Don’t compare apples to oranges.
You’ve found the home of your dreams and are ready to take it to bid. You do your homework, get references, review websites, walk through models, and talk with builders. Then, you share the same blueprint.
How is it then that when the bids come in, there are drastic differences between builders? Yes, some builders profit margins are greater than others. But, in most cases that is not the reason for the difference in the bids. As you begin reviewing your bid, make sure you are comparing apples to apples:
- Is one bid missing something? If your drawings and specifications included a covered deck, for example, did every builder include that in their bid? Make sure everything you asked for is included in all bids. There can be drastic differences in how one builder bids quotes aspects of the job.
- Not all products are created equal. Products such as windows can vary greatly in price. Make sure your specifications are very clear – and specific as to the finishes and products you want them to quote. If the quote is not specifying the specific product, ask the builder to ensure it’s a fair comparison.
- Are allowances similar? Builders will provide a specific allowance for you to choose finishes such as appliances, lighting fixtures and flooring. While some may keep the allowances down to keep the price down, if you exceed these amounts you will have to pay the difference later. Conversely, if the allowances are high and you spend less, you receive the difference back.
- Get quotes from at least three builders. When you do this, you will likely find that at least two come in close to same price and one will likely be higher/lower. And, that is okay. Let them know you are sending this out to be bid by multiple builders. Also, make sure you ask each of them to itemize their quotes so it’s easier for you to review/compare once you receive them all back.
So now that you’ve done your comparisons, which way do you go? That is a personal decision – and likely will include more than just the quote itself. Building is a long process and you need to make sure you are comfortable with the builder’s building process, communication style and approach. You also want to consider their longevity in the industry, their reputation, and their financial stability. In the end, be confident that the builder you choose can see your project through to completion.
In closing, make sure every builder is using the same drawings and specifications, compare all aspects of the quote, not just the bottom dollar. If something isn’t adding up, ask questions. Keep in mind that choosing the builder with the lowest quote is not always the best strategic move. While certainly not always the case, many who have chosen the lowest priced builder ended up disappointed, didn’t win. They end up paying more than quoted, the builders cut corners by using less than quality materials or subcontractors, or their overall expectations were simply not met. Building a home is one of the biggest investments a person will make. That is why investing time on the front end of the project to make the best decision for you and your family is so vital. Being better informed, will certainly make the home-building process more fulfilling in the end.