Real Estate Development

[Daniel Coleman]

Here is my question in the development process, how much are renderings and floor plans and when is the architect paid if you need an actual number to take to the bank to get construction started? Basically when is the architect paid? Due to I need plans to present to get a construction quote from GC's

[Mike Garrett]

Daniel, This is a far more complicated subject than it appears at first. As an architect we have billed hourly, by phase, by sheet, with a payment plan and promissory note, by percent complete, and lump sum. There are many ways to structure the agreement - even as a partnership so their fee is based on the performance of the property sale. What is important is the value and level of service that is being provided. Some architects provide a more desirable housing option or work well with the jurisdiction, which can increase the final sale (or rent) or decrease the overall schedule. These have a real cost benefit that may not be apparent at the front end of the project. 

First things first though, do you need an architect? Check with the jurisdiction as to what they require. It may be far less expensive to hire a designer (not a licensed architect) and a structural engineer then an architect. However, if they require an architect, make sure you know what services they are providing and what you can expect to receive: beware the vaguely detailed, low cost provider - like a contractor everything becomes a change order and your costs can get out of control.