What does a Base Price in a New Construction Home Mean?
What is the Base Price? This is everything you need to know about base prices when building a custom home. Builders use a base price to establish a starting point for pricing. With so many variables involved when building a new home, it’s important to begin with a base line of included features…IE the “Base Price.”
Base Price = a fixed list of included features in a home that are considered standard. We call this our “Included Features”. Some typical included features are 9’ basement, 2 car garage, and tile flooring in master bathrooms.
Builders strive to have a low base price…a low base price means a lower purchase price for the buyer.
If you speak to several different new home builders, you will likely notice that the base price is not the same from builder to builder. This is because each builder includes a different list of included features. For example, if you build with Comerio Homes, we include granite as a standard in some of our larger plans, but this is may not be an include feature in some of our smaller plans. Other builders might consider this an upgrade and charge more for it. Therefor they will naturally have a lower base price since they have not included this feature as a standard.
As a buyer or an agent, you will want to compare the builders’ base prices to see how they stack up per square foot and what the included features are. This is not the only thing to think about when comparing builders, mind you.
You should also consider that each builder offers different layouts and elevations which will effect the costs associated to build you home.
Example, we include granite as a standard in some of our larger plans but not our smaller plans. Other builders might consider this an upgrade. Therefor they will naturally have a lower base price since they have not included this feature as a standard. It will never be a true apple to apple comparison.
What is not in a base price?
Builders do not include the building homesite or any site costs in the base price. In other words… any upgrades, options or unexpected site costs are not included (IE if you hit rock while digging the basement for example). Site costs deserve their conversation own so we will skim over it for now.
Benefits of a Base Price:
One of the main benefits of working from a base price is that the builder can give a potential buyer a final sale price quickly by adding the selected building lot and upgrades to the base price. to get a final sale price quickly.
As builders get pricing increases on labor and materials, they adjust their base prices to reflect this throughout the year.
This is the best way to keep consistent pricing for production builders who build the same plan over and over.
Here is an example of how the math works using a base price:
● Base Price with Including Features: $300,000
● Homesite Cost: $100,000
● Buyer Selected Upgrades / Options: $50,000
Total sale price of the home =$450,000
For more information about base pricing click here for a New Home Pricing Guide.
For information about how the homebuilding process works, click here for a New Home Handbook.
Tags: Custom Home, Custom Home Builder, What to expect when building a home
Categorized in: How To, New Home Building Education
This post was written by Comerio Homes