MISTAKE #3:
Giving the Builder a Blank Check
Can you think of
one other industry where the client is willing to give a blank check to the
person providing the services? It
is unthinkable. Yet, the standard
for the residential home building industry allows that very thing to happen:
the builder provides a “bid,” but then the homebuyer must pay whatever the final
price ends up being. Builders call
this a “cost-plus contract.” Your immediate thought should be: cost “plus” what!?
Let me give you a
true-life example: A young married couple building their dream home for their
growing family recently relayed their experience with their “cost-plus”
contract. At the closing table,
they were shocked to discover that their bottom line price had jumped an
unbelievable thirty thousand dollars ($30,000.00) because the builder said the
price of lumber had “unexpectedly gone up.” While the price of lumber had indeed escalated considerably,
the builder was under no obligation or duty to make sure he purchased the
lumber prior to the prices going up because he knew that at the end of the day,
it was not him but the homebuyer who
would be paying the cost difference.
Welcome to the unforgiving world of “cost-plus.”
Tip #3: never give the builder the option to
build your home with a “cost-plus” mentality. Protect your
investment, control your investment,
get the results you want (including
the price of the bottom line!) by refusing to allow the builder to build your
home with a blank check.
No comments:
Post a Comment