Building new home - Typical allowances and overruns (appliances, lender)

[nrancour]

Hi All,

We are building a new home in SGC. First time home builders.
I guess we had an unrealistic idea that we could complete the house within budget.
So far, we have pretty much exceeded every cost of all the allowances in our contract.
For example,
Appliances... the allowance was $4000; we could not even get cheap low level GE appliance package for less than $5000.
Cabinets... the allowance was $11,000; but cost came in at $22,000.
Granite.... the allowance was $5000; but estimated cost for low level 1 granite was $7000.
etc....

Should we have allotted an extra 10%, 15%, 20% for these types of allowance overruns?
We would like to have some nice extra's; but I'm afraid of the total cost.
What is typical for overruns?
Can we choose other vendors?
How can we cut costs to stay close to budget?

"Champagne tastes on a beer budget".. It's eating into my boat money.

Help!

Thanks.

[TamRE]

This should have been discussed with your builder prior to signing a contract. Typical costs involved and possibility of costs exceeding amount alloted. I find that almost every person I know that has had a house built the costs have exceeded the amount they were originally given unless you are buying an already completed spec home or go with the absolute bare basics/standard features.

Questions to ask a builder:
• How long has the builder been in business?
• Is the builder licensed and insured in the state and county you want to build in?
• What references/testimonials are available?
• Does the builder have a model home or completed home to view?
• Does the builder have homes in various stages of construction that can be
viewed?
• Do they have a design center?
• Do they have a web site with floor plans?
• Are they a custom builder?
• Does the builder do a feasibility study on a lot at no cost?
• Does the builder own some of their own lots instead of purchasing a separate
lot?
• Do they have a weekly method of communicating with customers once the
construction has begun and is there a specific contact person such as the
builder/owner or a construction manager?
• What is their warranty program?
• What is their average time to build?
• What specifications are standard and what features are extra?
• Does the builder have a comprehensive list of options?
• Do they have a preferred lender they work with?
• Can changes be made once the contract is signed or once construction has
begun?
• Does the buyer have to deed the lot to the builder?
• AC square footage cost versus Gross square footage cost?
• Are there any hidden costs or additional costs that may arise once a contract is
signed?
• What is your process for final walk through to address any matters that need to
be corrected prior to closing?

[Ron61]

Originally Posted by nrancour

Hi All,

We are building a new home in SGC. First time home builders.
I guess we had an unrealistic idea that we could complete the house within budget.
So far, we have pretty much exceeded every cost of all the allowances in our contract.
For example,
Appliances... the allowance was $4000; we could not even get cheap low level GE appliance package for less than $5000.
Cabinets... the allowance was $11,000; but cost came in at $22,000.
Granite.... the allowance was $5000; but estimated cost for low level 1 granite was $7000.
etc....

Should we have allotted an extra 10%, 15%, 20% for these types of allowance overruns?
We would like to have some nice extra's; but I'm afraid of the total cost.
What is typical for overruns?
Can we choose other vendors?
How can we cut costs to stay close to budget?

"Champagne tastes on a beer budget".. It's eating into my boat money.

Help!

Thanks.

Unfortunately, the time to clarify cost overrun details was before the contract was signed. I don't know where your appliances were purchased from but I see low level packages for $3k frequently. Get online and do your homework. I think cabinets at $22k is out of line compared to what you allowed. Have you been involved in the negotiations or are you letting the builder handle everything. You would be amazed at what you can save if you will jump in and involve yourself in the entire process.

Forgive my pessimistic attitude but having been burned more than once I have learned to be involved in as many decisions as possible. Were I to have another new home built, I would likely be the builders biggest pain in the rear they've seen in a while.

I sure wish you the best in getting your new home at a price you are happy with.

[mr&mrssunshine]

Oh dear, I feel you may have fallen victim of the 'high allowance/high cost' ....I will use the word clause when I want to say something else


Here is what I do, I have a model, the allowances cover what is in the model, so if you see it and like it its not extra.


what some people do is give a higher allowance, restrict what/where you can buy from then charge 'their' price not cost.


for example
My granite allowance is $x competitors $2x so it looks like he gives twice as much BUT
I charge my cost price per sq ft for level 1.............other guy charges you way more, so you actually get less or pay more.


I do this to the point that if the fixtures go up in cost , its my problem.


I also allow clients to choose all 'cosmetics' from wherever they want and don't restrict them to 'my' small and closed shop choices. Also I charge cost price not retail.


to be honest the allowances you have are pretty good, so either you chose high cost items or you are being charged high cost

[mr&mrssunshine]

Originally Posted by TamRE

This should have been discussed with your builder prior to signing a contract. Typical costs involved and possibility of costs exceeding amount alloted. I find that almost every person I know that has had a house built the costs have exceeded the amount they were originally given unless you are buying an already completed spec home or go with the absolute bare basics/standard features.

Questions to ask a builder:
• How long has the builder been in business?
• Is the builder licensed and insured in the state and county you want to build in?
• What references/testimonials are available?
• Does the builder have a model home or completed home to view?
• Does the builder have homes in various stages of construction that can be
viewed?
• Do they have a design center?
• Do they have a web site with floor plans?
• Are they a custom builder?
• Does the builder do a feasibility study on a lot at no cost?
• Does the builder own some of their own lots instead of purchasing a separate
lot?
• Do they have a weekly method of communicating with customers once the
construction has begun and is there a specific contact person such as the
builder/owner or a construction manager?
• What is their warranty program?
• What is their average time to build?
• What specifications are standard and what features are extra?
• Does the builder have a comprehensive list of options?
• Do they have a preferred lender they work with?
• Can changes be made once the contract is signed or once construction has
begun?
• Does the buyer have to deed the lot to the builder?
• AC square footage cost versus Gross square footage cost?
• Are there any hidden costs or additional costs that may arise once a contract is
signed?
• What is your process for final walk through to address any matters that need to
be corrected prior to closing?

all of the above are great points and should easily be covered by any good builder...the highlighted one...........................in my very humble opinion NEVER NEVER EVER do this, if someone suggests it...run

[the searchers]

Quick question for mr&mrssunshine.

If I build another house will it be reasonable cost to include hurricane type break resistant windows?

Thanks.

[SgtRich]

Ditto.
We had similar allowances and blew them with ease! Buy nice once or cheap twice I suppose.

[mr&mrssunshine]

Originally Posted by the searchers

Quick question for mr&mrssunshine.

If I build another house will it be reasonable cost to include hurricane type break resistant windows?

Thanks.

before I answer that Ill show what a smart a$$ I am. the correct term is Impact resistant windows, they are designed to withstand the impact of a missile weighing (IIRC) 9 pounds at 160mph. The thing you don't want in high winds is as broken window as then the air/pressure has to escape and its usually through the roof so no ceiling !!


but to answer specifically, for a house around 2000 sq ft the additional cost of impact over non impact and shutters should be around $5000ish. we use all impact except in the lanai are, there we install an accordion hurricane shutter, can be closed in seconds and means you can leave all your outdoor furniture under cover but still outdoors.


In my opinion the cost is very very well worth it. I have put shutters up on a house once and its a killer....never again

[SeaRay35]

Ahhhh the old used car dealership bait and switch. When we built our house we were given realistic allowances we were able to work with unless we wanted extras.

[the searchers]

Originally Posted by mr&mrssunshine

before I answer that Ill show what a smart a$$ I am. the correct term is Impact resistant windows, they are designed to withstand the impact of a missile weighing (IIRC) 9 pounds at 160mph. The thing you don't want in high winds is as broken window as then the air/pressure has to escape and its usually through the roof so no ceiling !!


but to answer specifically, for a house around 2000 sq ft the additional cost of impact over non impact and shutters should be around $5000ish. we use all impact except in the lanai are, there we install an accordion hurricane shutter, can be closed in seconds and means you can leave all your outdoor furniture under cover but still outdoors.


In my opinion the cost is very very well worth it. I have put shutters up on a house once and its a killer....never again

Thank you.

I wish I had them. We were lucky in Charly and didn't loose any windows but after that storm I had metal sliders of various design installed. As I age they get heavier to put up or over or crank. Next house will have the Impact resistant type glass you were nice enough to explain.