Building a Home on a Fixed Budget

When it comes to building your dream custom home, a big part of the process involves budgeting. Making sure that you stay within your fixed budget throughout the construction and design process can be daunting, but there are steps that you can take in order to set and maintain expectations early on with your contractor.

Why build a custom home on a fixed budget

For many home builders, the most important element to building their dream custom home is knowing the exact cost of the project from start to finish. From the framework to design details and everything in between, you have complete control over your budget when you choose to work with a fixed price builder. Setting boundaries on how much money the project will require becomes your responsibility, and the only way the cost will go up is if you sign a Work-Change Order which establishes a new fixed price.

How to build a home on a fixed budget

How exactly do you go about establishing a fixed budget with your builder? We’ve listed four simple steps that will help you feel secure about the price of your custom-built home.

  1. Creating a fixed budget – Determining exactly how much you’re willing to pay for a new custom home involves a lot of research. Knowing the average cost of land in your preferred neighborhood as well as the typical cost of a custom-built home in your city can help you set realistic expectations and goals. Speaking with a  reputable builder might give you a better sense of how much you can expect to pay. The overall cost of a home is usually dependent upon the floor plan that you choose, labor, materials, amenities, and design. Contemporary house being framed for constructionHere at A New Beginning, we offer a build-to-suit process that allows our builders to focus on your lifestyle needs and personal tastes. Understanding your expectations for a custom home allows us to better estimate overall costs and offer you an accurate look at what your budget will allow.
  2. Choosing a custom home builder – Once you’ve selected a custom home builder whom you feel can get the job done, you should send them your plans and specifications. The builders will then give your plans to subcontractors who will estimate costs for their end of the project. The general contractor will collect and combine bids from electrical, plumbing, etc. into a final fixed price bid which should give you a look at how much the homebuilder estimates the project will cost you. It’s important to compare and contrast estimates from each homebuilder that you’re interested in hiring in order to determine who can achieve what you’re looking for at the lowest price.
  3. Understanding a fixed price contract – The beauty of hiring a fixed price builder is that if during the construction of your custom home the budget is blown, your builder is responsible for absorbing the extra costs. However, the inverse is true when the final price is lower than your fixed budget. In this situation, you would be responsible for covering extra costs while your builder would get to keep the money as profit. It’s also important to remember that with a fixed price contract, you will not see the cost of materials, only the final price.
  4. Be open with your builder – Unfortunately, some home builders will deliberately undercut your budget just to make a profit. Doing the research beforehand and sitting down with your home builder is important. Your relationship will last for the next several months which means that you should select a builder that you trust. You should also maintain open communication at all times. While administrative oversight for both owner and contractor decreases with a fixed price budget, it’s important that you and your home builder have regular conversations regarding the progress of your dream home. This will ensure that both you and your contractor are focused on completing the project on time and on budget.

Custom builder meeting with clients in a coffee shopIf you’re looking to build your custom dream home on a fixed budget, contact us today to learn about the options available to you. Also be sure to ask about our build-to-suit process which allows us to design and build your new home based on your unique tastes, ideas, budget, and lifestyle.