COST
- The typical custom builder works on a margin of 10-15% of the sales price of the home. Because we have one of the oldest track records in Marion County and a sterling credit rating we would love to tell you that our purchasing power allows us to purchase items at a much lower cost than others. In reality, the building industry is a very competitive industry and most credit worthy builders pay about the same price for the goods and services that they purchase. If there is a cost variance it is typically because one builder is using inferior quality services or products. If different builders were bidding on the same home with the exact same finish schedule and the same level of quality the bids would probably have no more than a 1 to 2% variance. The problem is that this will never happen. Each builder will include different items in the home as standard and their subcontractors and suppliers will have different quality levels than the other builder, which make a very real difference in the price. This makes comparing builders prices almost impossible.
- The important point is to find a builder that you trust.
- There are numerous “profit centers” that some builders will take advantage of. Be sure that the price you are paying is the same price that your builder is paying on items such as light fixtures, cabinets, appliances as well as other allowance items.
CHANGE ORDERS
- Unfortunately no matter how much planning has been done, changes will occur. Most will be in the selections that you make. For example when you go to the tile showroom, you will see a lot of inlays, borders and designs that probably weren’t accounted for in the pricing. They will be selections that you want and will cost extra. The change order process should be clearly understood prior to contracting with your builder. All selection based changes should never be authorized unless both the builder and you have executed a signed change order. Most builders have a change order fee for simply processing the change order and a builder fee added to each change order. The best way to avoid change orders is to make your selections ahead of time. If you select your cabinets, tile, flooring, paint, interior trim etc. prior to estimating, your proposal will be very accurate. Most owners don’t have the time to do this ahead of time and must rely on their builder to include adequate allowances. The builder should let you know how much certain items will cost if overruns occur for example, the cost for additional depth per foot on your well, the cost per square foot for additional concrete etc.
COST PER SQUARE FOOT
- Cost per square foot is probably the most commonly asked question of builders. An accurate cost per square foot is impossible to give until the plan is decided upon, finishes are agreed to and the home site has been evaluated.
- Each and every home is different and the items included or not included make a major difference in the cost per square foot. There are probably over 10,000 variables that will impact the square footage cost due to home design, specifications, site conditions and much more.
- Typically as the square footage rises, (assuming the same specifications are used) the cost per square foot will be reduced. This is because the same home, built on the same lot with the same quality will have the same amount spent on the landscaping, impact fees, driveway, appliances, pool, garage, and many more items. As the square footage increases those common costs will be spread over more square footage, which will reduce the cost per square foot.
- The fact is that there are many areas where square footage can be added quite inexpensively. Your builder should be happy to point out these areas to you.
- Many builders offer a low price per square foot with minimal specifications for the home assuming that the buyer will upgrade to their expected quality level once the home has been started. This is not comfortable on either side of this type of “surprise”. These type builders normally use these items as “profit centers” at your expense. Since change orders are after the contract most are not covered under your mortgage and will require 100% to be paid out of pocket. That is another reason that complete and accurate specifications and allowances are included up front and not after the fact.
- If there is a major difference in another builder’s cost per square foot for the same home you can be sure that there is a difference in the quality, features and finishes included.
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COST CONSIDERATIONS
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