Updated: Mar 4, 2021
So you are about to build or remodel your first home, Congrats! Now it's time to find that architect that can make all your Pinterest ideas come true. I suggest looking locally and finding one that already has built works in their portfolio that matches your style. If you are in a big city, I recommend getting a few bids.
Now you are reviewing the architecture contracts, and you see fees that range from 8-12% of the construction budget, sometimes more (especially w/ remodels). This seems like a lot of money, and you are probably wondering why do the fees correlate to the construction budget in the first place. What if I want a costly tile or appliances, why should I have to pay the contractor and architect more?
Here is why you should take a deep breath:
First off, it would be helpful to understand why 8-12% is the norm. This is an industry rule of thumb of time=money equation, and how do we tell the client upfront what we cost so we can sign a proposal and get started. Each firm will have a different number, and some won't use percentages. There are plenty of other ways to charge on a project. But for those that do use percentages, if you have 3 bids, you need to compare apples to apples. This means going through each proposal with a fine-tooth comb and finding what is included and not. Then trying to weigh those services out to your needs versus the additional cost. From all the architects I know, we are just trying to cover our costs and are usually happy to go with an hourly fee if there are too many unknowns upfront. We don't want to run up the costs cause that means a more substantial fee for ourselves. Usually, if the project changes in price, it means that there is more coordination work to do to maintain quality. Sure there are the architects that design projects that are way over budget, but that is why you should check references as well.
Secondly, if you are still uncomfortable with this fee structure, or you think you will have expensive materials paired with simple detailing, you can always choose to work on an hourly fee with both the contractor and architect up to a fixed amount. Some contractors open their books and show you their profit margins, so you know they are getting compensated but are selecting and doing what is in your best interest, and not price gauging and skimping on quality. Architects want what is best for you while maintaining the best quality output possible. If you pay them hourly, it might be a little more on the front end, but they can find smart ways to save you money on the construction end.
However, in my experience, these two fee structures tend to balance out to a similar cost and may not be worth the added administration, bookkeeping, and stress for both of you. Furthermore, most clients that go the hourly rate expect to see cost savings early and will typically make unwise quality decisions and ask for several cost-cutting revisions that may snowball the billable hours and lower the overall quality of the project. Just some food for thought.
As Benjamin Franklin says, "The bitterness of poor quality remains long after the sweetness of low price is forgotten."
- No one likes a bitter taste, especially for a lifetime, as something as personal as a house. Choose wisely and pick the right architect and contractor and then trust that they will deliver what you have been dreaming of.
It is essential to have realistic expectations before going into a project. What do I mean by realistic? Every project is a delicate balance of scope, time, and price. If you want to change this equilateral triangle on one side and not adjust the other sides to change equally, the quality will suffer. The project will become a headache for everyone involved.
Good luck, and feel free to reach out if you have any questions on this topic.