Builder contracts type 2: Percentage based. This is more common than the fixed price for custom homes. The builder is basically charging a percentage on top of each subcontractor to cover his costs. Advantages are that the builder fee is basically fixed—as long as you don’t make any changes; and that the specifications of the home and scopes of work for each sub dont need to be spelled out by the builder in his contract--it is done by each sub. Another advantage is that changes are simpler to implement during the process; though there still remains a concern that the builder is motivated to reduce his involvement as much as possible, since his fee will not reduce correspondingly. Therefore; there is a great need for clarification of what the builder is and isnt providing in his price. Questions to ask include: What happens if a subcontractors billed price is higher or lower than their quoted price? Are unlimited changes included in your fee? Do you charge for an estimate, and how accurate is that estimate? Do you charge for reworking the estimate after we make some changes to it? How much will you be onsite, monitoring things? What happens if the quality of the drywall finishing (insert almost anything here) doesn’t meet my expectations? How much can I be involved in the process? How much do I have to be involved? How long do you expect the project to take?
Posted on: Tue, 15 Apr 2014 16:00:01 +0000
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