Home builder question

[tpack]

Is it better to get a solid bid up front on a new home or do it for cost plus. I have had one contractor that I talked to tell me that he would do it for cost plus 12%. I really want to use him because he is my cousin and I trust his work. He has been building custom homes for over 30 years.

[tigerscowboy]

With a solid contract you know your final price before the project even begins (with the exception of change orders).

A cost plus can be great, but it's not for everybody. Remember that cost plus is cost plus everything. If the project experiences take off errors, material theft, fines, or delays; those will increase your final closing cost.

As a builder, we like cost plus on projects $800k-2mil. We don't offer it on any project under $600k.

[tps7742]

It sounds like from your statements you have already chosen one If he has the qualities you say I would jump on it that is if you are going the cost plus route.

[Cookiemonster1]

Cost plus 12% is pretty good. If someone bids the house they have to charge more for unforseen issues. If those issues arise they have enough money to cover them if they don't arise they pad their pocket with the extra money. One word of advice is to work with the designer to get everything on the plans exactly as you want it from cabinets to low voltage wiring and it will help with issues. Everytime you make changes to the plans expect to pay a lot and cause other issues.
One thing you need to remember is they are still trying to build the perfect house. You are gunna have issues come up so just find the best ways to remedy them for all parties.

[dhall]

I do all of my homes for a builder fee only.

[Briar Friar]

My old man once told me..." Never work for friends or family. Its a great way to **** up a relationship." You might think about employing your cousin as a consultant. Another set of objective eyes could go a long way to prevent goofy designs and design errors that Ive seen from custom homes.

IMHO...Cost plus is writing an open ended check...which is cool if youve the money to burn. Id bid it out or at least figure a cost analysis prior to signing a contract.

Also check out the magazine "Fine Homebuilding". They recently had a cover article covering "The hidden costs of homebuilding".

Good luck.

[8mpg]

There is a great way they do it in commercial and sometimes builders are up for it...

Cost plus fee with a maximum out of pocket. You split the savings.

Its kind of both of what you are talking about. Its cost plus his fee...say 10% but he gives you a maximum out of pocket like a solid bid up front. The key is to save both of you money and you split the savings usually 60/40 or something like that.

Example: Cost + 10% with a maximum $300,000 price
If you spend $230k on the build, he makes $23k (10%) + say 40% of the savings (70k x 40%) $28000. So he made 20%.

Sounds like a lot but what happened for the owner. You have a guaranteed maximum out of pocket of $300k. If the material amounts change, labor changes, etc...its the builders problem. You were prepared for $300k but ended up saving an extra $25k. You both benefit from saving money. With a cost plus, the builder benefits from spending more. With a traditional solid bid, he bids high and cheaps out on everything trying to make money. This way, you both win

[Briar Friar]

Sorry. I misspake. I just found the mag in my truck. The periodical is Houses...an offshoot of Fine Homebuilding. No . 259 Summer 2016. Prolly find it online or at Barnes and Nobles...it says to display until August 3, 2016.

God bless good contractors and good homebuilders.

[Ivanite]

All I can say is Look over the Plans carefully. We are finishing up a ranch house now and "change orders" can eat your lunch. Think of it now and not later!