It’s common to be concerned about keeping your custom home budget intact. With such a large investment, you want to be certain about how much you’re spending. If this sounds like you, learn about what mistakes can cause you to lose control of your budget and how to avoid them during your custom home building process.
Take Your Time During the Design Phase
This doesn’t mean your design process should drag on and on. Instead, this means you shouldn’t rush through the design phase in order to get to the construction phase as quickly as possible. Hurrying the design phase could result in mistakes and missed details that can add costs to your project later.
Why? An incredible amount of decisions are made before your custom home can reach the construction phase. It’s common to get decision fatigue and lose focus, or for life to cause distractions. To avoid this, gather as many design ideas and inspiration before your design meeting, or even your consultation. This way, your designer can zero in on the materials, colors, and features to show you and expedite the product choosing process and ward off fatigue.
When you rush the design phase and sign off on a design, you’re agreeing to what’s been planned. Once you reach the construction phase, you may realize you ended up with a product or design aspect that you didn’t intend, and to change your design or product means you’ll need to initiate a change order. This can accrue costs, possibly pushing you over budget.
Make Sure Your Designer and Builder Are Working Together
Having your Cincinnati builder and designer working together from the beginning has a lot of benefits. Communication channels will be established early on, creating less opportunity for miscommunication. Your designer can also get accurate up-to-date pricing on labor and materials, so your estimate will be realistic. You may also spend less time in the design phase with your builder involved because they will be able to validate the feasibility of the design before you sign off on it.
This is what makes the design-build method superior to the design-bid-build method. During the design-bid-build method, you’ll work with a designer or architect, receive bids from contractors, then have to deal with the shortcomings of a vague budget, the possibility of a poor professional relationship, and miscommunications. With design-build, your designer and builder are collaborating with you from the very beginning, you’ll have more control over your budget and design, you’ll have one point of contact, and one source of accountability if there is an issue.
Take a Closer Look at Your Contract
Once you have a line-by-line contract in hand, take your time to inspect every specification. Any vagueness leaves room for error. Every fee, labor charge, and product quantity and cost should be accounted for, making your cost and scope of work much more accurate than if those items are vague.
You will also want to keep an eye out for inconsistencies. Some issues you will want to look for are a detail in your plans that conflicts with one in your specifications, conflicting finish dates, or an incorrect payment schedule.
With any contract, particularly when a large investment is on the line, enlist a lawyer to look over the contents. Missing legal information could create a situation where you are liable for damages or injuries, your project not being completed to the specifications in your contract, additional costs, or a subpar warranty. Here are examples of the legal items that should be addressed in your contract:
- Actions to take if there is a conflict in the contract
- The condition of the project at completion
- Timing and extensions in the case of delays
- Changes to the scope of work
- Payment schedule
- Warranty information
- Contractor default provision
Choose a Fixed-Price Home Builder
Put simply, a fixed-price contract means you are going to pay the cost that is stated in your contract, unless you initiate a change order that changes your scope of work. If a mistake occurs on the side of the builder, the additional cost will come out of the contractor’s fee.
A cost-plus contract allows the contractor more discretion in the final cost. Your contract will state that the contractor will receive a certain percentage of the cost, which will increase as the price of your custom home increases. This can disincentivize your contractor from finding competitive pricing for products, labor, subcontractors, and any soft costs, like administration, safety, etc.
Your budget is better protected with a fixed-price contract. The amount on your contract is the amount you’ll pay. Your contractor will be incentivized to present a detailed contract with competitive pricing to ensure they won’t have to reduce their fee to complete a project.
Don’t Forget to Budget for These Important Custom Home Factors
After receiving your budget amount from a lender, don’t forget about the costs that also come with building a custom home that isn’t the home itself. Some small things that are forgotten when building a home are landscaping, furniture, smart home features, and a solar power system. If any of these will need to come out of your budget, be certain to subtract them from your overall budget before designing your custom home. Otherwise, you will be left to pay for these out of pocket, which isn’t always possible.
Hire an Honest and Experienced Design-Build Team
Read reviews, schedule interviews with prepared questions, learn about their process, and research their credentials. A trusted home builder won’t have anything to hide, will answer your questions, and address your concerns.
Chris Gorman Homes is a design-build team that serves the Cincinnati area. We value honesty, transparency, and trust, which is why completing a project within the budget and timeline is simply our standard practice. Your design goals and budget are our priorities during the entire process. If you’d like to learn more about Chris Gorman Homes, contact us to schedule a consultation.