Have a contract reviewed by someone qualified before you sign it.

1. Check that both prices are for the same plan

Ask each builder which drawings and which list of materials the price is based on, and the date of each. A price based on an earlier sketch is not comparable to one based on the final plan.

2. Compare the site work

Site work depends on the lot. Ask what each estimate includes for the following, and whether each is a fixed price or an estimate.

  • Clearing and grading.
  • The driveway.
  • Connections for water, sewer and power, or a well or septic system.
  • The foundation, given the slope and the soil.
  • Drainage and erosion control.

Our guide to buying a lot explains what to learn about a site before pricing.

3. Understand the allowances

An allowance is an amount set aside in the price for something you have not chosen yet, such as flooring, lighting or countertops. Two estimates can look alike and carry different allowances.

  • Which items are allowances, and how much is each?
  • Does the allowance cover materials only, or installation as well?
  • What happens if your choice costs more than the allowance, or less?
  • Is the allowance enough for the level of finish you have in mind? Ask to see what it buys.

4. Read what is left out

Ask each builder for a written list of what the price does not include. Things often handled separately include the land, design and engineering fees, permit fees, utility company charges, landscaping, appliances, window coverings and the costs of your loan. None of these is wrong to leave out. You need to know which price includes which.

5. Ask how the price is set

Builders price in different ways. Some give one fixed price. Some charge the cost of the work plus a fee. Ask which applies, what could make the final figure differ from the estimate, and how you will be told.

6. Ask how changes are handled

  • How do I ask for a change once work has started?
  • Will I see the price and the effect on the schedule in writing before I approve it?
  • Who can approve a change, and how is it recorded?

7. Check the builder as well as the price

The Alabama Home Builders Licensure Board advises consumers to verify a builder's license with its license search, to ask to see the license card, to check references, and to ask whether the builder carries insurance and for proof of it. Which work needs a license depends on the work and its value, so read the board's page for what applies to you.

A side by side checklist

  • Plan version and date used for the price.
  • Site work: included, estimated or excluded, item by item.
  • Each allowance and its amount.
  • Written list of exclusions.
  • How the price is set, and what can change it.
  • How a change is requested, priced and approved.
  • Warranty offered, in writing.
  • License verified, references called, proof of insurance seen.

These questions apply to any builder, including us. See our page on building a custom home.

Official sources