Building a custom home on your own lot is exciting, but it also introduces site-specific challenges and contract pitfalls that can turn enthusiasm into stress if you don’t ask the right questions upfront. As a Denver-based builder that designs and constructs homes on client lots, RKM Homes sees the same recurring issues: unexpected grading and drainage work, utility extensions, geotechnical surprises, HOA or municipal setback conflicts, and winter-weather implications for schedules and materials. Knowing how a prospective builder evaluates your lot, budgets for contingencies, and plans for local conditions is essential before you sign anything.
There are several concrete topics to cover that go beyond general credentials. Ask whether the estimate is a guaranteed fixed price or cost-plus, what’s included in allowances for finishes and appliances, and how the builder handles change orders and unforeseen site work (rock removal, retaining walls, blasting). Confirm who is responsible for permits and inspections, whether a geotechnical report and civil engineering are included, how erosion control and stormwater will be managed, and what foundation system is proposed for your soil and slope. Also request clarification on the project schedule with milestone dates, how weather-related delays are handled, and the builder’s payment schedule and lien-waiver practice.
Process, quality control and post‑build support are equally important. Ask to see recent projects built on similar lots in the Denver area and speak with those homeowners about communication, adherence to schedule and warranty responsiveness. Verify licenses, insurance and any bonding, get a list of primary subcontractors and the superintendent who’ll be on site, and review the warranty terms (coverage period and response time) and the punch‑list/closeout procedure. At RKM Homes we prioritize transparent, milestone‑based contracts, on‑site supervision, and a collaborative design‑build process tailored to each lot; bringing these questions to your first meetings will help you compare builders on the details that matter.
What builder credentials, licenses, insurance, references and portfolio should I check before signing a contract?
Ask for the builder’s exact business name and contractor license number, the classification of that license (residential, general, specialty), and how long the license has been active. Verify the license with your state or local licensing board yourself — don’t rely solely on a paper copy — and ask directly whether the company or the individual who will be supervising your job is the licensed party. Also ask how many years they’ve been building custom homes, how many comparable projects they’ve completed in the last three years, and whether there are any pending or past disciplinary actions, stop-work orders, or lien filings against them.
Request a current Certificate of Insurance (COI) showing general liability limits (a common minimum is $1,000,000 per occurrence with higher aggregate limits), workers’ compensation coverage for all employees, and a builder’s risk policy sized to the project value. Ask to be named as an additional insured during construction and to see the insurance carrier and policy expiration dates so you can verify coverage with the carrier. For larger projects, ask whether the builder can provide performance and payment bonds and how they handle subcontractor insurance and indemnity to protect you from liens or uninsured work.
Ask for three recent homeowner references from finished homes of similar size and scope, plus at least one supplier or trade partner you can call about payment and workmanship practices. Request addresses so you can drive by completed homes and ask permission for an on-site visit of a current job in progress — that’s where you’ll see site management, cleanup, and framing quality up close. Look for a portfolio that shows consistent work in the materials and details you want, and ask for the resumes or experience summaries of the project manager and lead superintendent who will run your job so you know the people, not just the company name.
Contract terms, warranties, payment schedule, dispute resolution and termination
What specific contract clauses should I insist on to protect my investment and avoid surprises? As a custom builder I always recommend the contract explicitly reference the drawings and specifications, define acceptance criteria (what “substantial completion” and “final completion” mean), include a schedule of values so every draw is tied to measurable work, and state who carries which insurance and indemnities; ask to see a sample contract before you commit so you can confirm those items are present. Watch for vague language like “work to owner’s satisfaction” without objective standards, open-ended allowances with no cap or replacement plan, or clauses that make you responsible for permits, fees, or corrections without a clear cost-share mechanism — those are common red flags that lead to disputes.
How should the payment schedule be structured and what practical protections prevent mechanics liens or payment disputes? I advise a payment schedule tied to milestones with a modest initial deposit, progress draws against a schedule of values, and a final retainage paid only after final inspections, receipt of all manufacturer warranties and certificates, and signed release of liens from subcontractors and suppliers; require conditional lien waivers at each pay application and a final unconditional waiver at completion. Consider holding the final 5–10% until all punch-list items are closed out and final lien waivers are delivered, and insist that any draw requests include invoices or lien waiver documentation from subs so you aren’t paying for work others haven’t secured or completed.
What warranties, dispute-resolution steps, and termination rights should I require before signing? From my experience you should get a written workmanship warranty (commonly 1 year) plus clear coverage for major systems and a structural warranty term (and require assignment of manufacturer warranties for appliances and systems); spell out response times and the remedy process (repair timeline, who provides parts/labor, and how warranty claims are escalated). For disputes, require a tiered process — notice and cure period, mandatory mediation, then arbitration (or court) with a designated venue — and for termination insist on a defined cure window, clear consequences if either party terminates (how deposits/retainers and in-progress subcontractor obligations are handled), and provisions that protect you if the builder becomes insolvent (performance bond or escrow options where practical).
What will be included in the detailed scope and specifications — plans, materials, finishes, allowances, and exclusions?
Ask the builder to give you a single, organized specifications packet that is referenced directly by the contract: a labeled finish schedule, a materials list with manufacturer and model numbers (or equivalent performance criteria), and the exact plan set that shows scope by room. As a builder, I expect homeowners to review product names, colors, sizes, installation methods (for example, tile layout pattern, hardwood direction and nail type, or cabinet construction details) — vague descriptions like “high-end” or “as selected” create ambiguity. Require that all items you care about be written down (lighting fixture cut sheets, plumbing fixture trim levels, paint brand and sheen, countertop edge profile) so there is no question at install time.
Get allowances and selections spelled out room-by-room and trade-by-trade, not as one lump sum. A practical allowance list will show the dollar amount, the intended quality level or example product, and the deadline for your selections so long-lead items can be ordered. Ask who is responsible for ordering and storing long-lead items and how sample approvals will be handled — we provide on-site mockups for things like cabinet stain and tile layout so you see the result before full installation. Insist the allowance list include unit measurements (per linear foot, per square foot, per fixture) so you can compare apples to apples when making choices.
Clarify exclusions up front: what the contract does not include (landscaping, window coverings, security systems, permit plan revisions, site remediation, builder-provided appliance upgrades, etc.) and what definitions of “finished” mean for each space. Request acceptance criteria and sign-off steps — require mockup approval for specialty finishes and a final walkthrough checklist tied to the specifications packet so installed items can be checked against the written spec. Ask for shop drawings and product data for custom items (cabinets, stair details, built-ins) and require that the builder deliver as-built drawings and maintenance instructions for the specific products used.
What will the construction timeline and key milestones be, who will handle permits and inspections, and how do you manage change orders?
Ask for a written, milestone-based schedule that breaks the build into discrete phases with target start and finish dates (permit approval, site work/foundation, framing, mechanical/plumbing/electrical rough-ins, insulation/drywall, interior finishes, punch list and final inspection). As an experienced builder I provide that schedule up front and update it weekly; insist the builder do the same so you can see if framing is late by a week or a long-lead item is delaying finishes. Also ask how much weather or permit float is built into the timeline — a realistic build in Denver often includes 1–3 weeks of buffer depending on season — and how the builder communicates schedule changes (email + updated schedule, weekly calls, site visits).
Clarify who is responsible for pulling permits and scheduling inspections and what inspections you should expect at each milestone: footing/foundation, under-slab (if applicable), framing, rough mechanical/electrical/plumbing, insulation, and final/CO. Request the permit number and copies of failed inspection notices and corrective actions; I always keep inspection records in the project file and will show you passed inspection sign-offs before moving to the next stage. Ask how the builder handles failed inspections — specifically who corrects the issue, expected turnaround, and whether the correction will alter the projected milestone dates.
Get the builder’s change-order procedure in writing: a standardized form that identifies the scope of the change, itemized cost or credit, and the schedule impact (days added or accelerated) before any work proceeds. I require signed approval for every change and provide a turnaround time for quotes (typically 48–72 hours for routine requests); ask what happens with emergency field changes and whether there are pre-authorized thresholds for small decisions. Finally, request a running change log that records approvals and cumulative time impacts so you can see how owner-directed changes or unforeseen site conditions are shifting the completion date.
Cost estimates, contingencies, allowances, financing and how change costs are handled
What should my initial cost estimate include and how accurate will it be? Ask the builder for a line‑item, trade‑by‑trade estimate that distinguishes hard costs (site work, foundation, framing, systems, finishes) from soft costs (permits, design fees, lender fees) and lists every allowance as a separate line with a realistic range. I recommend you insist allowances state whether they include installation, tax, and freight, and require the estimate to show the builder’s contract structure (fixed price, cost‑plus with fee, or guaranteed maximum price). From our experience the most useful budgets are percentage‑based for contingencies (typically 5–10% for routine custom builds, 10–15% for high‑finish or complex sites) and a clear note about what the contingency covers and who authorizes its use.
How will change orders be priced and approved during construction? Make the builder commit in writing to a change‑order workflow: all changes must be documented, priced with a labor/material breakdown, show any markup or administrative fee, include time impact, and be signed by both owner and builder before work proceeds. Ask for typical markup rates up front (we disclose our construction markup and any subcontractor pass‑throughs) and insist on a not‑to‑exceed cap on unknowns where possible; require the contract to state whether allowances are reconciled to actual costs and that overage beyond an allowance is itemized so you can see exactly what bumped the price.
What payment schedule, lien protections, and reporting will I get so I’m not surprised if costs rise? Insist on a draw schedule tied to measurable milestones (foundation complete, framing complete, drywall, substantial completion), conditional lien waivers for each draw, and periodic cost‑to‑complete reports showing committed costs, spent-to-date, and remaining contingency. If you’re using construction financing, ask how lender draws interact with change orders and whether the lender requires approval for extras — and request the builder notify you in writing when contingency usage reaches predefined thresholds (for example 50% used) so you can decide on scope reductions or additional funding before overruns become unavoidable.