Guide
Two bids for the same house, thousands apart. Here is where the gap usually is.
If you are holding quotes that do not match and cannot work out which one is real, this is the page. It applies whoever you end up building with.
Allowances are where the difference hides
An allowance is a placeholder for something you have not picked yet. Flooring, cabinets, lighting, plumbing fixtures, appliances. The builder puts a number in so the bid can be totalled.
Set those numbers low and a bid looks sharper than its rival without the house getting any cheaper. You find out at selections, when the tile you want is $6,000 over the allowance and the difference becomes a change order.
Ask both builders for their allowance schedule as a separate list. Compare the allowances, not the totals. That one request tells you more than anything else on the page.
The five line items that actually move
- Foundation. On Blackland clay this is engineered, not generic.
- Septic. Aerobic systems are the norm here and are not cheap.
- Water. Municipal tap fee, or a well.
- Power. Distance from the nearest pole is somebody's bill.
- Dirt work. Slope, fill and access on your particular lot.
All five depend on your land rather than your house plan, which is why a builder who quotes before walking the lot is guessing.
Take this with you
Six questions to put to every builder you are considering.
- Can I see your allowance schedule as a separate document?
- What in this bid is fixed, and what is an estimate?
- Have you walked my lot before pricing the foundation and the dirt work?
- Who is on site day to day, and will I have their number?
- How do change orders get priced, and do I approve them before work happens?
- What happens if the build runs over the date in this contract?
If a builder is uncomfortable with any of those, that is the answer to the question you were really asking.
The offer
Send Randy the other bid.
He will read it and tell you what is missing from it, whether or not you build with him. It takes him twenty minutes and it is the most useful thing anybody will do for you this month.
We never had to chase him. If we called, he answered — and if he said he’d be there Tuesday, he was there Tuesday.
Hamid & Lisa S.O’Brien homeowner
Common questions
Short answers.
- Why are two bids for the same house thousands apart?
- Usually allowances. The cheaper bid has set lower figures for things you have not chosen yet, so the difference shows up later as a change order rather than in the quote.
- What is an allowance?
- A placeholder for something undecided, such as flooring, cabinets or fixtures. If the allowance is $8,000 and you pick $14,000 of tile, you pay the difference. Low allowances make a bid look competitive without changing what the house actually costs.
- Does a fixed price mean the number cannot move?
- It means the builder carries the risk on what is specified. It does not cover things nobody could see, like what turns up when the dirt work starts. Ask which is which before you sign.
- Which line items move the most?
- Foundation, septic, water supply, how far the power has to run, and dirt work. All five depend on your specific lot rather than on the house.
