In the home building industry, there’s one question that we hear most often…
“How much is my home going to cost?”
Of course, this isn’t a black and white answer. There are various factors that go into the process of building a custom home and different methods with which to execute an agreement between the builder and the client. So when it comes to planning for a new build, you’ll need to know your options and what affects the price, making it vary so much from location to location and house to house. When it comes to home construction costs, here’s what to expect.
Factors that Affect Home Prices
It can be quite difficult to predict what a home might cost you to build, but factors that can increase these prices can include:
- Ceiling height
- Pools, spas and lanais
- Exterior Detailing
- Interior Detailing
- Total Air-Conditioned Living Area
- Total non air-conditioned areas, like garages and lanais
Other factors that can affect the price of building a home are the types of materials, fixtures and accessories that you wish to include in the home. In being mindful of the various aspects of the home building process and what is going to increase prices, you can better plan for the cost of your home.
About the Firm Pricing Method (FPM)
At Frey & Son Homes, we go by the Firm Pricing Method, meaning that the price will be determined by the client. In working together to design the home, both the team at Frey & Son and the client will help to establish a firm price; however, many aspects will need to be taken into consideration before the final number is calculated. First the parties need to agree on the house plan. Location of the lot and any clearing costs will need to be factored in, as well as any special requirements, like lighting, tile selections, cabinet selections interior trim selections, pool and spa design and more. There are many things to take into mind before a price is quoted and the team at Frey & Son will need to go through all aspects of the home in order to reach this point in the process.
The main benefit of FPM is that it allows the client to know the overall total price that they will pay for their new home with no surprises at the end.
About the Cost Plus Method (CPM)
This method is where the builder and the client negotiate a percentage of overhead and profit that is applied to the total costs, in order to arrive at a final price. This method has a number of limitations, and one of the main disadvantages is that the client doesn’t have a firm number with an agreed-upon set of specifications before the job commences. This leaves the popular question of, “How much will my home cost?” very open-ended in the eyes of the client.
The Cost Plus Method, more often than not, favors the builder over the client, as the builder has control over the final cost of the home. Since the final cost of the home is ‘to be determined’ at the start of the project, once the job is completed, the client may be hit with a hefty bill that they didn’t plan for, resulting in some animosity toward the builder.
Knowing What to Expect
In most instances, we like to know what to expect and we don’t like to be surprised when it comes to something as important as building a home. A builder who utilizes the Firm Pricing Method has an incentive to control costs, making this a more popular way for clients to build a new home. With this method, the builder and the client know exactly what to expect from one another, resulting in an overall better home building experience.
The team at Frey & Son Homes has been a trusted source in the Southwest Florida home building industry for generations. Call (239) 495-8200 or visit www.freyandson.com to learn more.