Once you know how much you are comfortable investing in a new home, the next concern is sticking to the budget. Depending on who you choose as a builder, doing so can be a lot more difficult than you’d think.
The two types of building contracts
When it comes to putting a home budget together, you have to consider the type of builder that you’re hiring. There are two types of builders: cost-plus and fixed price.
A cost-plus builder charges you the cost of the materials and labor, plus a fee. The problem with cost-plus builder is that the price isn’t set in stone. If more materials are needed or something gets messed up, that extra cost is on you! Come to think of it, there isn’t much of an incentive for a cost-plus builder to care about keeping you under budget!
A fixed price builder, like Turner & Son Homes, agrees on a price with you once the design is approved, and that price doesn’t change, period. We eat any extra cost.
Why a fixed price builder is the right decision for your budget
There’s a lot of peace of mind knowing that the price isn’t going to change once you’ve agreed to it. Going with a cost-plus builder means that there is a real chance you’ll go over budget. Now you’re talking about a potential financial disaster, since the bank has to decide whether or not to lend you more money to finish the home. Fixed-price is simply the right choice if sticking to your budget is important.
How to get the most out of your budget
Our goal in designing your home is to get the most of what you want into your budget. We help you decide how much square footage you really need, and find savings to make room for more of the amenities and features that you’d like to have. While everyone naturally holds back a bit when they’re giving their budget, we encourage you to be up-front about what you want to spend. Many times we come in under-budget with our price, leaving you room to add on the extras you’d been thinking of or to keep that extra money in your pocket.
Recent Blog Articles on Budgeting
- What does “custom” really mean?
- The key to building your home on time and within your budget
- Beware of the bid
- Your budget may be your undoing
- Focus on the problem, not the solution