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Based on your home floor plan and the list of amenities to be included, we will prepare a detailed quote for your review. We can also provide you with pricing for "wish list" items.
Many custom builders only provide a rough estimate or simply give a ballpark price per square foot. This type of pricing and a Cost Plus contract allows for very low preliminary pricing with lots of financial risk for you during construction.
Our quote is used to write a Fixed Price contract with the agreed upon and detailed Specifications and Allowances. Because the price and project are agreed upon up front, there are no unwelcome surprises as your home is being built. Of course you can still make changes to customize your home during the Interior Selection process through Change Orders. It's your home and you are in control of your budget.
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Cost Plus vs. Fixed Plus in Custom New Homes
Posted on February 24, 2010 by nhsblog_admin
When you’re looking at buying a new home, one of the less exciting things you’ll have to navigate is the contract. If you’re working with custom home builders, this process will be a little different than if you were to buy a home through the existing real estate listings. With custom home builders, you’ll need to determine whether you’re being presented with a “cost-plus” contract or one that has a fixed price. There are significant differences between the two new home contracts.
In the cost-plus model, the contractor assesses a fee for labor and materials and charges for all expenses up to a designated limit. This option is best for those for whom cost is not of major concern, as unexpected expenses can put the buyer at risk. One of the advantages to this model is that it tends to give the new home buyer more control over the project.
Fixed rate contracts usually offer more protection for the buyer, as the new home builder is required to stay within a determined budget. In the event that the cost of building a new home exceeds that budget, the builder must absorb that cost, rather than pass it onto the new home buyer. The advantage to this model is that the new home buyer knows exactly what the construction is going to cost right from the beginning. On the other hand, if the building materials end up costing less than anticipated, or if construction is completed more quickly than anticipated, the home buyer could end up paying more than necessary.
In the end, both new home contract options present some risk to the home buyer. Before choosing which one is right for you, decide how much control you want to have over the construction and whether or not you’re able to be flexible about costs.
