This installment in our series discusses finalizing home costs and contract preparation.
You’ve worked with your builder to come up with a home design that you’re excited about. You’ve made your product selections, and you can see the finished home in your mind’s eye. Most of the puzzle pieces are falling into place, however one more important step needs to be finalized before you begin construction. You need to agree on a price for your home, and sign a contract.
Hopefully early on in the process, you’ve met with your lending institution and decided on how much you’ll be able to spend on your home. That information should have driven many of the discussions with your builder through this point. Now you just need to put a final number to it and prepare the paperwork.
Each builder may handle this process a bit differently, but one way that might give you some peace of mind, especially if you’re on a strict budget, is to establish a “firm-bid” price from your builder. A firm-bid price is exactly what it sounds like….the builder prepares a very detailed contract, listing all the products, labor, and processes that will be used in your home construction, and agrees to adhere to that price.
While the contract is a legally binding document, it is only a snapshot of what you’ve agreed to, as of the day you signed it. If you were thoughtful during the product selection phase, you probably won't make many changes once construction has begun. If, however, you decide that you’d rather have hardwood floors instead of tile…or you want gold doorknobs instead of silver, it's perfectly all right to make those changes, but remember that will cause the price of your home to move up or down. You and your builder need to agree on what changes you'll be making, and the cost of the change, through a written change-order. Responsible builders are very diligent about change-order preparation. They know that reducing the potential for misunderstandings with their customers is the best way to keep the whole process less stressful and more enjoyable…for both parties.
Once your contract is signed, and a down-payment is received, the builder will go ahead and order materials and begin the first phases of the home construction. More on that in the next chapter!
“The Main Point” – Your contract should spell out everything that your builder has agreed to do for you, and at what cost. It should be very detailed, but not confusing. Remember, any changes you make will be an adjustment to the signed contract. That’s OK, just make sure your communication lines are open, and the paper trail is clear. The number one goal is to avoid unpleasant surprises!