Bids and Budget

After two weeks we have as many bids. One bid is still outstanding. When the bids come in things start to get real. All of a sudden the many features of the home in your mind have price tags attached to them. I won’t say we haven’t been cost conscious, we have to a degree, but there’s a certain amount of dreaming that takes place as you go through the design phase of the house (it is our dream house after all). It’s easy to act as if there’s room in the budget for everything; $25,000 glass wall – yes please, $2,000 tub – sure. It’s when you see all of these things added up in a bid that you realize that you can’t have it all and you’re going to have to make some choices. That’s what we’ve been doing for the past week.

Sticker shock

Preceding this choice-making exercise was several days of terror as we considered the first bid we received. The bid was returned in a mere two days and the bottom line was a whopping 40% higher than our initial budget. If this bid turns out to be realistic then we’re done and there’s no sense moving forward. Emotionally, it’s the lowest point we’ve been in this whole experience. However, after scooping ourselves up off the floor and taking a look at the details of the bid, there were several things that we simply knew were high or not necessary ($8,000 generator anyone?). There are a couple of other factors contributing to the high number. 1) We didn’t give the builder a target dollar amount to shoot for, which was intentional. 2) We did specify a few high dollar items. A $500 sink for example. This likely led the builder to assume that all other details and fixtures needed to be similarly high-end and high-cost.

The most unfortunate thing about the situation is that this is the builder we felt the most comfortable with. He’d invested a significant amount of time working with the architect and us. He showed us a couple of his houses and were really impressed with him and his work. We’re not closing the door on using him at this point. We’re going to wait until the last bid comes in and we have spent some time with him getting a more accurate (lower) number.

Bid number 2

Things turned more positive with the second bid coming in earlier this week. This one, while higher than where we want to be, is much more sane and workable. Comparing the two bids, some things, the concrete walls and plumbing rough-in were exactly the same, while others are very different (lower). I setup a meeting with the second builder and architect to clarify things and see where we can reduce costs. This turned out to be an infinitely beneficial exercise. We spent an hour and 45 minutes going through the bid line by line, focusing on the bigger ticket items. Simple clarifications like going with vinyl windows instead of wood can cut costs by half. They came away with a better feel for the things we are and aren’t willing to compromise on. Next week, we’ll come back together with some options for reducing costs.


For most people budget is determined by the monthly payment, including us. Working through bids, we needed to figure out more firmly where that final number needs to be. This meant mortgage calculators. I don’t go around giving personal finance advice, but I will make one recommendation when it comes to mortgage calculators. Always get a good faith mortgage estimate from your bank instead of relying exclusively on one of the many online mortgage calculators. A bank estimate will include things like taxes, insurance, and depending on your situation PMI; most online calculators do not and as a result will give you a low monthly payment estimate. I have found one calculator that does take these parameters into account.

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