Should you share your “real” budget with your builder? If you want a successful project, the answer is yes.
Our clients often end up spending more than the budget they first offered to us – sometimes a lot more. “Budget creep” is common as clients begin envisioning how spectacular their new custom home could be. Other clients don’t want to share how much they’re actually willing to spend on their project. This reluctance is understandable, of course. Much of the available advice about hiring general contractors treats the process as a zero- sum poker game, with the contractor as the opponent. This mentality leads people to hold their cards close, which is not in their best interest, and can lead to misallocated resources.
The adversarial approach is the least effective one when planning a custom home or major renovation in Delaware. You only get one bite at the apple, and if you end up scrimping or splurging in the wrong places, you’ll regret it for a long time. Success demands that you choose a builder in whom you have enough trust to discuss how much you are prepared to invest. You can give a range rather than a hard number, but it should be realistic.
A reality-based budget is a crucial tool in the construction planning process. Many people have preconceived notions of the average cost per square foot to build a custom home. These assumptions seldom support the designs and products they’re envisioning, and the result tends to be frustration. Putting your budget cards on the table is the only way we can help you make smart tradeoffs.
There are many ways to shed significant dollars out of a construction proposal. For example, we can recommend high performance materials that are significantly cheaper than the “top-of-the-line” selection but still look great. We did that with a prospect looking to build a new custom home in Rehoboth Beach Yacht & Country Club. But we also recommended that they increase their budget for HVAC systems to accommodate an advanced, variable-speed unit that will save them thousands of dollars in the future. This is just one example of where a quality builder can help you make smarter decisions when they know the real budget.
The best approach is to tell us your real budget and complete our proprietary Home Cost Estimating Questionnaire. We’ll crunch the numbers using a sophisticated spreadsheet that we developed specifically to produce a meaningful ballpark estimate of your cost to build. We share this spreadsheet with you, and you can interactively modify choices and see the budget results in real time.
If there are significant budget gaps, we begin the Value Engineering process which may include altering the layout or reducing square footage in a way that doesn’t take space from the rooms you consider most important. If you’re applying for a construction loan, a knowledgeable builder can help you reduce costs in ways that won’t significantly lower the home’s appraised value. For instance, your “as built” appraised value will be about the same regardless of your roof covering, so choosing standard shingles instead of that shiny metal roof could slash the roofing costs by tens of thousands of dollars, without affecting the loan appraisal.
The value engineering process can also include specifying less-costly products that, while not ideal, are easily upgraded later. For example, you can replace that $150 light fixture with the $2,000 chandelier you want when you have the cash. We can design in an elevator shaft but not install the elevator until you need it. Or you could opt for an inexpensive carpet today and install hardwood floors in a couple of years. This tradeoff process can go on until you have a set of plans and specifications that give you as much as possible of what you want without creating financial hardship.
We can’t do this creative work without an accurate budget. In other words, an honest discussion about money is a prerequisite to getting a satisfactory result for your lifestyle and budget. But it all comes down to choosing a pro that you trust to be your partner.
A Design/Build company like Turnstone is your best option to help you balance the tradeoffs to get your budget and design just right.
