Torron Group Blog

Thursday, August 28, 2014

Making Plans and getting bids!

Welcome Back!!

Now that we have narrowed down the list of possible contractors, it’s time to design your home, have blueprints made, and get bids.

The stage for building your home is set by the design process. To avoid costly budget increases and the inconvenience of delays, take your time in selecting the floor plans and layout of the home to ensure it matches your personality and lifestyle, both now and in the future. For example, if you may have children in the future, plan bedrooms and a bathroom with kids in mind.

For the bidding process, each contractor will need a complete set of blueprints, an idea of what you want in your new home, and a budget to show much money you want to spend. From this information, the contractor will compose a bid.

To make the process of comparing bids easier, you may want to ask each contractor to break the bid down based on:

Cost of material
Profit margin
Other expenses

Materials usually account for 40 percent of the total cost; the rest covers overhead and the typical profit margin, which is between 15 and 20 percent.

Once you have accepted a bid, keep in mind that changes will increase the actual cost.

Hire your contractor based on work ethic and the quality of his work. NEVER hire a contractor merely based on the fact that he has the lowest bid!

Payment Schedules

Setting a payment schedule usually starts with 10 percent down at contract signing. Then it can vary for the payment schedule. However, it is common to have three payments of 25 percent spaced over the duration of the project and a check for final payment once you feel that every item has been completed and you are happy with the finished result. If the contractor asks for half the bid price upfront, he may be having financial problems or is worried that you will not be happy with the finished work.

Get it in writing!

Have a contract drawn up that details the steps of the project, the payment schedule, the start date, and the completion date. Make sure it also specifies the materials and products to be used. Additionally, you will want to include a clause that the contractor must get a lien release from the suppliers and subcontractors indicating that he is responsible for paying them and not you!

Stay tuned for tips on The Budgeting Process! We’ll post that blog in a few days.

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