How do I select a custom home builder?
During the course of construction you will have a series of homework assignments. Selecting a builder is one of your most important tasks. The problem is there is no foolproof way of making the right choice. Ultimately, it comes down to trust. Do not get involved with a home builder you do not trust, regardless of how attractive the price. Trust alone is not enough, but it is the starting point. You also want experience, competence, service, and value for your money. Referrals are good, but they can be misleading. Some people just don't know a good job from a bad one, and every builder, even a poor one, usually has at least a couple of decent jobs for referrals. It is best to visit some previous projects, to see the workmanship first hand. Ask questions of past clients. Don't be shy. This is your hard earned money at stake. Ask your potential builder tough questions. You are turning over a lot of money to a stranger. 

Should I competitively bid my project to several builders or negotiate with one builder?
Negotiating with only two builders will be your best bet.  Make sure you have researched thoroughly and believe the builder to be reputable and trustworthy. Your home builder might be a great craftsman but overpriced. Your home builder might be very fair on pricing but incredibly inefficient, which could end up costing you more than dishonesty.

On paper, a competitive bid makes a lot of sense; however in reality it is intrinsically flawed. A competitive bid on a residential construction project is essentially a game. The bid is based on a set of plans which usually have mistakes and are generally incomplete. Competitive bids are never apples to apples: each builder is calculating on a different level of quality and service. Some builders bid low and make it up on extras. Some builders bid sloppily and make it up on crummy workmanship. Some builders scrutinize the plans for errors and omissions, areas that they can exploit to their advantage. Sometimes you can win the competitive bid game, but you can also lose. The more you do your homework and find out what things should cost, the more likely it is that you will get value for your money. If you find a good builder whom you can trust, and he or she has a reputation for pleasing clients, being efficient and fair on pricing, this is the builder you probably want.

How do I analyze competitive bids on home construction projects?
Let's say you have two bids for $90,000 and $100,000. The first thing you want to do is make sure the bids are as close to apples to apples as possible. The problem is that every home builder has his own way of estimating and may use different categories than his competitors. When the plans are given out to bid, an outline should be given to each builder, breaking down the job the same way. Each builder is then required to fill out the outline with his bid. Now you can compare the electrical price and the plumbing, etc. It is also helpful if you can get information from each builder as to how much overhead and profit or any other markups there might be in the bid. Choosing a home builder should never be based on price alone, but the more clear information you can obtain about how the bid prices were reached, the better chance you have of making the right decision.

Why do so many people have home construction nightmares?
For most people, a major home addition or renovation or the building of a new house represents one of the largest purchases of their life. However, you cannot approach construction the way you would approach buying an oven or car or television. First of all we are talking about much more money. Secondly, it is an entirely different type of purchase. You pay for most of it before it is finished. Unlike a product you can buy and touch or test drive, your construction project is built after you decide to purchase, not before. If it is a custom home design, then in all likelihood, the product has never been built before. In other industries when they build a new product, they make samples, models, and prototypes which they test, debug and discard. In construction, your custom designed house is the prototype.

If you analyze most construction nightmares you will find a common theme: the consumer was seduced by a low bid. If you are buying a television and you shop at different stores and you are accurately comparing the same model, size, year, features and one store has a lower price, not much should go wrong if you buy the less expensive television. However, when purchasing construction, you are never comparing apples with apples. Every builder builds differently. If you get seduced by a low bid and then have a construction nightmare you are not an innocent bystander in the story. You are spending your hard earned money on a very expensive purchase. Take it seriously. Do your homework!