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What are architectural fees?
Architectural fees are a form of compensation paid to an individual or entity that designs buildings or structures.
Architectural fees are the standard rates paid routinely by people, government organizations and agencies for services offered by commercial architects. An architect is a key asset for any project requiring the construction of a new structure or altering a current structure. Architects are skilled in spatial and structural relationships, building engineering, and planning. Additionally, they are familiar with the applicable zoning regulations and building codes.
Architectural fees are mostly charged per hour, by square footage, as a ratio of the cost of construction, or as a fixed fee. The charges depend on the economy, the nature/complexity of the construction, the location of the site, and the property owner’s negotiation skills. Hourly rates are advantageous to the architect, especially when the project owner keeps changing the building designs. However, the charges can be lower if the project owner has settled on a particular layout.
Some architects combine both per-square-foot and hourly billing. They charge per hour when working with design and schematic phases so as to provide incentive for the client to present any changes in a timely fashion. After settling on the design, the architect and the client will have a better understanding of the project scope. Thus, it will be more accurate to use per-square-foot billing.
In some instances, architects may charge a fixed fee for their services. This occurs when the architect understands the details of the project, so there is no need for hourly or per-square-foot billing. This system is common in small-scale projects and renovations.
Architectural fees example
George, a real estate investor, wants to build a rental home. He needs the best architectural design, so he hires Ronny, a professional architect, to design the house before construction begins. They sign a contract and George offers to pay Ronny $3,000 (about 6 percent of the building cost). The $3,000 is Ronny’s architectural fee.
Project owners can apply for construction loans to cover architectural fees and other building expenses.