Three reasons why accurate build cost data is important to lenders

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Preston Tucker
July 6, 2023
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With recent rises in the price of construction materials and ongoing labour shortages, it’s more important than ever that you can accurately calculate and benchmark how much it will cost to build your development. 

Not only to give you a strong sense check of your costings but also so you can increase your chances of wowing lenders – and securing funding. 

Below, we share three reasons why build cost data is so important when trying to get development funding. 



1. Justifies overall costings 


It’s all well and good telling prospective lenders that your development is going to cost you X amount to build, but without the comparative data to back it up you could risk coming across as naive. Particularly if your costs are on the low side. 

Showing the proposed costs of your project against other similar developments in the areas demonstrates awareness of the market and provides a benchmark for lenders. 

Build cost data can help you justify your own lower (or higher) costs, by presenting where exactly you’re able to get a cheaper deal, or expanding on the different materials used. 



2. Demonstrates an eye for detail

Lenders are looking for the sweet spot of depth and detail in a development appraisal. 

Too little information and it may look like you don’t know your stuff. Or too much, and you risk overwhelming them with detail and overshadowing the key information you want to get across. 

Incorporating build cost benchmarking is a box ticked for many lenders. 

It can also help speed up the underwriting process, as you’ll be answering their questions before they even have the chance to ask them – putting you in a stronger position.

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3. Provides you with clarity and confidence


Most importantly, build costs data gives you a clearer picture of what is achievable within your budget. It can be a good check to manage your own expectations or provide you with the assurance you need that you’re on track. 

Either way, this data can give you the confidence you need to expertly pitch your project to lenders and expertly navigate any doubts or queries that they may have. 

After all, knowledge is power. And the more information you can arm yourself with to fight for your case in a challenging market, the better. 

And we can help you do that. 



How LandFund can help 

We now have build cost data available as part of our LandFund offering. In our appraisal tool, you’ll be able to see a new line item (under the build section) that shows the average build cost in the area. This data can help you benchmark your project against others in the area and deliver the value and detail that lenders are looking for. 

And even better, once you’ve got a rock-solid appraisal, our brokerage service will help find you the right lender to fund your development. We offer a range of funding options and work with a range of highly-experienced funding partners to ensure you’re getting the best rates on the market.

 

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