1. Allowances that are too low
An allowance is a placeholder amount in the contract for something you haven’t picked yet, like tile, lighting or appliances. If the allowance is low, the contract price looks good and the final price doesn’t.
Protect yourself: ask each builder to list every allowance and what it buys at today’s prices. Compare allowances across bids, not just the totals. Make your biggest choices before you sign if you can.
2. Change orders
Every change after the contract is signed becomes a change order with its own price, often with a markup and sometimes more time. A few are normal. Dozens are how budgets break.
Protect yourself: the contract should require a written, priced change order signed by you before the work is done, and say how the builder’s fee applies to changes.
3. The schedule slips
Permits, weather, inspections, supply delays and slow decisions all add time. Every extra month means more interest on the construction loan, and maybe more rent.
Protect yourself: get a written schedule with milestones, ask what happens if the builder misses them, and make your decisions on time. Check the construction loan’s extension terms; see construction loans.
4. Unpaid subcontractors and liens
If the builder doesn’t pay a subcontractor or supplier, that company may be able to file a lien against your house, even though you paid the builder.
Protect yourself: require lien waivers from the builder and major subcontractors with every payment request, and make sure your lender checks title before each draw. See closing and title.
5. Surprises in the ground
Rock, groundwater, poor soil, an old oil tank or a buried foundation can all show up after demolition. On a teardown lot they are common.
Protect yourself: ask what site conditions the price assumes, get a soils test when the builder suggests one, and keep a contingency of 10% or more.
6. Vague plans and specs
If the drawings and specifications don’t say exactly what is included, two reasonable people can disagree later about what you paid for.
Protect yourself: the contract should attach the plans and a detailed specification, and list what is excluded. Use our quote checker to spot gaps.
7. Picking on price alone
The lowest bid is sometimes lowest because something is missing.
Protect yourself: compare scopes line by line, visit finished homes, call past clients, check the license, and look at the builder’s permit records and homeowner scorecard on its profile.
