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Just signed builder's contract
We feel great with our builder choice. So that's good. I hope we made the right choice here too! lol. We chose a builder who is more like our consultant. The house's price is not on a contract price, but we're very optimistic that we'll come out below our budget and won't have to touch our 10% contingency.
Next week is closing on the construction loan. We hope to break ground the week after depending on weather. After, basement/foundation is done, we'll evaluate if we want to start framing or wait. I feel good starting this time of the year. Prices seem lower. Example, the foundation subcontractor has been dropping his price just so they have work to do since there's not much building going on around this time.
Lots of decisions to make ahead of us. That's the only downside with our builder choice.
Re: Just signed builder's contract
Congrats! Building is fun! Does your builder already have all of the necessary building permits and everything in order? Breaking ground in two weeks seems a little tight. Especially since a lot of builders wait to make sure financing is in place before starting anything. We paid cash and the builder wouldn't even apply for the building permit until he had proof of deposit (moved money from multiple accounts to one) that there were sufficient funds. Even then our building permits took 3 weeks to obtain.
Thanks! I'll try to enjoy it. Just not looking forward writing all the checks.
No building permit yet. Yeah, we plan on starting in 10 days. I assume we can get the permit before then? I don't know.
Our builder does not require any financing proof or anything. Perhaps because our setup is different? I don't see why it matters to the builder if we can pay for everything or not since he won't need to write any checks to the subs. He won't face any potential losses. We can choose to terminate his service at any time, and he can also choose to quit at any time.
Every county is different on length of time for permits. Ours took 3 weeks so we broke ground 2 weeks later than expected. I'm surprised that he doesn't require that you show proof of financing since he's essentially taking 100's of thousands of dollars on to his company in supplies and time.
It concerns me that the contract seems to be non-binding. If you or he can walk at any time, that scares me. Are there penalties involved? I assume you don't get your deposit back if you walk, but what about for him?
No, he's not taking 100's of thousands of dollars on to his company in supplies and time. We are paying for everything. We are the one writing the check for all supplies, labor, subcontractors, etc. All he gets is his predetermined builder's fee which is disbursed by percentage based on percent of completion.
There's really no penalties. If we fire him or if he leaves at 50% completion, he would get a total of 50% of his fee.
We are financing it, not the builder. We opted not to do a contract price. We could have done that which would mean 5% more than current estimate/budget since the risk is then on the builder, not us. Doing a contract price would also mean changes would be tougher to do.
With our current setup, we can choose to cut corners (or what corners to cut) to save $$$ or we get the savings if materials or labor will actually end up lower than estimated; the builder won't get that. With a contract price, what ever savings seen during construction goes to the builder. Of course, there's the negative side. If prices skyrocket for some reason, then it's on us.
I apologize I thought you were actually paying a builder to provide you with x vs you buying the things and getting the builder to install them (more or less)
Our builder had to purchase all the supplies, pay his labor, hire the subs etc, we paid him in the end.
Oh, no problem.
I know this setup/contract is not typical. We like it because of its flexibility, but not really looking forward making lots of decisions.