Evaluating Prices

Many builders will be able to give you a rough estimate in a short amount of time based on a set of plans or a rough sketch. These estimates are generally based on a builder’s overall experience and some rough calculations. Some builders use a price per square foot calculation while others use estimating software to create a set of basic specifications and an estimate that might be closer to a fixed price.

If you want to get a fixed price, you will need to get a set of specifications. Specifications define all or most of the cost variables for a new home. A fixed price will normally include some allowances for things that you have not selected, such as flooring or cabinetry.

It may be useful to ask a builder to develop a set of specifications for your project (normally for a reasonable fee) so that you can get a number of prices based on the same set of specifications.

When you seek a price, have the same set of plans been shared with each builder? It is important that each builder is pricing the same job. It is not uncommon that when you receive one price you might seek prices from different builders after making small changes or additions that you feel are not significant. However, even small changes can have a big impact on a project’s price.

For example, to accommodate a slightly larger room, the floor system or truss structure may need to become far more complex to accommodate wider spans. The relocation of a staircase may require engineered walls and foundations. Or a slightly higher exterior grade may require foundation walls to be much thicker. There are lots of ways that seemingly small changes can have major impacts on the price of a home.

Builders will normally price homes based on a set of standard fixtures and finishes that they typically use. However, what one builder typically uses might not be the same as what another builder typically uses.

For example, some builders may choose cheaper doorknobs, hinges or bifold doors from big-box stores. These typically cost far less than similar items that come from specialized suppliers. However, you may find the overall quality and longevity of these cheaper fittings to be far lower.

Perhaps the most common way builders lower an estimated price is through undervaluing allowance items. You will want to pay close attention to the allowances for floor coverings and kitchen cabinets and countertops. Flooring and cabinets are expensive. The difference between a flat-packed kitchen and a custom-built kitchen can be significant. Tile is another item that can range in price. You might like a tile that is a few times more expensive than what has been budgeted for. Be sure to evaluate the allowances and ensure that they will reasonably cover what you are looking for. Remember, if the price is too good to be true, it probably is.

Some builders specify that you must get fixtures from their preferred suppliers. This could be a sign that the builder receives a commission from the supplier for the fixtures you purchase. Although this practice might be less common now, it is something you should look out for. You may be paying more than you have to. Look for estimates that allow you to select fixtures from any supplier.

No matter where you shop, ensure that you source fittings and fixtures from professional and reputable suppliers who provide warranties for the products that they sell.