As a 30 year custom builder, I can give you a few hints.
First- understand that the relationship with a builder is not like that with a retail or short-term service purchase; you will be working together for an extended length of time. Nor is it based on an existing product you can see; this is usually a vision on paper. That changes the way you need to go about it.
I will say that picking a builder is the single most important decision you will make in building your house. Do it well, and most of your problems are solved. Do it poorly and you are in for a nightmare that you think may never end. The relationship quality is the key; this is sort of a short-term marriage.
Here's what you want-
(1) Absolutely impeccable character. That means the person's word and self-respect means more to them than a contract. They won't do a bad job, period. This is not the average builder; you will have to do your homework to find one.
How to know? Check not only references- start there, but if those are good, then check sources that should know the builder, such as city building inspection, lumber yards, etc. Also, watch what happens in the interview process. Does this person tell you what you want to hear, or tell you what they feel is possible? Do they listen to your ideas and address your questions directly, or conveniently brush them off? Do they accept responsibility for construction problems, or always assign it to someone else?
(2) Experience. Look at houses he has built before- get a list, knock on the doors, talk to the owners. In person, without the builder present.
(3) Sub-contractors. A good builder will have solid reliable subs, ones that have probably been with him for years. Believe me, they are very important. If he doesn't have a good sub-sontractor team, he will be hard pressed to perform well. He should be able to provide you with a sub list. Call them too.
(4) Look at the payment process he wants. Terms will vary with the builder, bank or mortgage company and other things, but know it's safe and fair before you sign.
(5) Consider the contract terms; legal review is a good idea. If you fail to pick correctly on the integrity issue- you are reliant on the contract. If you have to revert to enforcing the contract, you don't really have much leverage because goodwill is gone. Refer to item (1).
(6) Consider the price. One of the worst choices is to pay too little, it insures you will get a cut-rate job. This is not "you get what you pay for", that is a falsehood. I can give you less than your money's worth and stay in business forever. But- if I start giving you more than your money's worth, I lose money, and I will soon be out of business. Thus the price puts a ceiling on what you can get, but does not put a floor under it..
You need to give the builder enough money to do the job right and make a fair profit. That will keep the ceiling where it needs to be.
Make sure you have selected a builder of integrity and skill. That will keep the floor where it needs to be.
Last- Be fair. Find an expert you can trust; hire the expert- then let him do his job. This will keep your relationship professional and friendly, and the outcome will be a good home as well as a good experience.