If you’re ready to get your house built or rebuilt, the first thing you’ll do is find qualified home builders who can help you. So, you go out there and search for the most reputable companies in town. Once you have a shortlist, you proceed with asking for quotes from them. Now that’s where it all gets difficult.
No two home builders are ever alike. You might be able to tell the difference with the quote that they sent you. The big question is, why can two companies offer you very different quotes for the same type of service? That’s what we’re about to find out.
How Home Builders Do Costing
There are at least two ways on how home builder’s price their services, and they are generally termed as cost plus and fixed price. For those who never have built homes before, they’re probably wondering which between the two the better one to pick is. To arrive at the right choice, it’s essential that you know exactly what each entail.
What is Fixed Price?
Home builders that use fixed pricing in their quotes will factor in all the costs accrued when building homes. This includes labor, materials, profit, and overhead costs if any. Once they have determined all of that, they’ll give you a quote showing the project’s total cost. It’s the agreed price that you pay once your home is fully built.
Should You Choose Fixed Price?
There are advantages and disadvantages to this method and the major advantage would be the fact that you get protected from cost inflation. In theory, the builder should stick to their quote start to finish. If for some reason, the budget for your project goes up, it’s the home builders that should absorb that.
The disadvantage is the reverse of that. If the costs go down, then the builders are going to get more profit as the savings aren’t likely to be passed over to you. Also, you’re bound to see only the final cost of the project, which means there won’t be any breakdowns for you check or double check. If you’re stuck with unscrupulous home builders, what they’ll do is give you a quote using the costs of top materials then build your home with substandard ones.
What is Cost-Plus?
With the cost-plus method, the builder will list all the costs and the profit for the project. This is a more complex method of pricing, but a lot of people prefer it. Here, the cost you’re going to pay may increase or decrease depending on a lot of factors. To know more about cost-plus, it is strongly recommended that you consult with the expert home builders Hornchurch. They should be able to tell you more about it.
Should You Choose Cost Plus?
But its biggest advantage is transparency. You can see exactly how the builder is charging you. You’ll know if they’re adding too many profits. However, the disadvantage is poor estimates. If the builder is wrong with their estimate, then you’ll end up messing your budget for your home.