save the cost of hiring your own architect. However, the architect who designed your stock building plan has never met you and does not know your tastes and needs. Moreover, stock building plans cannot take into account the nature of your building lot or the climate in your region. Another caveat is that stock and/or catalogue plans viewed on a website do not have the required architect and/or structural engineer’s stamp that is required in Massachusetts. Obtaining this stamp would result in additional fees. In summary, many people who purchase stock building plans eventually decide to hire an architect to make modifications.

Another cost-saving alternative is to hire a Certified Professional Building Designer (also known as a Home Designer) to design your new home. Home designers do not have the same level of education or the same licensing requirements as architects, and their fees are usually lower. Nevertheless, professional home designers do hold professional certificates which demonstrate that they have completed coursework and achieved experience in the field. Ultimately you will need to have a licensed architect to stamp your plans.

Sterling Homes is happy to recommend one of our preferred designers or architects to work on your project.

Step 5: Obtain Estimate & Contract

The last step in preparing to build your custom home is to obtain a cost estimate and sign a contract. To find out what the average price is for a project, most homeowners opt to get at least three quotes from different builders. Bids are complicated and time consuming for the builder, so it is important to only request bids from companies with whom you have a good rapport, have heard good things about and are serious about doing business with. To get tight bids that you can really compare, you must have clear directions and a goal so each contractor is bidding on the same thing. You must compare apples with apples.

Sterling Homes has a four-step process to develop the cost estimate and contract:

1. Preliminary Cost Estimate

2. Proposal Review and Retainer

3. Final Estimate and Spec Sheet

4. Contract Signing

After the contract has been signed, we will form a team to manage the job. These professionals will work with you throughout every step of the project. Prior to the start of a project, we will hold one or more pre-job planning meetings with you and the architect to understand your wishes and review the construction documents with the architect. Pre-construction also includes procuring necessary permits, determining a schedule for ordering materials, and coordinating subcontractor timeframes.

We would be happy to talk with you further about the building process. Please contact us for a free, no-pressure consultation.