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The two most important factors when building a custom home are timeline and pricing. You’ll want to establish clear expectations with your home builder and architect from the start to lay the foundation for a smooth, efficient process. After all, investing in a home is investing in your future.
The cost of your luxury custom home in Houston could vary depending on several factors. In particular, home builders may give you estimates, bids, and quotes. Each has to do with the cost of the project but in different ways. Also, if you are still looking for the right land in Texas, it will help to know the additional cost of an acre of land as well as how your land could affect your custom home price.
If this is beginning to sound a bit confusing, don’t worry! We’re here to break it down and help you feel more knowledgeable about this important part of the home building process.
Is an Estimate the Same as a Bid?
In short, no. An estimate is a rough approximation of the cost that home builders provide during a consultation based on your initial vision for the project. A bid proposal comes after you’ve picked a builder to build your new luxury home and nailed down various selections and specifications. This bid proposal will outline a more concrete dollar amount and a specific time frame for completion.
There is a second type of bid process that comes prior to choosing a builder. These bids come from numerous builders vying for your project. In this scenario, builders submit a bid with a rough cost estimate to complete the project. The caveat is that many builders are vague with the terms of their bids, which can be unfortunate for you. You will likely pay roughly 12% more by the time the project is all said and done.
How could you end up paying so much more? It may seem that bid proposals from various builders would be similar since they’re all based on the same plans. This isn't necessarily the case. Proposals vary based on two primary factors: the quality of materials and the level of detail included in the proposal. Meanwhile, labor and overhead costs will largely be the same across home builders serving the same region.
All of that is to say a low bid doesn’t mean you’re getting a good deal on your new custom home. Instead, it's more likely that their bid isn’t priced with high-grade construction materials or premium finishes. So, if you do end up with the quality materials you are hoping for six months down the line, your project is likely to cost more than what was called out in the original bid because of modifications and change orders.
How Does a Change Order Work?
In construction, a change order is an amendment to your original contract with the home builder that alters the scope of the project. Change orders can be initiated by either you or the contractor. Any time you want to change a feature, material, or finish on the original house plans, it requires a change order. This typically includes a description of the requested change, how it differs from the original bid or contract, an itemization of any subcontractor costs, the contractor’s summary of the relevant costs, and the impact of the change on the project completion date.
Not every luxury home build begins with every detail nailed down, and many builders take that into consideration by including an allowance in the contract. An allowance identifies an amount of money intended to cover the cost of various items not yet specified in enough detail. Like change orders, allowances can significantly affect the final price of your new luxury home. The difference, however, is that an allowance is agreed upon from the start.
Avoiding the Construction Change Order Process
Once a project is underway and specifications are approved, the project manager distributes purchase orders to suppliers and subcontractors. Any change after that point creates a ripple effect that quickly augments your final project cost. These ripple effects are delays, schedule changes for trade partners, and project waste.
Given the current supply chain and material cost issues, one of the best ways to control the cost of your new luxury home is to nail down as many details as you can during the design phase to get the most accurate cost proposal before construction begins. Whether this happens between you and your custom home builder, or your builder and architect, communicating expectations to the smallest detail is key.
Consult Experienced Professionals
Southern Green Builders takes a detail-oriented approach to its construction proposal process. We’ll also collaborate with you on your new home in the Houston area during the design phase of the project to avoid these issues. Our proposals contain such great detail that we are able to keep our final cost variance to within 1% to 2% of the bid proposal, as opposed to the industry average of 12%. Your proposal contains everything from appliances and flooring materials down to windows and light bulbs, giving you a more accurate idea of your project’s total cost. This enables us to minimize the risk of change orders and price overages.
