How Much Will It Cost?

One of the most common question builders are asked is "how much do you charge per square foot?" If you ask this question and get a quick, definite answer back, beware. Sometimes, hearing what you want to hear will deter you from wanting to hear the whole story. If a builder says "I can build you a home for $XX per square foot" without having a specific set of parameters to base it on, this is worth about as much as the paper it's not written on. A better initial question might be to ask for a range of cost, perhaps what the range of cost is for a certain level of quality in a specific area or subdivision, perhaps another home -- "what should I expect to pay for a new 4,000 square foot home that is in keeping with the typical level of quality in the Wuthering Heights subdivision?"

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 cost of all its components, divided by the square footage of the home. This can vary significantly based on complexity of design, material selections, the cost of site work, local permits and fees, accessibility of the site, and so on. 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 $100 per square foot, when in fact the home you are picturing in your mind will cost $300, he is doing you a great disservice. It's also good to note that in Real Estate and construction, the square footage number used is typically the living space only, not including garages, patios, etc., but be sure to ask as this will vary regionally, and can represent a significant difference.

In most cases, substantial variations in cost from builder to builder on the same project will represent differing levels of quality in materials and service, or worse yet on the low end, simple bait-and-switch selling practices. Unfortunately, this is all too common in the industry, sometimes as an intentional 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 have defined all 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 materials and finishes etc. all influence its cost. Even the finishes that are typically associated with a higher level of quality such as wood-frame windows, 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.

What things cost is no big mystery. 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 differences up or down are almost always in quality -- perhaps in the quality of materials or perhaps in the inclusion or 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 sometimes equal faster completion, but not necessarily. If a builder is "spread to thin", if he has more projects under construction than he has resources to properly manage them, all of his projects will suffer, both in quality and timing. 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 - it's not very realistic to expect all three.

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 thousands less than the flatter, more construction-friendly site 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.

More>>