No two home building quotes are created equal so learning how to compare and contrast them is an important skill to nail down. Even if you’re reviewing one quote and not multiples, we still have some handy tips for you. They’ll help you stay on budget, improve communication with your builder, and ensure you’re comparing apples to apples.
- Some items in your quote will specify exactly what will be provided (for example, R50 blown-in cellulose insulation in the attic). Other items will be more open ended with allowance values. The allowances are the value of funds set aside for that item (such as appliances). In this case, you spend as you wish. If the final amount differs from the allowance, you either receive a reduction or increase in the price of your home.
- Ask yourself if the allowances are adequate for what you want in your new home. If you’re unsure, ask how the builder arrived at their number and how confident they are that it’s adequate.
- Is GST included in the price? Some builders will leave it out of the quote to make their price come in lower. If you don’t watch for this, it
could create an unpleasant surprise for you when the bill arrives!
- Is financing of the home included? Often times, Lexis Homes will finance the project from start to finish. If the quote doesn’t include that, you can expect to invest more time and money into financing the project — from interest to inspection costs.
Fixed price versus cost-plus contracts
- Who is on the hook if building costs come in higher than expected? Most fixed price quotes mean the builder is responsible for all actual costs other than the allowances (which the client controls). However, if you happen to have a quote from someone who is offering to build your home for something such as “cost + 10% management fee,” be aware that any cost miscalculations or overages will be your responsibility – not the builder’s.
- How detailed is the quote? Does it provide all of the information you need or are there grey areas or missing items? Does it include everything you asked for and discussed? If it’s not in the quote, don’t assume it’s included.
- Is each builder quoting on the same specifications? We were recently asked to quote on a set of drawings for a potential client. Our electrician was quoting on the plans and called to ask if we wanted to quote on our Lexis standards. The reason being was the electrician was quoting on the same plans for another potential builder and they were using entry-level specifications. Therefore, without a clear set of specifications to quote on, you can expect that the builders won’t be quoting on the same level of finishes, or they may revert to a lower level of finishing to be competitive with their price. One free service we offer at Lexis is helping you clarify what you want in your home by working together to create detailed, comprehensive specifications.
Know when to run
- When we hear about builders quoting based on square footage alone, Kenny Rogers’ The Gambler comes to mind. Specifically, the verse: “know when to walk away; know when to run.” If a builder provides you with a price-per-square-foot cost to build and does not take the time to delve into the details, run away…quickly! Your home is a big investment and the details matter. A reputable builder will take the time required to provide you with an accurate quote based on your wants and needs. To better understand why this kind of quote isn’t recommended, check out our guide, “Don’t Bust The Budget: 13 Tips to Keep Costs on Track“.