There’s one simple answer to sticking to your budget while building: communication, communication, communication. Here are a few ways to keep lines of communication open to ensure you don’t go over your building budget.
Use a Spec Sheet
A spec sheet is a document that outlines every detail of the new home you’re building, from the type of windows right down to the dimensions of the lumber. This document will vary based on your builder but should be painstakingly detailed and is usually 6 or more pages long. Consider it a red flag if your builder can’t provide this prior to signing a purchase agreement. Building a home is a large undertaking with lots of moving parts; having as many of these details nailed down as possible will save you more than a few headaches throughout the process. Also look for a list of allowances in your spec sheet. This will give you a clear picture of what types of amenities and materials that will be included in your new build as well as a price range to stick within while shopping for said materials. Common allowance items include: appliance package, cabinets, flooring, lighting, and landscaping.
The Importance of Communication
It’s not unusual or unreasonable to meet with a prospective builder multiple times prior to signing a purchase agreement and hiring them to build your new home. If you change your mind about a detail of the new home, it’s important to communicate that with your Realtor and builder immediately. Changes in the construction process can cause a chain reaction of delays that you may not be aware of and even worse it might be too late to make a specific change if you stall. Always use written communication for any changes. This will help to prevent confusion and save you some time if a dispute arises.
Questions to Ask
- How much are allowances?
- What are some common upgrades and pricing for them?
- Who will carry the construction loan?
- Who are the sub-contractors?
- Ask for a quote before agreeing to an upgrade or change.
- Where does the builder typically get their interior finishes?
Making Material Selections
When you begin the process of choosing interior and exterior finishes it’s important to reference the allowances in the spec sheet the builder provided to you. Also bring your floor plan when you’re out shopping. Sales reps should be able to tell you which sections to stay in (and which to stay away from) by looking at your floor plan and budget. Ask the builder if they’ll break down the allowances into price per square foot, especially for things like tile and flooring, to really make things easier for you.
Sticking to your budget is your largest job after you’ve signed a purchase agreement but there’s more to going over budget than choosing countertops that are way out of the agreed upon allowance. When you make changes to the plans or finishes after the purchase agreement has been agreed upon, you need to expect changes to the price as well. Materials, schedules, and labor costs all come into play and it’s important to first ask for a quote for the change and then agree to any changes in written form and have all parties sign off on it.
To further make things crystal clear, make sure your builder provides you with a running total of the final purchase price throughout the process so there are no surprises at the end.