Builder's incidental

17 years ago

Our potential builder says that he includes an amount for incidentals in the price of the house in case we decide to add something or if the price of "something" happens to increase during the building process. Is this normal? We know that he already has a cushion. He told us in our first meeting that if he did a turn key-project, he has a cushion. We've built before, but I don't remember this contingency plan from the other builder. What if nothing goes up? Do we get that portion back? What if "something" goes down? Will he go back and say,"The cost of xyz went down and here's your money back from the draw." He's protected, but where is our protection?

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Comments (2)

meldy_nva
17 years ago
Read the contract carefully. All specified amounts should be clearly allocated and the dispersal should be clearly stated. His verbal comment/s is not to be relied upon, only written statements signed in agreement by both parties provide either of you with any security.

Personally, I'd be leery of a clause as you stated. However, I'm a firm believer in making all choices before the contract is signed and then not making any changes afterwards. Doing otherwise (especially those 'while we're at it' upgrades) is a sure way to way to become shockingly over budget. To think there is some sort of cushion built into the contract just encourages financial carelessness.

If you are tempted by late upgrades, get the exact cost of each, and then multiply by 5... that's at least close to what you'll pay as the real cost on the mortgage.
creek_side
17 years ago
"Our potential builder says that he includes an amount for incidentals in the price of the house in case we decide to add something or if the price of "something" happens to increase during the building process. Is this normal?"

Let's see, if you add something, you may not have to pay for it. On the other hand, if it is really expensive, you will have to do a contract mod and pony up.

If something specified in the contract turns out to cost more than anticipated, you may or may not have to pay more out of pocket. It depends on whether his "pad" is big enough.

What seems to be missing is any mention of a refund if you don't add anything, or major items in the house turn out to cost less than anticipated.

Our fixed price contract has allowances for items like cabinets, counter tops, appliances and light fixtures. If we choose items that cost more than the allowance, we pay extra. If we chose items that cost less than the allowance, we get the difference back.

If we add something major not in the contract, it is added as a change order.

Your builder's contract is all one way. It favors him in all cases. If you economize on anything, he pockets the savings. If you get extravagant on anything, you pay extra.

Find a new builder.
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