Fixed price construction contracts provide lenders with predictable financing because they establish a clear cost ceiling, whereas cost plus contracts lack a predetermined cap, making them less attractive to banks that prefer certainty in loan amounts.
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Fixed Price vs Cost Plus BuildingAdded:
Question was, how does a fixed price builder make financing more predictable?
That's easy. We are fixed price, meaning that if you stay within your allowances, you won't go over cost of your home. So, a bank looks at that as a true fixed price contract, whereas a cost plus contract, you know, doesn't really have a cap how they're written. So, a bank's a little bit more cautious when they're working with a cost plus builder. So, fixed price, that's the way to go.
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