Any business venture has risk, and that would include new home construction. It may not be what most would consider a “typical” investment, but nobody buys a house to lose money. In fact, for a typical family, this is the largest single investment decisions that will ever be made, so, we want to try to minimize risk in all areas to ensure your investment pays off when it comes time to sell the home.
Here are a few of the areas in custom home construction where the risk is greatest:
Today, there are more tools available than ever to ensure that mistakes during the design process are kept to a minimum, ideally eliminated altogether, but the reality is that there is still a chance of human error. One simple keystroke mistake could result in massive miscalculations that, if not caught, could pose a significant financial risk as the project moves forward.
The simple fact that the project is outside means that there are numerous factors that can influence the timeline of the build that are outside of anyone’s control, especially during the early stages of construction. For instance, if there were several days of downpours when you were supposed to start the foundation, the project would have to get pushed back.
There could also be issues with your supply chain, permits, and/or labor, all which mean more delays. To a certain extent, delays are built into the original cost, but too many of them can start to add up rather quickly.
Pricing Commitments Not Honored
When you sign a custom home contract, there will be a lot of fine print, some of that related to certain costs that you may have thought were fixed. When supply costs go above a certain level, the builder usually has a clause in the contract to protect his business from eating these costs, passing them on to you. You are going to need to go over that contract with a fine-tooth comb, preferably with an attorney or a residential construction project manager that has experience in these details.
This is probably something that we do not talk about enough, but it is a real-world problem that comes up when you have so many moving parts. You have to ensure you can get along with your builder and project manager to ensure any conflicts are resolved quickly and with a solution that everyone can live or you risk the entire project being derailed. Imagine the worst-possible scenario where there is a conflict with the builder and he shuts down the job then files a lawsuit for breach of contract… an absolute nightmare.
We know these waters can be murky, at best, which is why we recommend stacking the deck in your favor with a residential construction project manager or consultant from Better Build Now. For more information about our services, please call us at 888-402-4180.