Comparing Custom Home Builders and Pricing
Comparing Custom Home Builders and Pricing
Are you beginning the journey of building a custom home, interviewing custom home builders, and selecting a builder? One of the biggest challenges to selecting the builder with whom you will work, is the concept of Comparing Custom Home Builders and Pricing to ensure you’re comparing ‘Apples to Apples.’ In this article, we discuss How to Compare Custom Home Builders and Pricing Apples to Apples.
For over 30 years, and far too often, we’ve seen homeowners make decisions about their custom home based on pricing or specifications that were not apples to apples. The easiest way to ensure you are comparing apples to apples is to begin with a detailed set of specifications. Detailed specifications ensure that you are getting the quality, finish and type of product you expect and also help ensure that you are comparing apples to apples. Detailed specifications aren’t free. It takes time to determine what the best product is for the job, what your preferences are, and where you can value-engineer a project. So, most builders or architects will charge a design fee to create a detailed set of specifications. Some homeowners do not believe this is necessary and proceed without detailed specifications. Here is an example that illustrates the importance of Comparing Custom Home Builders and Pricing:
Jim and Linda were determined to build a house with a budget of $1.5M. They met with an architect who drew up their dream home with all of the designs they desired. Although a preliminary budget was discussed with the architect, the specifications were vague and the architect advised them that detailed specifications would need to developed and reviewed with the builder.
We met with Jim and Linda and reviewed their drawings. Since they had not spent the time or money to create a detailed set of specifications with the architect, we provided a price that included many of the materials and specifications we felt would be commonly used for similarly styled homes and budgets, while reiterating the importance of detailed specifications for each builder. Our estimate was that the home would cost approximately $1.85M to build. Meanwhile, they received a bid from another builder for $1.55M and wanted to know why there was such a price difference – a legitimate question.
We offered to review the specifications, where it was determined that our bid included an allowance for commercial-grade appliances such as Thermador or Wolf whereas the other builder used a mid-level GE line and this example of “incomparable allowances and specifications” was prevalent through all the other pricing and selections, causing an obvious discrepancy in price, value and overall quality.
Now, while it was not a problem to use GE appliances if that is what the client preferred, it certainly did not provide an apples to apples comparison. Meanwhile, the client expected upper-end selections, so this assumption and inconsistency should have been a big red flag. Instead, they approached the other builder to discuss the discrepancies. The builder indicated that he could provide all of the higher-end selections for the same price. So, we shook hands with the client and parted ways, amicably of course.
While persistence can be a good thing, it does not override the theory that ‘you get what you pay for.’ They ultimately signed a contract with the builder for the $1.55M price they had in mind. Unfortunately, that was not the end of the story. About eight months into their project, and after $1M had been drawn down from their construction loan, the house was only about half-way finished. By this time, they realized that there was no way the house could be completed for the remaining $550,000. The selected builder (who coincidentally only had about 5 years of experience) informed them that he could not continue the project without additional funds. The bank would not release any more funds until the previous phases had been completed. So, the entire project, half-way done, came to a complete stand-still. This is a no-win situation.
Over the years, we’ve seen our fair share of situations just like this. Comparing Custom Home Builders and Pricing is not a simple matter. As a matter of fact, it’s one of the main reasons we wrote a book on the subject – with a goal to educate consumers on the home building process. We believe that an educated consumer will make the best decision. Our goal is that, armed with this information and knowledge, you will be able to make wise decisions that provide an experience that you fondly reflect on for years to come.
If you are thinking about building your once-in-a-lifetime custom luxury home, be sure to download our FREE ebook: “Designing & Building Your Custom Dream Home: How to Create an Experience You’ll Love to Remember” or visit our website at MuellerHomes.com
Ready to get started? Contact Mueller Homes today, and let’s talk!