Are you afraid of sharing your true budget because you fear your builder will only increase their margins the more you’re willing to spend?
You might’ve been told that you shouldn’t reveal your true budget to a builder because, even if they can do it for less, they’ll always take your figure and make up the difference by increasing their margin or adding items that you don’t actually need.
However, this is a myth because market forces keep builders honest at this stage of the process so you needn’t worry about being overcharged.
Truth is, at this stage of the process, you are not negotiating the price of your contract, you are simply attempting to establish what can be built for your budget… And the only way to do that is by being open and honest about your budget with a professional builder before the design is started.
Building a relationship with your builder from the start will help you gain confidence that you’re getting what you pay for and that disclosing your true budget won’t disadvantage you.
Trust Is Crucial When Choosing Your Builder
A recent study by Lifestory Research found that 77% of new construction buyers consider trust as a crucial factor in judging the merit of a home builder. So if you feel like you can’t trust your builder, you’re probably talking to the wrong one…
Average builders just want to hurry you through the process and get you to sign the dotted line. They don’t work with architects to make sure the designs created can actually be built without blowing your budget. Instead, they’ll give you a lowball quote on your architect’s designs and they won’t go through the necessary processes to make sure all of the plans for your new home are complete and accurate.
On the other hand, professional builders won’t sign a building contract with you until the plans for your new home are 100% complete. By working with an architect and completing a range of pre-start checklists, they make sure every last detail is included from the beginning. Because of this, professional builders are able to provide you with a fixed price contract so you can trust that the price you sign is the price you pay.
Without this, you’ll likely end up with a contract riddled with issues. Leaving you to deal with thousands of dollars in additional costs that could have been avoided.
There are a few ways you avoid unexpected costs during construction, here are some of my top tips.
Don’t Fall For The Lowest Price
First, don’t fall for the builder with the lowest price. While the lower price might look appealing, it should be a cause for concern.
When you’re comparing a bunch of quotes from different builders it’s hard to see where the value is and simply choosing the lowest price seems like the easy option. But when you do this, you’ll only end up blowing your budget trying to make up for what the builder has missed. Or worse, you’ll be left with a home that is not what you expected.
Therefore, it’s important to dig deeper and not just look at the price… Because the builder with the lowest price has usually made expensive mistakes or missed key elements completely. So take your time and go through your quote with a fine-tooth comb to make sure everything you requested has been accounted for.
And keep an eye out for allowances! If a builder has set very low allowances for any aspect of your build, you’ll be the one that has to pay the difference later down the track. A professional builder will have done their due diligence and provided you with a fixed price for the complete project before you sign anything.
Find Out What Is And Isn’t Included
Next, get clear on your builder’s scope of work and make sure you understand everything that is and isn’t included. If your builder is vague about this, or reluctant to provide this information, consider that a red flag.
A professional builder will have complete plans created so they will be able to tell you exactly when particular stages will commence, and even provide job schedules to lay the entire process out for you. Their fixed price contracts will also include an itemized list of every inclusion so there is no confusion on what will and won’t be a part of your finished home. And remember, completed plans are more than just the architect’s drawings. They should include the minor details too, like complete drawings of your kitchen layout, the exact tiles that will be installed in your bathroom, the materials used for countertops and everything in between.
Your Perception Of Quality
Finally, make sure you and your builder are clear about your expectations of quality finishes. Quality is down to perception – for example, in the car industry some people might consider a Mercedes as their idea of high quality where others think of a Bentley. If you don’t communicate your perception of quality to your builder, you could end up disappointed with the finished product.
So, it doesn’t matter if you are building your first home or if you have built many times before… Deciding to build a new home can be very overwhelming. The tips I’ve covered here are just a sample of the information I can share with you to ensure you are able to confidently get started on the design process.
You can learn more in the downloadable quick guide I have put together, The 7 Things You Must Know Before Designing Your New Home. It’s completely free, and it will help you stay on budget and avoid those builders who hit you with hidden charges.