When it comes to home building, we realize many people are cautious about sharing their top-price budget too soon. Often, they have two budgets—the lower number they share with realtors, designers, & builders and the higher number they’re actually able to spend. So, an important question is, should you share your real budget with home builders? Well, let’s discuss three different strategies…
Strategy #1: The Lower Budget
First, there’s the strategy of holding your cards close and not letting the builder know your exact budget. After all, if you divulge the real number too early, the builder might take advantage of you, artificially inflating the price. But if you truly suspect the builder that you’re speaking with has such a mindset, should you really trust that person to build your custom home? I mean, isn’t it fair to assume that you are only interviewing home builders that you believe are reputable?
But for now, let’s pretend that you’re just not sure you fully trust the builder yet. So, you’re keeping the real budget under wraps. While this may give you a sense of control, your lack of trust will make it difficult for the builder to do his job well. After all, how can the builder help you design your custom home, choosing the appropriate floor plan, features, and finishes, without knowing how much money you have to spend?
Because Elements understands that over-all cost is so important, we make every effort to stay within the budget our clients tell us. Because of this, we will suggest a smaller home or less expensive finishes in order to keep our building projects on budget. If our clients can actually spend more money, then we have to revise plans, add features, and/or complete change orders, which slow down the building process. In reality, this could be avoided if clients were forthcoming with their real budget from the start.
Strategy #2: Comparing Budgets
Obviously, clients want to get the highest quality home for the most affordable price. That being said, some people like to check a builder’s bid by comparing it to other home builders’ prices. Often, clients do this by comparing price-per-square-foot, believing this a “good way” to find a fair price. Unfortunately, comparing price-per-square-foot does not truly give an accurate representation, as size and features greatly affect cost.
For more information, please read the following articles by clicking on the title.
- The Cost to Build a House: How much is the price per square foot?
- The Cost to Build a House: How Size and Features Affect Price per Square Foot
Of course, clients should interview several builders before choosing one to build their custom home. We are just advising to look deeper than price-per-square-foot when making such an important decision.
Strategy #3: The Real Budget
Now, let’s look at the strategy of sharing your actual budget with the builder from the start. In order to feel comfortable sharing this higher number, you must trust that the builder is not going to take advantage.
Yes, I said you have to trust your builder first.
With this strategy, you’re choosing a builder first because of his reputation and second because of budget. Because you are entrusting this professional with the largest purchase of your life, shouldn’t you establish trust first anyway?
Once you’ve established that trust, you should feel more confident sharing your real budget with the builder you’ve hired. With this realistic budget, you and your custom home builder can make important decisions during the design phase to incorporate what you really need and want, plus stay within your budget. In this way, you won’t waste time discussing design compromises because your builder was trying to hit a fictitious smaller budget.
Should you share your real budget with builders from the start?
So, should you share your real budget with builders from the start? In our professional opinion, yes. We say this because we believe that you should research first, finding a builder that you believe you can trust enough to be honest about your budget.
How do you find a builder you can trust?
And how do you find this builder you can trust? Well, read our article, “How to choose from home builders in Greenville (or anywhere)” for six resources to help you with this important decision.
And remember, reputable home builders do not want all your money. (Read more about that here.)