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April 14, 2011 | | Comments 0

Cost Plus v. Fixed Pricing When Building Custom Homes

When you’re shopping for custom homes, how do you know if you’re getting the best price for the construction? Usually, a
luxury home builder will price its services as either Cost Plus or Fixed Price, and both have very different outcomes.

On the surface, it may seem that a Cost Plus model is the better option because you’re building your dream home at “builder cost.” But think about this: building hard-costs are constantly fluctuating based on supply and demand. During the construction process, it’s likely that the price of building materials will increase. And, who do you think will have to absorb the rise in building materials? Not your new home builder; under the Cost Plus model, the home buyer is responsible for covering all of the “pluses” that arise.

On the other hand, in a Fixed Price scenario, all of the pricing specifications for your new home are worked out in advance. As a result, you have a comprehensive understanding of the budget up front. Once the cost of construction is determined, any fluctuating material costs are covered by the builder.

For more than 20 years, Sterling Custom Homes has operated under a Fixed Price model. For more information, visit the
Sterling Custom Homes website or call Gary Grambley at 512-263-2214.

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