Building a Home: Tips on Cost Estimating and Cost Savings
By Charles Koty, A.I.A.
A home is usually the single largest financial investment that one makes in a lifetime. When it comes to such a huge investment, caution, research and conservatism can be rewarding.
First, determine how much you can afford to spend on the lot and on the house that you wish to construct, taking into account your current financial situation and your future potential for earnings. Bear in mind that property taxes and mortgage interests are tax-deductible -- a true relief for homeowners.
Choosing an Affordable Home Plan
Before selecting a house plan, carefully review your family needs in terms of lifestyle and how much living space you require. A big challenge is selecting the right design that fits your needs and is in a style that you cherish. However, this selection does not have to end the customizing process. More often than not, plans can be altered to better suite your needs. Minor adjustments need not be costly, and major alternations should be planned in advance to avoid overcharging.
Also, prior to selecting your favorite house plan, take the time to thoroughly study your property so as to make the most of your lot. Look for the perfect views. Note any special features that can enhance your orientation. Harness the sun. And, beware of adverse conditions and deal with them early.
Choosing a Contractor
Construction costs can vary widely, depending on the size of the house, style amenities, and on the type of materials and finishes that are selected. Labor costs, especially, vary greatly within the urban and suburban regions and in different parts of the county. Contractors often tend to quote different prices, depending on the season of the year and how busy they are. You can attempt to take advantage of that. For the final bidding, obtain at least three or four bids from reliable, competent builders. The same applies if you decide to become the "general contractor" and have to deal with subcontractors. Avoid questionable contractors just because their bids are low; the end result could lead to a big disappointment.
As a rule of thumb, you can obtain a rough cost estimate by multiplying the average construction cost per square foot in your region by the square footage of the house living area, as given with the plan. To acquire the average construction cost per square foot, consult with local contractors or with the state and regional builder association or with the NAHB (National Association of Home Builders).
However, for a realistic and binding construction cost, the best way is to submit the house blueprints and the material list (including all your modifications as well as your detailed list of requirements, clearly specified) to a number of contractors who will give you official bids for your evaluation and selection.
"Allowances" in the bids can be the cause of a big headache and added cost. To avoid unwelcome surprises, make certain that your prospective builder's bid has almost no "allowances," if possible. "Allowance" is the dollar value for labor and material that are not clearly defined in the plans or are not covered by code, such as allowances for specific kitchen cabinetry, kitchen appliances, bathroom fixtures and finishes, light fixtures, roof tiles, heating and cooling equipment, windows, doors, house paint, etc.
With too many "allowances," the surprises come in when you discover that the builder had budgeted for low-cost products that are compatible with the house design.
Do Your Homework!
The smart way is to do your complete research prior to submitting the blueprints for bids. Prepare your own detailed list of materials and products that go into the house, specifying manufacturers, sizes, numbers, models, colors, brands, etc. Such a thorough listing may require extensive research and cost analysis, but it will avoid later problems and unnecessary expense.
You will discover that by doing your homework early, methodically and thoroughly, you will very likely avoid later anxiety and even have peace of mind and joy during the construction period.
Click here to view our affordable home plans.