When building a custom home in Maryland, many people think that a basic set of drawings and specifications is adequate to get bids and pricing for their project. However, this approach often ends up with bids that are widely varied because each builder is allowed to interpret or substitute specifications that may or may not align with the client’s vision. This is one of the biggest mistakes homeowners make when building a custom home and we have watched many people go for the lower price, without realizing what they were compromising – and even struggling to pay the difference. The Estimating, Specifications and Allowances (ESA) process is the most critical and complex area of the home building process, for client expectations, satisfaction, and the ultimate home building experience. In this article, we highlight what you need to know about Estimating Costs for a Custom Home building project and how to compare apples to apples.
Don’t Choose a Builder Based on Price
For many consumers, the process of building a custom home and choosing a builder comes down to the numbers. Although there are many other factors to consider, for some people, it just comes down to price. While there is nothing inherently wrong with being cost-conscious, it’s important to fully understand the process that your builder uses to come up with an estimate because not all builders approach this process the same way. We have met with hundreds of clients over the years. We have certainly met with homeowners who ‘got a lower bid’ or ‘a bid that was significantly less than ours’ and chose to go with another builder. In some cases, this worked out. But, in many cases, there was something missing. In several cases, the homeowner did not realize the magnitude of this problem until they were well into the actual construction – a point at which it is too late to remedy the situation.
The Role of Detailed Architectural Drawings in Cost Estimation
While detailed specifications form the backbone of any reliable bid, the foundation of those specifications lies in comprehensive architectural drawings that go far beyond preliminary sketches or draft sets. These detailed blueprints—encompassing precise structural layouts, electrical and plumbing schematics, elevation views, and material integrations—allow builders to uncover hidden complexities, such as load-bearing adjustments for open-concept designs or custom millwork alignments that impact labor and material sourcing. When estimating costs for a custom luxury home, start with detailed drawings.
We caution against using a draft set of drawings, often used in early conceptual phases to keep initial costs low, because it can lead to significant oversights in the estimation process. This has a greater potential to leave you with sticker shock, too, when the project is fully estimated with all the details, drawings, and specifications.
For instance, unrefined details might overlook the need for specialized framing around large windows or the integration of smart home wiring, resulting in changes that can inflate the budget by 10-20% or more, once construction begins. By investing in finalized architectural drawings before soliciting bids, homeowners not only ensure an “apples-to-apples” comparison but also mitigate surprises. We believe the best client experiences are a harmony of collaboration between the builder and architect.
Why Specifications are Critical
Before you bid the project, be sure that you can have a detailed list of specifications so that you can make an honest assessment. Once you have a detailed list of specifications, the builders bidding the project should be instructed not to make any substitutions or value-engineer. Value-engineering or substitutes are best reserved after you have evaluated each builder’s bid on a line by line comparison.
We suggest paying a design fee to your architect or builder to create a detailed set of specifications, so that you can create detailed specifications to get an accurate ‘apples to apples’ estimate. We believe there are no cutting corners in this regard. We have seen many homeowners get several price quotes, that are not equal, and get lured down a slippery slope. The level of detail included in an estimate has a direct correlation to estimating costs for a custom home.
Just as you choose a trim package for a car, this selection process is vastly more complicated when building a custom home because every detail (from switchplates to floor registers, lighting and plumbing fixtures, roof material, insulation, appliances, to cabinet hardware, etc.) is driven by your choices and selections. These items may not seem significant but one builder may estimate low in this regard, to obtain the bid or project; whereas, another builder may estimate based on the fit and finish you desire. Often, this is where the gap between builders can result in big swings. One builder may assure you the house can be built for a certain cost per square foot, while another builder helps you realize that your desired home may not be possible for the budget established. While we cannot speak for all builders, Mueller takes pride in providing a fair estimate and prefers to bid on projects that have detailed specifications vs. those that do no.
Estimating Construction Costs is all about the Details
A reputable builder cannot possibly give you accurate pricing without a detailed set of drawings and specifications. This is often a timely and thought-provoking process that requires a considerable amount of time and effort by you and the builder. These discussions are collaborative with the builder providing you ideas for consideration along the way. For example, do you prefer vinyl siding or Hardi-plank siding? Do you prefer high quality custom cabinetry or stock cabinetry? Do you want your stair treads to match the rest of your flooring? It is these personal preferences and details that truly make a custom home uniquely yours. In addition, a detailed estimate provides benchmarks for every single item so that as you make your final selections, you will understand any cost variations. This level of detail provides a much better home building experience, for a number of reasons.
Don’t Allow Bidders to Substitute, Until Much Later
Assuming you have a detailed set of specifications, it is important to require the bidders to bid the project, as specified. Keep in mind, without those details, each builder will have to provide an allocation and these are very subjective. The moment that one builder takes liberties with your specifications, the project will evolve into an apples to oranges comparison. Builders should always adhere to an industry standard for any specifications [learn more about Residential Construction Performance Guidelines from the NAHB.]
Why These Details Matter the Most
You have likely taken the time to carefully consider the design and quality you want to utilize in every aspect of your home. Later on, you may consider design changes as the project progresses. That’s good, because the former process will help you understand the associated costs and make an informed decision. For example, sometimes a homeowner will agree to one set of specifications during the design process, but as the home building project progresses, they may decide they want something different. That is the beauty of building a one-of-a-kind, custom luxury home.
For example, perhaps you chose a mid-range lighting package with a nickel finish during the design specifications phase. But, during the actual building process, you realize that the lighting in the great room could be enhanced with a different style or design, perhaps to be used as a focal point. This new light fixture may cost much more than budgeted, but it is the jewelry for your home, and you can easily see how and why a budget is just a guide to be used, as you make selections. In a cost-plus contract, you will still only pay the cost of the actual products selected, but the original budget may need to be adjusted for any of these choices. This is where a contingency fund will be invaluable, helping you pay for these types of changes during construction.
Which Builder Should You Choose?
If both builders have the same level of detailed specifications, they should be within 3-5% of their bid figures, which allows you to base your final decision on other important factors. However, if one builder has much lower numbers, there is a much greater chance of big surprises later. It’s important to realize that a low bid is not usually a simple matter of one builder making less money on the project. We suggest reviewing the figures carefully to ensure they are realistic and transparent. Then, as discussed in this article, choose the builder with whom you want to spend the next 12-18 months of your life with. After all, you want to work with someone you can trust to help you create a memorable building experience.
If you want more information on costs check out the library of articles available here.
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