Should you tell your builder your real budget?

July 25, 2018 | Starr Tingle

Is this a thought that has gone through your mind:  When my builder asks me for my budget, do I tell him/her my real budget? Or do I tell him/her a number less than my real budget?  If it has, you are not alone.  

Are you concerned that if you tell your builder your real budget, the builder may not try to negotiate a better price for you if he/she knows that the cost to build is already within your budget?

For example, let’s say you tell your builder that your real budget is $250K. Later you find a house plan you like and the cost to build is $225K. Since $225K is already within your budget, you are concerned that your builder will charge you $250K to build the house.

First and foremost, if you have a fear of this happening to you, you have not yet found your builder.  If you don’t trust your builder, don’t use them.  Walk away.  

From a builder point of view, I can honestly tell you we’ve been frustrated on more than one occasion because we’ve been low balled.  A client had told us they could only spend x when in actuality their budget was much higher.  Then we spend multiple hours rebidding and re spec’ing their file.  I would have saved much time if everyone had been honest up front.  A good builder will save you money if they are indeed working on your behalf.

In our early days, before we had a lot of experience, we never asked folks what their budget was when we started working with them.  It seemed “rude” or invasive.  Also, we assumed, wrongly, that people knew roughly what a new home would cost to build and we trusted, incorrectly, that they would only look at plans they could afford.  After so much wasted time and heartache, we learned to ask for the budget number and insist on a prequalification letter from their lender.  You can read a post about that here.  It was quite an improvement to our process!

Our next improvement to our process was to not only ask for an honest budget number (which may, or may not, actually be honest) but to also ask for a “Needs/Wants/Wishes” list from our clients.  First, we want the list of needs; these are must-haves – if you can’t afford to have these features in a new home, there is no reason to build.  Second, we like to get a list of the wants; these are things you would like to have in your home but can live without them.  Third, we ask for wishes; these are items you don’t really expect to be able to afford, but if the budget could magically handle anything extra, this is what you would choose.

By always honing our process, we’ve just about gotten to a place where we can deal honestly and transparently with our clients.  It’s an enviable position as a builder; one we enjoy greatly.  At Sanctuary Homes, we take great pride in minding your budget like it is our own.

Let us know what questions you have, we would love to answer them!  ~Starr