Cost is always a factor that is considered when selecting the lot, the home design, the architect, and the builder. But, as we’ve mentioned before, it is just one aspect of the overall factors considered. Yet, so many times, we see clients make the big mistake of making cost the primary selection tool. In the home building industry, making a decision primarily based on cost can be a very dangerous selection tool. This article is dedicated to discussing the complexities of price and how you can ensure you’re making an apples to apples comparison. As there are many different variables to cover, this is a general view of each topic. For more details check out our articles that go into each point more in-depth.
1. Apples to Apples
You will see the concept of ‘Apples to Apples’ repeated throughout our site because, far too many times, we’ve seen homeowners make decisions 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. We discuss this concept in detail in Chapter 17. In simple terms, this means that when you receive two budgets that vary greatly, make sure you are looking at the details. Are they both using the same quality of materials? Have they included everything that is needed for a build? Are they ordering enough of everything and paying attention to the details?
2. Too Good to be True
The saying “It’s Too Good to be True” is worth its weight in gold. If one builder’s price is 5-8% different than another’s – it’s too good to be true or there is something wrong. The reality is that if all things are equal (and this is a BIG if), each builder’s pricing structure should be relatively close. As we will discuss later, you can avoid a lot of issues, by contracting an architect or builder to prepare a complete set of detailed design specifications.
When detailed specifications aren’t provided, some builders will try to cut corners on price, just to get the business and make it up later. They may provide vague specifications or offer to ‘do it for a better price.’ In most of these cases, the builder cannot finish the project, goes out of business, or the homeowner ends up struggling to find the cash to make up the difference. This reality often hits somewhere in the middle of the construction process when you have few options – either during selections, half-way through the construction process, etc. When your builder tells you that everything is included in their price, be cautious.
3. Vague Specifications
When obtaining or reviewing the pricing and specifications, you want to be extremely careful about any builder package that has vague or general specifications. This is why we reiterate throughout our site, that you should work with an architect or builder to create detailed design specifications. It is virtually impossible to compare apples to apples or stay within a budget when specifications have not been clearly outlined. Vague specifications leave a lot of room for interpretation, cost variation, and substitution (often with lower quality products). Whether you’re working with an architect, or directly with the builder, it is critical to have detailed specifications so that you have a clear understanding of exactly what type of quality, materials, and finishes you will have in your home. This process requires considerable time and resources but saves the homeowner, the builder, and the architect from uncertainty and confusion. You will likely pay either the architect or the builder a design fee to prepare a detailed list of specifications.
4. Insufficient Allowances
One of the most common ways that an unscrupulous builder will present a price that is too good to be true, is to knowingly or unknowingly include allowances that are insufficient to complete your home as expected. Of course, you won’t realize this until you are knee-deep in the project and the change orders start coming through.
The allowances provided by your builder should be based on the discussions you’ve had and typically aligned with the finish and specifications throughout the remainder of the home unless purposefully specified otherwise. You should have a good sense of what your allowances will buy. Vague specifications open the door wide for insufficient allowances, so if you notice this occurring, be very wary.
5. Value Engineering
Often, our clients come to us, looking for an architect to assist them with the design of the home and we have a wealth of resources to help match them with an architect who is capable of serving their needs. Other times, a client has already met with an architect to draft the original designs. We work with either scenario, but it’s important for a client to be aware of the fact that an architect is not typically responsible for knowing current material costs and/or adhering to the final budget. Therefore, the designs may need to be reviewed and/or value-engineered to ensure that the home and specifications align with the customer’s budget.
At Mueller Homes, we stand behind our reputation as an outstanding luxury custom home builder. We belong to industry associations like the NAHB and the MBIA, which uphold industry standards and best practices. 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. In our ongoing blog series, we’ll continue to provide you insight and experience we’ve gathered from over 40 years of experience. Stay tuned!
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.