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Building a home can be a complex and risky venture, with different contract models presenting unique challenges. This article explores the pitfalls of cost-plus contracts, where homeowners risk budget overruns and inefficiency, and fixed-price contracts, which can lead to disputes over unaccounted items, highlighting the importance of thorough comparison and understanding of builder pricing and specifications.

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Cost Plus Contracts

Building a home on a cost-plus basis can be a trap that can seem attractive on the surface but can be a risky venture due to poor budget estimates and the lack of incentive for the builder to work efficiently. In this model, the homeowner pays for the actual cost of construction plus a fixed fee or percentage to the builder. This setup can lead to budget overruns if initial estimates are inaccurate or if unexpected costs arise during construction. Moreover, since the builder is assured of a fee regardless of the actual cost, there is little motivation for them to seek cost-saving measures or to complete the project in the most efficient manner possible. This lack of incentive can result in higher overall costs and a longer construction timeline, making it a potentially unfavorable option for homeowners who are budget-conscious or time-sensitive.

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Fixed Price Contracts

These contracts can have many advantages; however, a fixed-price contract with a builder can also be fraught with risks, particularly if the contract includes inadequate allowances or overlooks certain items in the specifications. This can be especially problematic if the omissions are substantial or critical to the project’s completion, leading to disputes, delays, and a potential increase in the overall cost of the build beyond the homeowner’s initial budget.

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Compare Home Builders in Des Moines

When comparing various custom home builders it is important to compare pricing, apples to apples, as many of our competitors (1) fail to spend the time or have the needed experience to adequately budget and/or (2) appear to be the most cost effective initially to secure a contract.


Important items to discuss and fully understand is:

  • Construction Loan Interest

  • Specific lot needs.  Plan revisions, Grading, Sod, Irrigation, Tree Removal, Soil Remediation etc

  • Landscaping, Trees and HOA requirements

  • Building Specifications and Industry relationships

  • Allowances.  Cabinets, Appliances, Lighting & Plumbing Fixtures, Custom Trim and Built Ins, Flooring Quality, Closets, Electrical (including cans, device wiring and fixture installs) etc.

  • Rural lot needs: septic, water, propane, electric, driveway length/material etc

  • Designer access and time

  • Realtor Commissions

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