New Construction tip: Don't Go Changing

By
Real Estate Agent with Florida Supreme Realty SL514814

Why Changes Are Costly From the Desk of Harwick Homes

Even small changes made after work begins can have surprising effects on the budget. Here's why.

Minimizing change orders is one of the most effective things homeowners can do to control costs. The reason is that seemingly small changes can have cost impacts beyond the builder's control—costs that ultimately are borne by the customer.

We're not talking about unscrupulous contractors who write vague specifications to create low bids and then nickel-and-dime clients with change orders to increase profits. We mean honest builders who write detailed specs and manage their jobs in a professional manner. It's not unusual for customers of these builders to decide, after the project kickoff, that they want something different in part of the house.

The kickoff usually happens at the preconstruction meeting, where the builder and clients review the final product and design choices, and the clients sign off on those choices. After this meeting, purchase orders are generated and sent to all subcontractors and suppliers, setting firm prices for every part of the job. Any change that happens after that point will likely add cost.

Grey OaksHow much cost? That depends not only on what is being changed, but also when. A common example is the clients who, after seeing the opening over the kitchen sink, decide they really want a bigger window. That decision will cost a lot less if they make it early, during the framing walkthrough. Once the window is in the opening and the insulation, drywall, and sink cabinet are installed, the change is more costly.

Less obvious are seemingly minor changes that have a ripple effect. These can multiply the cost of an item to several times what it would have been as part of the original specs.

For example, suppose the homeowners decide they want a pedestal sink in the powder room, rather than the small vanity they had chosen. The builder's staff has to cancel the order for the vanity and possibly for a granite top. If those items have already shipped, the supplier will likely charge a restocking fee. The pedestal must be ordered from the plumbing supplier, taking additional time. If the hot and cold water pipes are already in place, the plumber has to move them, and the plumbing inspector has to inspect the change. If the wall has already been finished, the drywaller must be called back. This minor change may throw everyone's schedule off by a week or more.

Every change also requires time from the builder's staff—time to complete and track orders, to reschedule workers and subcontractors, and to update the budget. That's why change orders include an administrative fee.

This explanation is not given to discourage important changes. Clients are entitled to make their home their own, and most clients decide to make at least some changes during construction. But they should do it with a clear understanding of the costs those decisions will bring when they are made after the specs have been written and the contract signed. It's a reminder that making as many firm selections as possible up front is in the customer's best interest.

 

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Topic:
Home Buying
Tags:
new construction
after the fact
ripple effect
predictable results
make it your own
changeouts
think ahead
how nuch
timing is enerything
preconstruction meeting
control costs
be sensible

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Rainmaker
2,584,578
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

You definitely know how to assist buyers with purchasing a new build home!

Sep 17, 2019 07:25 AM #1
Rainmaker
5,041,528
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
Marketing Agent for The Todaro Team

Good morning Kevin J. May once the plan is approved by the buyer and submitted with the application to build the structure, there are no more changes unless they are not structural.... and once the frame is finished and the roughs done, no more changes.... but that's how my builders did it and it worked well...

the magnitude of those homes were 3,000 to 5,000 sf for the last subdivision I did.... 52 lots.... ran smoothly.

Sep 17, 2019 07:40 AM #2
Rainmaker
785,143
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

Interesting post and something all consumers should read before starting to build a home or an extension.

Sep 17, 2019 07:43 AM #3
Rainmaker
4,108,884
Joan Cox
House to Home, Inc. - Denver Real Estate - 720-231-6373 - Denver, CO
Denver Real Estate - Selling One Home at a Time

Kevin, most of our local builders say changes can only be accepted through a certain time.

Sep 17, 2019 08:24 AM #4
Rainmaker
4,493,264
Ron and Alexandra Seigel
Napa Consultants - Carpinteria, CA
Luxury Real Estate Branding, Marketing & Strategy

Kevin,

Change orders is how $$$ are made.  My father used to review construction bids amd select the contractors for one of the government branches.  The lowest bidders were always hoping for the change order game.  He would call them, and ask them how they could possibly make a dime on their bids.  LOL. A

Sep 17, 2019 11:31 AM #5
Rainmaker
3,268,931
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Realtors - Luxury - Divorce

Don't go near new construction if you don't have an agent with experience in thiis niche !

Sep 18, 2019 02:13 AM #6
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Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Kevin- Larry did new home construction for the larger builders and yes, it's those changes that will cost you. 

Sep 18, 2019 08:28 PM #7
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Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

This is such great advice, Kevin. We have friends who built a home and from the sound of it the builder likely made a fortune from the change orders. And it all took waaayyy longer than expected, which is not a surprise given how many times things changed, or got added.

Jeff

Sep 19, 2019 10:14 PM #8
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Kevin J. May

Serving the Treasure & Paradise Coasts of Florida
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