We’ve all heard the term that prevention is better than cure right? It gets used a lot in the health industry, but we can also apply this theory to building your own home.
Some of the terms in the custom home building industry are quite confusing, and if you’re aiming to build your dream home without wasting materials or money, you should pay attention to what you hear, especially when talking about payment and pricing.
By paying attention early and being informed and educated on the process, you can avoid a lot of the pitfalls that clients face when it comes to this topic.
You might have heard the terms “price estimate” and “fixed price quote” being thrown around as you do your research about home renovation, and they are commonly mistaken as the same thing.
However, you should know that these two have their differences…
Differences Between “Fixed Price Quotation” and “Price Estimate”
When you say price estimate, it refers to a ballpark approximation of the price that you’ll pay for renovating or building your house. This is usually based on incomplete or uncertain information and at best is simply an educated guess.
In a price estimate, there won’t be any quotes from subcontractors, and it won’t give you the exact reflection of what you will pay in total.
The numbers someone will give you are usually based on the project’s difficulty, its size, past projects which are similar to what you want to build, and the quality of the builder’s services.
On the other hand, a fixed price quotation gives you complete information about what you need and how much you will pay to build your dream home and it includes the full scope of work needed without any variations.
Compared to a price estimate, a fixed price quote is more specific and more detailed. It comes with a documented scope of work, a breakdown of all the expenses, the final total, as well as the taxes you’ll pay.
The problem we commonly have with these two scenarios is that there are lots of custom builders who do free price estimates for clients and disguise them as fixed-price quotations.
They’ll give you an estimated amount of all the expenses, and add some provisional sums and PC items, as quickly as possible, so they can immediately sign a building contract with you.
Now I know this Sounds like a trick, but it’s actually not!
They do this because it’s free and it doesn’t take much time. The truth is, getting you a fixed-price quotation takes a lot of time, effort, and energy, and no one’s going to want to be doing this for free.
This is why as professional builders, we recommend you get a paid fixed-price quote rather than taking advantage of the free ones. That’s right, we recommend paying for a quote from a builder if you want a figure that’s accurate for your project.
Why Should You Pay For a Fixed Price Quotation?
Getting things for free sounds good right, but how sure are you that you’re getting a guaranteed quality service?
If you were looking at two cars, one was free, and the other was 40 grand which would you take? You’d probably have some questions about the free one and wonder what’s wrong with it right?
So when it comes to building your dream home, are you willing to take the risk of unexpected expenses? Are you willing to risk your budget and have the possibility that it might be completely unaffordable when it’s too late to go back?
If you pay for a fixed price quote, it means that you’re acquiring a professional service.
With this, you allow the builder to spend enough time and go through your project carefully.
They can collect all the documents and information they need to provide you with an accurate price, that’s custom and relevant to your build. Not a guess based on someone else’s build they did in the past.
Yes, the price you see on the fixed price quote looks more expensive than the estimated one, but you might end up paying the same cost when you choose to acquire a free estimate.
When you go for a free estimate (disguised as a fixed price quote), chances are, your project costs will have lots of variations and you’ll end up paying what it was always going to cost anyway, resulting in a broken relationship with your builder.
To make it even worse, the builder could go bankrupt because they didn’t see that they’re not making any money, leading to an abandoned project— which could be your dream house if you went with a free price estimate.
Not convinced yet? Take a look at the benefits of a legit fixed-price quotation.
Benefits of a Paid Fixed-price Quotation
It will not be full of provisional sums or PC items.
With a fixed price quote, you can set aside the exact budget needed for your project to be completed. You won’t be surprised by the unexpected amounts during the building process which results in a hassle-free and much smoother build.
Just imagine being bombarded with unexpected costs! No doubt that’s going to stress anyone out which isn’t what you want when you’re engaged in a lengthy process like building a home.
You’ll have specific expectations.
What you see is what you get if you pay for a fixed-price quote.
You’ll know exactly what’s permissible for your project and what’s not. With this, your expectations are set and you’ll avoid disappointments. Statistics have proven that builders who charge for a quote result in you as the client having a much greater chance of actually having your project built.
Some Reminders Before Getting Your Fixed Price Quote
Now, that you’ve got enough reasons to get a paid fixed-price quote that shouldn’t mean that you’ll automatically accept any custom home builder that will come to you and offer a quote.
You’ve worked hard for that money and you want your dream home or project to be a success, so please be very careful in choosing the builder you’ll entrust your project with.
Paying for a quote is just one step.
Choose a builder who has proof of success with past projects. Someone you can actually rely on and trust that that they’re going to come through on their word.
So, you might be asking, “How will I guarantee that a builder is the right one for me?”.
Aside from reading our previous blog on How to Choose the Right Custom Home Builder, remember that a professional builder will:
- Come with a fixed price guarantee, a project schedule, and all of the specific details you need to know with regards to your project.
- They’ll go through the systems they have in place throughout the build.
- You will get an actual quote on time and they will communicate with you often.
Our Final Word
Building a new home and planning a renovation is no joke, so the last thing you want is to partner up with builders who aren’t committed to helping you and end up giving you nothing but stress and hassles halfway through your project. Remember, at the end of the day, the success of your dream home project will still depend on the decisions you make today.
No matter what you do, decide to work with experts.
At CKS Projects, we’re experts in luxury custom-built new homes. This is what we do.
Schedule a meeting today so we can start your dream home.
Building a luxury home can be stressful and we want to help you have a more enjoyable experience. We created a FREE guide you can follow to avoid costly mistakes and ensure your dream home gets built exactly how you want it.
Just click on the link below to download 7 THINGS YOU MUST KNOW BEFORE DESIGNING YOUR NEW HOME.