One of the insider secrets of the building industry is that Cost Plus contracts often lead to a more expensive home than Fixed Price contracts. Time and time again we see families who want to “beat the system” by doing a Cost Plus contract they will get a better house for less money.
In most cases, the reality is much different. Cost Plus contracts lead buyers into a false sense of security so they feel comfortable changing their mind, adding elements and features, going over budget or just redoing something. Often they fail to see the subsequent consequences of these decisions or dramatically underestimate the potential additional costs.
Traps
The reality is there can often be a false sense of security often leads families to spend MUCH more on their house or make decisions that will “trap” them later in the process and cost them more money to fix something.
What do we mean by “trap” (we also call them landmines)? Traps are decisions that are forced later in the process by a decision earlier in the build process. Often simple seemingly inexpensive choices early in the process can lead to big expenses later.
Examples can include;
Changing a window to a door as this now requires hardware, weather stripping, sidewalks, protective roof cover, etc…
Adding a cabinet to a room can lead to increased hardware costs, painter chargers, trim charges, lighting changes, etc…
Adding multiple flower beds will require zones to be added to the irrigation system.
When you do a cost plus contract you pay these costs as they are incurred but when you do a fixed price contract, you pay for these items in a lump sums. This allows you to see the entire scope of the change you wish to make, account for the expense and make a decision on if you really want to move forward.
Another “trap” is picking items with nominal extra costs on the surface but that create additional charges down the road.
Examples include;
Specialty trim that requires custom milling and can’t be returned such as clear alder versus knotty alder.
Ordering hardware that is on sale only to find out that each assembly takes 4 hours to install into a door. The carpenter that makes $50 an hour loves those types of decisions!
Adding a bonus room to an attic will often mean, more trim, paint, carpet, hardware, hvac, lights, etc…
Mistakes & Changes
Mistakes and changes are paid by the buyer as a necessary cost of construction. A Cost Plus contract means that every cost associated with the construction of the home is paid for by the buyer. This means every cost including but not limited to material that is damaged by weather, theft, broken items, items that require reinstallation, incorrectly ordered items, unforeseen consequences, etc…
When you have a Fixed Price contract, the builder builds in budget items and/or margins to cover these occurrences however in exchange for a “lower fee” from the builder,
buyers now take on that liability.
It Is Harder Than TV Makes It Seem
With so many shows on TV and books being published, we find many homeowners do not fully appreciate the daily hardships that come with a construction project.
Just as the doctor shows on TV never show what goes on inside a person’s body during surgery or how the wound heals, HGTV does not show all the micro decisions and
challenges that come with seemingly simple tasks.
In a Cost Plus Contract the homeowner takes responsibility for meeting unforeseen issues or having to incur costs to attend to tasks they never see on TV. Often this can lead to confusion and frustration to families who have little to no exposure to the building process.
When you have a fixed price contract, the builder will build those costs into the prices quoted so you can see a clear picture of all the necessary costs associated with the task at hand.
Another way to look at it is as ordering the ingredients for a meal at the grocery store and ordering a fully prepared meal at a restaurant. Having someone else put it all together for you will speed up the process and offer you a very simple means of making a decision.
Exceptions
Now this is not to say that a Fixed Price contract will not have some of the same challenges and issues. Also this is not to say that all Cost Plus Contracts will cost a homeowner more. However our experience over the past two decades along with observations from our professional friends is that buyers that go the cost plus path will often have a more expensive project budget than those who chose a fixed price contract.
Cost plus contracts can offer value to an experienced home owner/buyer, however it can also cost a family much more in the long run. Visit with your builder about which option is the best fit for your family.
Thank You
Pricing out a home is a complicated process. Work with your contractor to determine the contract that not only offers you value but peace of mind.
If you have a question on how we can help you build a custom home, please feel free to email your questions to our offices. Garabedian Properties is a full service building firm serving the Dallas/Fort Worth Metroplex. We offer new luxury homes, premium remodels, green building/remodeling, home care services, storm/roof repairs and commercial building contracting.
Please feel free to leave your comments, drop us an email at mike@garabedianproperties.com or call us at 817-748-2669. I also encourage you to visit http://www.garabedianproperties.com to see movies on our homes, hundreds of pictures and information on how we can
be of service to your family or clients. Or join us on Facebook.
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If your family is not quite ready for us at this time, we will be at your service when you are in need or wish to request our assistance. If you know someone we can help, we
welcome and honor your referrals.
One of the most common questions we hear from families is “Why should I build a home that costs more than a used home I can buy?” This is one of the easiest questions for a professional custom builder to answer. Below are some important items to consider when working with your Realtor and chosing between buying a preowned home or building a new custom, luxury or estate home.
Buy What You Want
When you buy an existing home, you are spending your money for features someone else thought were important. These may or may not be what your family feels is important.
They may have stained cabinets when you preferred painted. They may have travertine where you prefer wood. You may need to replace or add light fixtures. Their windows may be a different color which won’t work with your décor.
When you build you can pick and choose what are the most important parts of your home and invest your family’s resources on those areas so you are able to have wood where you want it, windows that match your style and not have cabinets in places that do not work for you.
Don’t Pay Twice For The Same Feature
Often when a family will purchase a used home and have a list of changes they need to make. In the past we have seen families add cabinets, redo flooring, rebuild bathrooms and change out appliances. You can easily spend 20% of the purchase price of a used home on repairs and improvements in the first 2 years of ownership.
Once you start improving/repairing things it is hard to stop. We call this the “domino effect”. If you buy a new refrigerator, you then feel obligated to have matching dishwasher and ovens. If you paint the family room, the other rooms looked dated. It is hard to find a good stopping point.
Almost everything you touch, every appliance you replace, and every floor you refinish is something you paid twice for. You paid for it when you purchased the home and you are paying for it again when you do the replacement/update.
Don’t spend your time and money redoing what is already there. Spend your time enjoying your newly built custom home and spend your money on something only once (when you buy it new).
Financing Options
Even in today’s difficult times, professional builders have access to an assortment of financing programs with rates and terms similar to what you will see on the purchase of an exsisting home. Do not let the uncertainity of how construction financing works keep you from exploring all the options available to your family.
Right House Wrong Location
Many times families will find a home that works for them but in a location that does not. It might be the wrong school district, too close to the train tracks or backing to a busy street. It might be right across the street from some homes that are not kept up very well. Regardless, no matter how well you keep up your home, you can’t overcome issues near your property.
When you build a custom home, you will often have several locations and communities you can choose from so you don’t have to put up with living in a community that you don’t like because of your need for a particular floor plan.
Right Location Wrong House
Other times we have families who are able to find a community or site they like but the house does not work for them. They force the issue and purchase the home because of the location. We call this “square peg round hole”.
They settle (or suffer) on a home that is not comfortable for their family because it is in the right place. When you build a custom home you can design and build the home you want on the lot you want.
Don’t Throw In The Towel
Sometimes a family can realize a great value and find a used home at the right price in the right location that works for their family. If that works GREAT!!!! However if you are having trouble, before you throw in the towel and settle, talk to an experienced professional custom home builder.
Many times you can build a custom home in a community that works for your family for a very small premium over your cost of ownership in the purchase of a used home.
Thank You
Building a new custom home may cost a bit more upfront than buying a used home, however when you look at all the factors, it may still be the best value for your family’s investment.
If you have questions on how a professional builder can help your family evaluate if building a custom home is best for your family, please feel free to call us at 817-748-2669, email us at mike@garabedianproperties.com or visit www.garabedianproperties.com.
We are a full service firm serving the Dallas/Fort Worth area. We offer professional contracting services for custom homes, fine estates and premium remodeling. Our remodeling division offers remodeling, kitchen and bath updates, room additions, insurance repairs and roof replacement.
Please feel free to leave your comments below or share our blog with your friends and family. Our web site features hundreds of pictures, a dozen E-books, testimonials (details) and videos showing casing our work and families (Portfolio). Join us on Facebook and You Tube, to stay current on our latest projects.
Thank you for allowing the Garabedian Family to share our thoughts with your family.
We publish a monthly electronic newsletter. We provide this free to our friends and families and we NEVER share your informationn with third party companies.
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Michael Garabedian
With American Airlines changing their frequent flier program, we are seeing so many travelers in search of creative ways to earn miles to top off their accounts. Often in the search for miles, they may overlook items that require attention very clsoe to home.
Oue Miles For Dreams program allows a person to earn miles for daily activities they must undertake to care for their families housing needs. There are three ways to earn big mileage with the program.
Build - If your family chooses to have Garabedian Properties build you a new home, you can earn miles.
Renovate - Roof - If your existing home is in need of improvements, updates, add ons or your roof was damaged by a storm, you can earn miles for those items as well.
Share - If your family is not quite ready for us but you have a friend or neighbor who is, you may beable to earn miles if your they move forward with participation in the Miles For Dreams program.
Realtors, you can become a hero with your clients by introducting them to this program. An extra bonus for building a new home that they would have never expected!
Complete details at www.milesfordreams.com
So before you start booking crazy trips to places you don't want to go or ordering magazines you will never read, start with your family first. Building or caring for your home may not only get you closer to your next Million Miles it will make your familiy happy. A happy family is worth more than a million miles any day of the week.
For details or questions, please visit the web site or call our office at 817-748-2669
Happy Flying!
One of the most common questions we hear from families is “Why should I build a home that costs more than a used home I can buy?” This is one of the easiest questions for a professional custom builder to answer. Below are some important items to consider when working with your Realtor and chosing between buying a preowned home or building a new custom, luxury or estate home.
Buy What You Want
When you buy an existing home, you are spending your money for features someone else thought were important. These may or may not be what your family feels is important.
They may have stained cabinets when you preferred painted. They may have travertine where you prefer wood. You may need to replace or add light fixtures. Their windows may be a different color which won’t work with your décor.
When you build you can pick and choose what are the most important parts of your home and invest your family’s resources on those areas so you are able to have wood where you want it, windows that match your style and not have cabinets in places that do not work for you.
Don’t Pay Twice For The Same Feature
Often when a family will purchase a used home and have a list of changes they need to make. In the past we have seen families add cabinets, redo flooring, rebuild bathrooms and change out appliances. You can easily spend 20% of the purchase price of a used home on repairs and improvements in the first 2 years of ownership.
Once you start improving/repairing things it is hard to stop. We call this the “domino effect”. If you buy a new refrigerator, you then feel obligated to have matching dishwasher and ovens. If you paint the family room, the other rooms looked dated. It is hard to find a good stopping point.
Almost everything you touch, every appliance you replace, and every floor you refinish is something you paid twice for. You paid for it when you purchased the home and you are paying for it again when you do the replacement/update.
Don’t spend your time and money redoing what is already there. Spend your time enjoying your newly built custom home and spend your money on something only once (when you buy it new).
Financing Options
Even in today’s difficult times, professional builders have access to an assortment of financing programs with rates and terms similar to what you will see on the purchase of an exsisting home. Do not let the uncertainity of how construction financing works keep you from exploring all the options available to your family.
Right House Wrong Location
Many times families will find a home that works for them but in a location that does not. It might be the wrong school district, too close to the train tracks or backing to a busy street. It might be right across the street from some homes that are not kept up very well. Regardless, no matter how well you keep up your home, you can’t overcome issues near your property.
When you build a custom home, you will often have several locations and communities you can choose from so you don’t have to put up with living in a community that you don’t like because of your need for a particular floor plan.
Right Location Wrong House
Other times we have families who are able to find a community or site they like but the house does not work for them. They force the issue and purchase the home because of the location. We call this “square peg round hole”.
They settle (or suffer) on a home that is not comfortable for their family because it is in the right place. When you build a custom home you can design and build the home you want on the lot you want.
Don’t Throw In The Towel
Sometimes a family can realize a great value and find a used home at the right price in the right location that works for their family. If that works GREAT!!!! However if you are having trouble, before you throw in the towel and settle, talk to an experienced professional custom home builder.
Many times you can build a custom home in a community that works for your family for a very small premium over your cost of ownership in the purchase of a used home.
Thank You
Building a new custom home may cost a bit more upfront than buying a used home, however when you look at all the factors, it may still be the best value for your family’s investment.
If you have questions on how a professional builder can help your family evaluate if building a custom home is best for your family, please feel free to call us at 817-748-2669, email us at mike@garabedianproperties.com or visit www.garabedianproperties.com.
We are a full service firm serving the Dallas/Fort Worth area. We offer professional contracting services for custom homes, fine estates and premium remodeling. Our remodeling division offers remodeling, kitchen and bath updates, room additions, insurance repairs and roof replacement.
Please feel free to leave your comments below or share our blog with your friends and family. Our web site features hundreds of pictures, a dozen E-books, testimonials (details) and videos showing casing our work and families (Portfolio). Join us on Facebook and You Tube, to stay current on our latest projects.
Thank you for allowing the Garabedian Family to share our thoughts with your family.
Luxury Home Builder Serving Westlake, Southlake, Colleyville & Keller. Graduate Master Builder, Texas Star Builder, Certified Green Professional, Realtor
With nearly 20 years in the home building industry, I pride myself of offering unique luxury and estate homes to special families. All our homes are one of a kind creations as we will never build the same home twice. We primarily serve the Northeast Tarrant County area of the Dallas Fort Worth Metroplex in Texas. However we can also provide our home building services to other areas in the adjoining regions.
Towns we are most active in, include; Southlake, Westlake, Keller, Colleyville, Trophy Club, Roanoke and Grapevine. However we are also working with families in Argyle, Bartonville, West Fort Worth and adjoining areas.
We build luxury and estate homes with project sizes up to 20,000 sqft. We are Realtors that service our own homes as well as provide support to our families and cooperating Realtors. We are Certified Master Builders, Graduate Master Builders, Texas Star Builders, Energy Star Builders and Certified Green Professionals. Other accreditation's include Greater Fort Worth Business Press's 40 Under 40 honoree, Green Built Texas Member, award winner in the Kaleidoscope of Homes, award winner in the Spring Tour of Homes and an active member of several local nonprofit boards and organizations.
"It is with pleasure that I write this testimonial on the quality and professionalism of the Garabedian Properties team. Our introduction to the team occured at an informational meeting, where Michael Garabedian introduced the membesr of his team and provided an overview of the home building process. We had heard about Garabedian Properties from realtors, other home builders, and other homeowners, who have only good things to say about the team. Most important to us in selecting Garbedian Properties, was availability of comprehensive knowledge required to carry out a build project. We met individuals with real expertise covering all aspects of construction, financi, design and architecture. We also appreciated Michael's "hands-on" approach in helping us progress through the process. His effective communication skills and detailed knowledge with regards to budgeting a build were instrumental in designing the home. Another extremely important factor was our perception that Garabedian Properties is well-positioned for long-term success in the area; we knew that there would be the commitment to guaranteeing our satisfaction."
- Gulizia Family, Colleyville
"The overall experience with Mike and his team of professionals was exceptional. Mike worked with us on our plans, the placement of the home on the lot, which was changed, the actual building process and just as important, the follow up after we moved in. There wasn't an issue that Mike didn't address. We would and have recommended Garabedian Properties".
- Slone Family, Colleyville
"Mike Garabedian and the staff at Garabedian Properties really care about their homeowners and it shows, not only through the way you are treated, but in the final product. When Mike says his homeowners are a part of his family he means it."
- Frendo Family, Trophy Club
"Our experience with Mike Garabedian and his team have only been positive. The entire team is professional and extremely responsive, even during weekends and evening hours and all go out of their way to immediately address concerns, answer any questions we had and provide practical soluctions. The team is reliable and friendly but above all they have built us a beautiful home of outstanding quality! A great experience!
- Beljaars Family, Keller
"How many people can say they have built their dream home with a good friend? Well, we have, and we can't say enough about the experience. We have been friends with the Garabedian family for 6 years and have always wanted a Garabedian home. It was a privilege to work with Mike and his entire team. From our original planning meetings with Mike, designing with the architect, making selections with the decorator, and to overseeing the whole process with the superintendent, we were blessed throughout the entire process. There could not be a higher level of care, interest, integrity, quality workmanship, and work ethic than what we experienced with the entire Garabedian team. Our concerns and questions were handled immediately, and sometimes they were even taken care of before we could ask. Mike exceeded all of our expectations in every way, and we are now living in our dream home!"
- Bittick Family, Keller
"We purchased a new home with Garabedian Properties. His staff was very helpful and informative through the whole process. After we moved in, they have been there to assist us with our needs and have always responded in a timely manner. We woudl higly recommend Garabedian Properties to anyone looking to buy a new home. The quality and customer service is exceptional."
- Bailey Family, Southlake
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