Building a new house on your land: Best price, or best value?

    There are two concepts that tend to influence the way most people make big purchases (including building a custom home on land you own):

    1. We all want the best deal.
    2. You get what you pay for.

    It's easy to think that these concepts are in conflict with each other. You might weigh one against the other and decide which one you want to learn toward. But the reality—in home buying anyway—is a bit more complicated than that.

    Getting the best deal

    The "best deal" doesn't always mean the lowest price. And when you can find a great deal, where you can trust you aren't being overcharged or unknowingly given low-quality material, you've managed to keep both of those big ideas in balance.

    The "best deal" might mean the lowest price but only under one very strict condition: all the other variables are the same. When you're shopping for a builder, there are lots of variables, and there are a lot of unknowns. Consider these questions when you're choosing a builder—the answers will determine whether or not you get what you pay for:

    • Will the builder fix his mistakes or cover them up? Will he cut corners? How will you know either way?
    • Will the materials used in your home be high quality? Who defines what that means?
    • Will your builder return your phone calls? Will he be diligent about the building schedule?
    • Will he hire only craftsmen or just any old subcontractor?

    There are any number of questions you could ask to try to figure out if you're getting a good deal with your custom home build.

    So here's what happens: most people, when faced with a daunting list of variables with no way to know how to measure, revert to price-shopping. That reduces the decision to a single variable, which is a bit scary to me. We don't choose doctors that way—shopping for a builder shouldn't be that way either.

    You get what you pay for

    That brings us to the second big idea: You get what you pay for. Of course, this is true. (Sometimes.) But when you're having a custom home built on your land, the product you want to buy doesn't exist yet. You don't get to see it before you buy it.

    The only way to gather information is to interview builders and see what they've built in the past to try to get some idea of what you're going to get.

    That's a great idea, assuming you can see some of those homes. Better yet, you should talk to people who've used the builder you're considering. Of course, if you ask the builder, he'll only give you the names of happy customers, and that's to be expected. But you can usually find some less-biased reviews online to help you make a decision.

    Before you interview the builder, find some negative reviews. Ask him about them. Sometimes the negative comments are unwarranted, and sometimes they're legitimate. You'll get a feel for which ones are which when you ask the builder about specific reviews.

    The bottom line is you need to trust the builder you decide to hire. There's no way to babysit him throughout the process to make sure he's doing everything exactly right, and even if you did, he might find ways to cut corners without you knowing. Especially if he's done it before.

    Your goal, when choosing a builder, is to find one you trust. He should know more about the home-building process than you (or you should choose a different builder), but he should be willing to address whatever concerns you have.

    There are plenty of solid, trustworthy builders out there. Do your homework, pay a reasonable price (not the highest and not the lowest), and then relax.

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