Nobody wants their new home build to go over budget.
You hire a builder, they quote you a price, they build the house, final bill comes in… Notwithstanding new items that you chose to add or upgrade along the way, the final cost should be the same as the contract price.
Should be. A home-builder, after all, does this for a living. You, the client, have likely never priced a home in your life and you’re trusting your builder to do it for you- accurately and without surprises.
But we’ve all heard the stories. You have that friend, cousin, workmate that built a house and ended up paying way more than they were quoted. This happens all of the time and it shouldn’t… going over budget is avoidable and should be a focus of any solid home builder worth working with.
If you’re about to get into a contract with a builder, make sure that you look for the following signs to ensure that your home will cost what you’re builder says that it will.
You’ve done your homework & met with multiple builders. You’ve probably narrowed it down to 3 or 4 builders that you like/trust and had them price the home. So where did the pricing come in?
I’m going to let you in on an industry secret… if the builders priced the exact same quality of materials and finishes, their prices should be extremely close. Extremely. After all, they’re sourcing material and labor from the same region.
If you’re finding that one builder is significantly cheaper than the others, chances are very good that they are planning on using cheaper materials. There’s nothing wrong with that, you think, until you find out that your kitchen allowance will not cover that “painted, cabinets-to-the-ceiling” dream you’ve been coveting on Houzz.
You’re planning 10 foot ceilings, a double-sided fireplace and custom woodwork throughout. Is your builder thinking 8 foot ceilings, non-existent fireplace and mini-baseboards? Communication is key and it is impossible for the builder to price something that you’ve never discussed.
Prior to pricing your plan, your builder should be asking you extremely detailed questions about the finish that you want in the home. If they don’t include these items when pricing upfront, these items will become upgrades and will drive you over budget in no-time at all.
Maybe they told you that you will get a more custom experience because you’re 1 of 3 projects… Perhaps, the owner of the company himself will be able to be on the job-site every day… Heck, he may even do the finish work himself! Great…. or, is it?
First, there’s buying power… Obviously, Wal*Mart buys better than Joe’s Convenience. Shocker. Similarly, home-builders are rewarded by vendors based on volume. The builder who builds 3 homes a year is simply not getting the same pricing as the builder who builds 50.
Next comes the issue of limited experience. 20 years of home-building experience, building 3 homes/year = 60 homes built. 10 years experience at 50 homes/year= 500 homes built. The builder that is more active is much more likely to be current on trends and customer wants (aka. more likely to know that you want an open-concept floor plan instead of the halls & walls of yesteryear).
Whether your builder is a relative stranger or your second cousin, you need to get a detailed list of what’s included in a quoted price. This is not negotiable. Not requiring this level of detail of your builder is giving up too much control and allows the builder to decide what is (or isn’t) included on whim.
Having a detailed list of inclusions creates accountability. Always ensure that the inclusions are added to your contract, making them part of a legally binding document.
If your home builder is demonstrating these signs, talk to him about budget & share your concerns. Cross-reference your wishlist with the pricing specs. Ask for past references and find out what their experience was like. Only when your builder demonstrates to you that these items are taken care of, should you move forward with a contract.
If you have any questions about staying on budget throughout your build, shoot us an email to firstname.lastname@example.org. We’d be happy to help out!