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re: Avoid turnkey pricing?

Posted on 8/29/14 at 11:21 am to
Posted by man117
Los Angeles
Member since Jul 2009
674 posts
Posted on 8/29/14 at 11:21 am to
quote:

Just get construction loan. Can go cost plus or turnkey with that route. Then switch to perm at closing. Most builders cant finance project on land they don't own


This is what I thought. All of the people I talked with knew I owned the lot. So, in this scenario, the only thing turnkey would be is "hey I'll bid a total price on the high side and guarantee it won't change"? Is this the correct assumption?
Posted by ForeLSU
The Corner of Sanity and Madness
Member since Sep 2003
41525 posts
Posted on 8/29/14 at 11:48 am to
quote:

So, in this scenario, the only thing turnkey would be is "hey I'll bid a total price on the high side and guarantee it won't change"? Is this the correct assumption?


Personally I would never try to do a fixed price agreement, not because I'm afraid that the builder is going to price it high, but because I'd be worried about getting the house I really wanted.

But yes, the builder is going to price in risk, mostly unknowns. Risk comes from many areas including how much of a pain in the arse you may be, how well the money will flow, what decisions aren't made yet, etc. The last thing you want is to find out your plumbing allowance will only get you apartment grade junk.

Personally if I were going down this path, I'd get a price on building the house to the point it's ready to trim out. Then I'd work on budgets for my flooring, paint, appliances, trim, fixtures, etc. That also gives me the flexibility of using a different contractor to trim out if I don't have a good experience during construction.

Also be very clear about work acceptance and performance standards.

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