The reality is that the cost of anything is simply the sum of the parts. The cost per square foot of a home is simply the sum of all the parts, including site work, permits and fees, etc. divided by the square footage of the home. This must of course include the cost of doing business -- overhead, supervision, profit, etc. Without a clear definition of these “parts”, a builder cannot accurately say what the “sum” will be, hence, if a builder tells you he can build you a home for $125 per square foot, when in fact the home you are picturing in your mind will cost $225, he is doing you a great disservice. Substantial variations in cost from builder to builder will typically represent different levels of quality and service, or worse yet, simple bait-and-switch selling practices. Unfortunately, this is all too common in the industry, sometimes as a sales technique, but often as a result of little more than enthusiastic optimism on the part of the builder. Reality will come around eventually, but it is better to approach the process from the start with realistic expectations -- don't let yourself get sucked in by the "low-ball". Until you have had a detailed discussion about the home and defined the important project parameters, it is impossible to give even a loose “ballpark” estimate of cost with any accuracy. The size and style of the home, site conditions, the various finishes etc. all influence its cost. Even the finishes that are typically associated with a nicer level of quality such as granite counters or hardwood floors can vary tremendously in cost depending on what you choose. Until the builder has spent some time on the site, and learned the specifics of your tastes and the various project details, his guess has little more value than your own.

So just what sort of home are you getting with that cost estimate? Geographically speaking, builders will tend to work from the same pool of labor, subcontractors and vendors. Given that builders of similar ability, quality and reputation will use similarly priced resources (or in many cases the same resources), and typically have similar margins for their services, the difference is almost always in quality -- perhaps in the quality of materials or perhaps in the omission of certain items. Most often however, this is reflected simply in the quality of their service and personal attention. Less time spent with you, less attention to detail can equal faster completion also, but there is a different price to pay for that. There’s an old adage that engineers use that goes “…good, cheap, fast…pick two”. This applies to virtually any service (in a relative sort of way), and it is good to keep in mind when discussing the cost of your new home.

The various inherent difficulties involved in building on given site will often be the biggest factor influencing the cost of building. Some projects will require significant expenditures outside of the scope of the basic house. We call these "peripheral costs", and they vary widely from project to project. An unusually large, steep or otherwise difficult site might seem like a bargain if it is several thousand dollars less than the one down the street, but often the extra expense in making this sort of site work for your individual needs will significantly outweigh the benefit of its lower price tag. The necessity of septic systems, wells, utility extensions, etc. can also add to these peripheral costs. In addition, it may be nearly impossible to achieve the same results in terms of things like flat yard areas, minimizing steps and stairs, avoiding steep driveways, etc.