Finding Your Contractor and Getting a Price

(or, a Shock to the System)

You've got your house plans. Now to get started on getting them built.

If you had your plans drawn by an architect, the architect is probably the best bet for finding reputable contractors in your area familiar with building the type of home you're looking at. The same is true if you've used a designer to modify plan book plans. An architect may even run the bidding process for you, depending on the level of service you're paying for.

Your general contractor is the person you'll have to deal with throughout the process of construction; they, in turn, hire and manage all of the subcontractors of the various trades required to build a house today. You're going to be spending a lot of time with this person, so it's imperative that you find someone that you're comfortable with and get along with, that you can communicate with, and whose work you're sure you'll be happy with. Careful selection of the general contractor will help minimize headaches down the road.

The first step is to simply find contractors to screen. The best ways to begin are:

• Ask your architect or residential designer. They'll most likely know and have worked with a variety of local builders, and can give you several names.
• Ask friends and relatives who've had work done recently - but only if they're happy with it!
• Contact local homebuilders organizations - they'll be able to give you lists, although it's not likely they'll have narrowed things done much.
• Talk to your local lumberyard - while they may not be aware of the quality of work of a given contractor, they certainly know who's financially sound and paying their bills on time.
• Drive around and find other homes being built - contractors usually put their signs out when building, and you've got an example of their work right there. If the home is recently completed, don't be afraid to ring the doorbell and ask the homeowner who built it and how happy they are with the work - many homeowners will be flattered that you like their home, and will be more than happy to chat. We actually found our contractor this way.

Even if you plan on having multiple contractors bid on your home, sit down and be sure that all the contractors you'll have bid on your home are people that'd you'd hire. Meet with and interview your contractors. Be sure to:

• See examples of their work; especially work that's similar in scope to your project
• Verify that they are licensed and insured if licensing is required in your state.
• Check their references, both to check their work quality and also their financial soundness. Having your contractor go out of business in the middle of your project would not be a good thing, but it does happen.
• Find out how long they've been in business under the same name. Many newsmagazines have done exposes of "bad contractors" - in many cases, these guys will just close up shop under and reopen under a new name, with no complaints against it. Yet.
• Ask what work they do and what they "sub out" to other contractors. Many general contractors have crews that only do framing carpentry and finish work, and hire subcontractors for virtually everything else. This isn't a bad thing - a contractor that does so may have lower overhead and can offer you a better price than one that keeps their own plumbing and electrical crew on the payroll. Knowing who's doing what is important, though.
• Make sure that you like them. As I mentioned earlier, you're going to be interacting with this person a lot while your house is being built. If you can't establish a good working relationship, no amount of money saved will be worth it.
• Do a background check - many online sites, like contractors.com, offer basic, inexpensive, checks that look for a valid license, complaints against that license, and so on, that could catch potential problems quickly.

If you decide you want to have multiple contractors submit bids for the project, you'll want to put together a set of specifications for your house. Specifications include the plans themselves, construction details, processes, and, if you have a lot already, should include the site engineering for any grading, well, or septic system you might require. Be as detailed as you can be: if you want 2x6 construction, say so. If you know specific model numbers of windows, or at least manufacturers, say so. The same goes for flooring choices, plumbing fixtures, mechanical services (hot water heat or forced air?), electrical fixtures (size of service, number and location of lights and switches), and finish carpentry. Even if you don't know something exactly, be sure to explain as much as you can. Again, your architect or residential designer can help with this. By providing specifications as detailed as possible, you'll be putting all of the bidding contractors on a level playing field. Putting together full specifications can also be useful even if you're working with a single contractor, as it will help be sure you get just what you want.

To Bid or Not To Bid?

Should you just find the contractor you're most comfortable with, and go with them, or should you have several contractors bid and see who has the best price? Or, are you considering being your own general contractor?

Working with a single contractor may not get you the absolute best price out there for the house, but you'll be able to spend less time up front writing specifications: most contractors have their own specifications that they normally work from, and you can work with them to refine them to your needs.

By bidding, you might be able to save some money, but this isn't a sure thing. Some people advise throwing out the low bid and the high bid, but that doesn't make much sense: if you've already done a good job screening the contractors, even the low bid should be one to consider, although I'd still be suspicious of a bid that's significantly lower than all of the others. If you do decide to bid, there are a number of resources out there on how to conduct the bid process itself. We looked to The Complete Guide to Designing Your Own Home, by Scott Ballard AIA, which covers specifications and bids quite well. Be forewarned that the sample specifications included are for a high-end home, which we discovered as we talked to several contractors locally, and may include items not relevant to what you're building. If you don't understand something, be sure you either understand it or remove it from your specifications.

Many people claim that you can cut your costs by up to 30% by becoming your own general contractor, but unless you are in the building trades yourself, I don't recommend it. A general contractor understands the process much better than a layperson, and should also understand the interactions between subcontractors better as well. Subcontractors are also likely to pay more attention to a general contractor; after all, they stand to get more business from a general contractor than from a homeowner doing their own project management. Doing all of the general contractors work will also be time consuming, as you must then interview and get bids from all the subcontractors involved. If your time is valuable, the time consumed alone could erase any cost savings. Being your own general contractor can also make getting financing tricky, as banks are looking to be sure that the project will be successful if they are to lend money for it.

A Shock to the System

Your bid or bids have come in - how much will this thing cost? The answer is probably more than you expect - most people will experience at least some sticker shock if they've specified their dream home on paper. Our house came in tens of thousands of dollars more than we had expected - fortunately, still within the range of the possible, but more expensive than we expected. If you're working with a single contractor, or can pick one out of the bidding field, you can work with them to reduce the cost, if necessary. A word to the wise: start by removing expensive finishes, not by skimping on the structure. Hold off finishing a spare bedroom, skip the wainscoting and crown moldings, maybe tackle some of the easier work like interior painting yourself. Finish work can always be added later, but if you get the structure wrong you'll be stuck with it, barring expensive remodeling.

What did we do?

We spent some time collecting contractors names and meeting with them, checking references, and the like. We also spent quite some time assembling detailed specifications, including what we wanted for allowances for lighting, plumbing, flooring, and door hardware, then sent things out to bid to four contractors. Bids came in very close to one another, and we worked with the contractor we selected to bring the cost down somewhat by modifying the specs before signing a contract.

If we had to do over again, we would have just worked with the contractor we liked the most. Because we did such detailed specifications, the bids all came in within a few thousand dollars of one another, and we ended up choosing the contractor we liked best anyway. This would have let to a final price and a signed contract much faster than the bidding process allowed for, and we'd be further along now as a result.

Not being a lawyer, I'm not going to provide advice on drawing up a contract with your builder, although I've provided references to some web sites that do. The AIA provides template contracts that many architects use. As with anything in the legal arena, when in doubt, contact an attorney.

Resources
 
American Institute of Architects <http://www.aiaonline.org/>; - Architect's Professional Org.
contractors.com - Find and Screen Contractors
ImproveNet.com - Find and Screen Contractors, Contracts, etc.
The Complete Guide to Designing Your Own Home, by Scott Ballard, AIA