Tuesday June 30, 2015
Someone once said that the definition of a problem is, “the difference between what you wanted versus what you got – and the greater the distance between the two, the greater the problem.” If this serves as our litmus test, clearly those seeking to figure out exactly what their new home is going to cost have a problem!
The distance between what homebuyers often believe their new home will cost versus what it actually ends up costing all too often constitutes a big problem. Unfortunately, in the custom homebuilding industry, this problem is systemic to say the least.
Why The Confusion?
When walking into a builder’s model home, what you see is not necessarily what you get. And most everyone who has gone through the new homebuilding process will tell you that there often is a great discrepancy between the stated price of the home versus what the home actually costs once all of those wonderful features that drew you there to begin with are actually tallied up and included.
There are many reasons for this, not the least of which is the competitive nature of the marketplace. No builder wants to appear considerably higher priced than their competitors building down the street – especially when builders realize that once a prospective buyer exits their model, the chances of them returning are slim.
In the building industry, the old adage about how “you don’t have a second chance to make a good first impression” is certainly true. More often than not, builders have very little time to make the case that of all the builders from which to choose, they alone are the perfect fit for Mr. or Mrs. Prospect.
Because of this, the standard practice of the new home industry is to “wow” the customer the moment they step through the front door. And this means putting on a good show, i.e., lots of attractive upgrades. And often those upgrades represent a significant increase in the total price of the home.
Recently I spoke with a realtor who told me that she informs her clients to look at the builders price-sheet and then add $50,000 just to get a realistic feel for what the home will really cost. THAT is quite a discrepancy, indeed, and is probably the number one reason why so many homebuyers approach custom homebuilding with an abundance of fear, uncertainty and doubt. Determining what you get for what you pay can be a difficult process.
Builders follow this practice because they are caught between remaining price-competitive and at the same time showing off all of the fun things – and value – they can build into a home. (It helps to remember that just as you don’t want to build predictably vanilla home, in most cases, builders don’t want to build one, either.)
The Solution: Removing the Fear, Uncertainty and Doubt about Price
The two most important things a prospective homebuyer can do is 1) determine the builders’ average price per square foot, and then 2) obtain a comprehensive list, in writing, of the exact included features that come at that price point. (It’s worth mentioning here that Copperleaf also puts their included features list in picture form as well.)
Often, by seeking the answer to these two seminal questions, buyers (and real estate agents) can gauge, not only the true price of the home, but the overall value the builder is putting into their homes for the price they are asking you to pay.
Only when prospective buyers have gathered this information are they best prepared to choose the builder that is right for them; and hopefully, the one that will provide the least discrepancy between what the buyer really wants, versus what they actually end up getting.
In sum, two simple questions can help you discover the REAL price of building your new home: What is the builders price per square foot… and where is the list “in writing” of all the included features that come at this price?
With that insight in mind – happy shopping!