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How to Prevent Price Overages on Your Custom Home Build

How to Prevent Price Overages in Your Custom Home Build

Building a new custom luxury home is an exciting process! When moving day is upon you and your home is complete, the last thing you want to worry about is whether or not you went over budget. How can you avoid budget overages on your custom home? How can you work with your Houston custom home builder to keep your costs on track?

Don’t Rush the Design Phase

Your new luxury custom home will require two sets of drawings before you can even get a permit to begin construction. These are complete architectural drawings and structural drawings, which together are just called construction drawings. This process begins with an initial meeting with an architect to discuss and understand certain basic details of your design goals. Make sure to communicate this in as much detail as possible. Come to the meeting prepared with pictures, ideas, wants, and must-haves. Getting this information in front of your architect at the very beginning of the design phase is imperative to reducing changes to the design later and change orders once construction has already begun.

It’s common for there to be a few changes to the drawings to get your custom home just right. 

What follows will be the estimate, approval of the budget including allowances, and choosing finishes. It is extremely important to review all of the details that have been drawn into the plans and specifications and ask detailed and thorough questions until you are comfortable with what will be going into your new home. Once you are confident in the details, the structural drawings can be created by the engineer. These are highly detailed and more technical drawings that contain all of the information needed for the construction team to build your home to exact specifications and proper calculations.

The design phase is also when your architect will assess your land to be certain that your design goals work for the site. There are several factors about the land you buy that can affect the cost of your overall project. If you don’t yet have land, your architect and custom home builder are excellent sources for acquiring land.

You can see now why providing the utmost detail from the beginning is key. If you were to make any changes at this point, a lot more time and energy would go into correcting these drawings to suit the changes. Paying for this time would have to come out of your budget, along with any cost difference these changes may incur.

There are also many compelling reasons to hire your home builder as soon as possible in this process. Unlike the architect, engineer, and interior designer, your home builder truly understands the costs and availability of certain materials since they are pricing and purchasing them on a daily basis. This information can provide great value during design and effectively keeps budgets in check. 


Learn About Construction Allowances

Making an educated guess about the price is a common practice that helps to set a realistic expectation without knowing the exact cost. This practice is known as a construction allowance. This is done when the price of materials can’t be determined, but a price needs to be set to move on in the project. It’s at this time that an allowance would be built in to make room in the budget for any unpredictable fluctuations that may come later.

There are two types of construction allowances: material and installation. Material allowances are used when certain finishes haven’t been chosen at the time of the contract, like plumbing fixtures and flooring. They’re also used to ensure there will be room in the budget in case there is a pricing fluctuation but also if the homeowner changes their mind about a material later on in the project. Installation allowances are used to hold space in the budget for the change in scope that can come from a change in the materials. For example, if changing a material means a higher level of skill is required for installation, then the cost difference will have to be made up for in the budget.

Allowances help to avoid cost disputes but it’s important to note that allowances can be too large or too small. Large allowances are a sign of abundant uncertainty. Some breathing is permissible but a very large allowance is a sign of a larger problem, like your designer or contractor lacking important industry knowledge. An allowance that’s too small may be the result of a contractor attempting to underbid their competition. An allowance that’s too small will inevitably be inadequate, resulting in going over budget in the long run. Making sure your budget is appropriately set is one of many reasons to thoroughly vet your architect and builder in the interview process. Additionally, it is important to review the allowances set by either your architect or builder for accuracy. A reputable professional will have the ability to guide you in the right direction to cross-check allowances to make sure they are in line.


Keep Change Orders to a Minimum

Change orders are documented requests for changes in materials that could also result in a change in labor. This affects the budget, most likely increasing it. There could be several reasons why you or your builder might request a change order. You could have come across a stylish finish that you’d like to incorporate, like tile or a fancy light fixture. There may also be a rough construction material change because of availability or volatility, which has become more common in the current market. Sometimes the change order is the result of a mistake in the design. Regardless of the reason, change orders add costs and can also greatly affect the timeline of the project, so keeping them to a minimum is crucial to protecting your budget



The best way to prevent excessive change orders and subsequent changes to your home building costs is for your home builder and the architect to begin collaboration right from the start. Collaboration reduces errors in communication. The knowledge and experience both your architect and custom home builder bring to the table compliment each other and are integral to the entire process of designing and building your custom luxury Houston home. Additionally, nailing down as many details as possible and incorporating them into the construction drawings enables your home builder to develop a more accurate budget and mitigate overages.

Builders like Southern Green Builders are also able to give precise materials allowances and estimates based on your preferred materials and the square footage the material will cover, leaving no room for error or going over budget as long as these initial allowances are adhered to.


Controlling Costs of Your Custom Home in Houston

Some sources suggest expecting as much as 10% of the total contract price for change orders. Without proper planning, that may be the case. Using the collaborative process at Southern Green Builders, we average less than 2.5% in change orders. At Southern Green Builders, we want you to feel confident while undertaking your custom home building project in the Houston area. We work with you during the design phase to establish specifics before the contract is signed, which helps decrease the risk of extending the project completion date or unintentionally increasing your total project price due to change orders. Contact Southern Green Builders to schedule a consultation and learn more about keeping your custom dream home within your budget.

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