Before You Build: How to Choose the Right Builder

Before You Build: How to Choose the Right BuilderAustin McKnight

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Choosing the right builder is one of the most important decisions you'll make when building a home. Builders come in all shapes and sizes—some specialize in high-volume production homes, others build fully custom homes from scratch, and some fall somewhere in between.

The right builder for you will depend on your budget, your design flexibility, and—most importantly—their level of organization, transparency, and financial stability.

Let’s break it down.

1. Types of Builders: Production vs. Custom

Builders typically fall into one of these categories:

• Production Builders: These builders offer a catalog of in-house plans with minimal customization. They’ve built these plans many times, allowing them to offer aggressive pricing with fewer unknowns.

• Semi-Custom Builders: You may start with an in-house plan but customize it. They might have designers or architects on staff and some flexibility.

• Full Custom Builders: Often, you’ll need to bring your own plans or work with their architect from scratch. Great for unique builds, but can come with unknowns and higher costs.

2. Budget Match: Where Set Plans Save You Money

If you’re working with a tighter budget, production or semi-custom builders are often the smarter choice. Because they’ve built the same plan multiple times, they can price it tighter and with less risk. Unknowns are minimized, and pricing is more accurate.

The more custom your plan is, the more room there is for pricing surprises, change orders, and material variability—all of which cost money.

3. Why Specifications Matter More Than Floor Plans

A floor plan only tells half the story. A great builder should walk you through every specification category—from insulation and HVAC to cabinetry and finishes.

• What type of HVAC system and efficiency rating?

• What insulation package?

• What type of windows, doors, appliances?

An organized builder will help you define the scope clearly before breaking ground. That transparency is key to staying on time and on budget.

4. Communication is Everything

How does the builder communicate?

• Do they offer weekly updates?

• Do they perform walk-throughs before and after major stages?

• Do they use a cloud-based system like BuilderTrend to keep everyone aligned?

Clear, consistent communication reduces surprises and builds trust—especially during a complex build process.

5. Budget Practices: Fixed Price vs. Allowances

Ask how the builder handles:

• Change orders

• Unexpected costs

• Allowances

Is the builder truly offering a fixed-price contract? Or is there a lot of flexibility built in that might come back to bite you?

We’ve seen cases where a builder used a $20,000 allowance for cabinets—only for the homeowner to find out later that amount didn’t even cover basic cabinets. That’s why it’s critical to make sure allowances are tailored to your specific plan and expectations—not just recycled from other projects.

6. Contingency Planning: Don’t Skip It

At PRMI, we don’t require a contingency fund—but we strongly recommend one.

Once your loan closes, the loan amount is locked. If costs go over budget, you can’t increase the loan. However, if the project comes in under budget, we can apply the unused funds as a principal reduction.

It’s always better to build in a buffer and not need it than to be scrambling later.

7. Financial Strength: A Non-Negotiable

This is the toughest one for many clients to evaluate—but also the most critical.

Most construction loans don’t offer upfront funds. That means your builder needs to be financially solvent and able to float expenses from one draw to the next.

Red flags to watch for:

• Builders asking for weekly or bi-weekly draws

• Builders unable to provide two years of financials

• Builders who don’t know what a balance sheet or Profit & Loss (P&L) statement is

Just because our loan program allows clients to put little down doesn't mean your builder should be in the same position. A builder who is financially unstable can derail your entire project.

That’s why we require two years of financials when registering builders—and why you should ask similar questions before hiring one.

8. Warranty & References: Don’t Skip the Homework

Every builder should be able to provide:

• A couple of past clients you can talk to

• At least one current client who’s mid-build or recently finished

• A clear overview of their warranty process and coverage

Ask about the overall experience, but also dive into specifics:

• How responsive was the builder after closing?

• Did they honor their warranty without pushback?

• Would they build with them again?

Hearing directly from people who’ve gone through the process—both during construction and after move-in—can tell you a lot about how a builder truly operates.

Final Thoughts on How to Choose the Right Builder

Choosing a builder isn’t just about who has the flashiest model home or biggest Instagram following. It’s about fit, process, transparency, and stability.

✅ Know what type of builder fits your budget and expectations.

✅ Make sure the specifications—not just the floor plan—are well defined.

✅ Ensure communication is consistent and cloud-based when possible.

✅ Get clear answers about how allowances, overages, and change orders are handled.

✅ Ask for references and details about their warranty process.

✅ And most of all—don’t overlook financial strength. It’s the foundation of a smooth build.

If you have questions or want help navigating the builder selection process, we’re here to support you. While we’re not your project manager and can’t guarantee how your home is built, our goal at PRMI is to equip you with the tools, knowledge, and questions you need to choose the right builder with confidence.