The 3 Types Of CONTRACTS Used By Custom Builders

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The 3 Types Of CONTRACTS Used By Custom Builders
Contracts are an important part of building your custom home, and in this video we are going to discuss the 3 most popular contracts used in residential construction. The three main types of contracts that we will cover today are Fixed Fee, Cost Plus, and Fixed Price.
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For home buyers who love detailed architecture, we are an award-winning custom home builder with a reputation for meticulous attention-to-detail, fine carpentry, and distinctive quality. Our focus on luxury custom homes can be seen in some of Houston's finest neighborhoods, including Memorial, Spring Valley, Hilshire Village, Garden Oaks, and the Heights.
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0:44 Fixed Fee Contracts
1:55 Cost Plus Contracts
3:57 Fixed Price Contracts
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[@aldoogie824]

Awesome video. I'm a builder in California, focused on residential homes. I love the video you put out. It's spot on. I'm considering a fixed fee contract with a client now, but seriously concerned about their lack of commitment to the finishes, which means they have a lack of commitment to it getting finished.

[@hectorbart]

You seem to prefer the fixed price (lump sum) contract. Would you recommend that type of contract even for an addition to an existing house? I'm looking to add on a master bedroom suite. Thanks in advance.

[@tamil1001]

Very helpful and informative video. In the current economic environment with supply chain issues, fluctuation of cost of building materials is cost plus contracts more common? Also what is a reasonable profit for a builder at the current time for cost plus?

[@AspireFineHomesHouston]

Correct, cost-plus would be safer for the builder in these current economic conditions - but not for the customer, which would absorb all of the increased costs.

[@djmatt4498]

How do I create a contract ?

[@jagslion3]

On a fixed price the homeowner has not control over the money, for example I want to know how much my builder is paying for a yard on concrete and how much is he selling it to me. with a cost plus I will have control over all the sub contracts bidding.

[@AspireFineHomesHouston]

If you want to be that involved and have that level of control, then cost-plus is the right choice for you. But you need to realize your contractor makes more money the more things cost, so the motivation to keep costs down isn't always a top priority. As long as you have a trustworthy builder, you should be good. Also, 90% of litigation between builders and homeowners are cost-plus contract related....

[@eddielee5634]

Will most builders let you choose what type of construction contract that you want to enter with them?

[@AspireFineHomesHouston]

Typically builders only offer one type of contract to their customers and operate their companies around that particular type of contract. With that said, some smaller builders will use multiple types.....

[@CMCraftsman]

Most builders will select their clients based on the type of contract they offer. For example, if you have a set budget you absolutely cannot go over, typically a cost plus contractor will steer you towards finding a contractor that can stick to a hard number.

[@tommyryan4810]

Great Video, but the shirt moiré is distracting

[@AspireFineHomesHouston]

Agreed. I won't be wearing it during any more videos. Thanks!