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Types of contracts for home builders

On Behalf of | Apr 20, 2016 | Contract Disputes |

If you are a home builder in Florida, figuring out the best way to structure your customer contracts is an essential part of running your business efficiently and profitably. There are many different types of contracts from which you can choose. Each one has its own set of pros and cons. Understanding these pros and cons is important so that you can make the choice as to which one is right for you. You may even choose to use different types of contracts for different jobs.

When building a custom house, it is not uncommon for some homeowners to want maximum flexibility to make changes all along the way. While this can result in the home of their dreams, it can make it all but impossible for you to give a firm estimate on the cost up front. In these situations, Home Source indicates you may be wise to use a contract based upon the actual costs incurred. Your customer would pay you the actual cost of building a home plus a percent. You can also include a cap on the amount if desired. In order to accommodate the additional management you may incur, you can also adjust the markup or charge additionally for project or account management.

For projects that are more defined and where owners want more assurance on their final costs, you can leverage a fixed price contract. Many times, lenders prefer these as well. You might want to include a contingency that can account for any cost shifting that happens along the way so that this does not end up coming out of your profits.

If you would like to learn more about contract law in Florida, please feel free to visit the builders’ and contractors’ legal page of our business website.


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