Often, by the time clients receive our brochure, they have already found a plan they’ve fallen in love with. Whether it’s something they found online, something they’ve had drawn, or a plan they’ve created themselves, we can usually figure a cost to build the home on their property. For a custom builder, pricing that home is a costly, time consuming process. It’s very common for clients to tell us that they’ve gone to other builders, but never received any final pricing. There can be a few reasons – the builder may be booked up for the year, the plan may be more complicated than they want to take on, but it’s usually just that it’s going to take them too much time to price. Here are a few tips that will help you get better results when looking for custom home pricing.
- Make sure that your plan has at least the minimum dimensions. The builder needs length and width, dimensions for porches and garages, and room sizes if possible. The more information you can give him the better.
- Most clients, rightfully so, have no idea what a particular plan might cost to build. So the first plan they take to a builder could be $100,000 over their budget. If you’re just trying to find out if the plan is within your budget, let the builder know. An experienced builder can give you a very close ballpark estimate in a few hours rather than a few days. If it falls in your budget, or close, then ask him to price the home in detail.
- This might be a good time to address the fallacy that a builder’s square foot price has any bearing whatsoever on the price of a plan. It would be no more accurate than asking a car dealer what their price per pound is and expecting to be able to figure an accurate price for your new Cadillac. In our company, all of our standard homes have exactly the same amenities – cabinets, flooring roofing, siding, faucets, etc. – and they still range from $125/SF to $175/SF. That’s because the majority of cost, approximately 55%, in a house is the structure. You also have every builder calculating his square foot price differently. Is he including decks, porches, garages, basements in his square foot price? Or, like Craftsman, do they only use the finished square footage? In our calculations a $20,000 garage added to a 1500 square foot house just raised the square foot price by $13. If a builder is going to use the garage to calculate his square foot price, it will drop significantly.
- If you have a budget that you want or need stay within, tell the builder. It seems many clients are reluctant to tell a builder their budget. Maybe they fear their budget is unrealistic, but if it is, wouldn’t it be better to know that right up front and save your and the builder’s time? Or they might be afraid that telling their budget could affect the builder’s price. Builders aren’t salesmen. Their price, as the saying goes, “is what it is” – cost plus profit and overhead. So let them know where you need the price to be. First, if the plan you want priced is way over your budget, he’ll let you know and you can move forward with a better plan. Second, if you don’t give a budget, most builders will be polite, but they’re unlikely to price the plan. They fear they’ll spend 30-40 hours pricing a plan just to find out it’s out of your budget and they’re not willing to make that investment. The last – and most important – reason for giving your builder a budget is that they’ll look at your plans with that in mind. If he’s a talented builder, he’ll do his best to stay in that budget. If the home is higher than your budget, he’ll look at ways to decrease cost without affecting the appeal of the plan.
- When you’re looking at plans on the internet, do consider the cost of purchasing the plan. Even if the builder, like Craftsman, will be making the modifications and drawing the blueprints, he will still have to purchase the plans from the architect to meet copyright laws. If the builder tells you he won’t charge you, or doesn’t need their plans, he’s most likely just “burying” the cost somewhere else.
- As I mentioned earlier, the greatest effect on the price of a home is the structure – engineering, roof lines, floor joists or trusses, framing difficulty. So if you hand the builder a 4 page list of every item in the house with manufacturer and model #’s, you can pretty much guarantee you will not get a price at all. If you do, the builder will simply put an allowance in for all of those things and it will be up to you to determine if you can get them within those allowances. He’ll also typically leave the purchase and handling of all of those items to you, the homeowner, since he may or may not be able to purchase them from his normal suppliers.
- Start the process early. Most builders will take 45-60 days for a quote (so much for the price per square foot). At Craftsman our goal is 7-10 days, depending on the complexity of the plan. If it will take longer, we let our customer know up front. Keep in mind, you’re asking a builder to price 11,000 different parts and pieces with their prices changing every day, figure what he’s going to have to pay 50-100 contractors over 6-8 months for labor to put them all together and ask him to guarantee that price. That’s a lot of variables.
Finally, if you’re understanding the complexity of what the builder has to do – estimating all the pieces and parts that go into a plan, estimating the cost of labor to put all those pieces together and estimating cost increases over 8 months – you’re going to have varying, sometimes widely, prices. Because a builder happens to be the highest price on your home doesn’t mean he’s a “high priced builder”. His estimating on your plans may have just come out higher (or everyone else is low) because none of them have built the plan before and none know the cost for sure. So a word of warning, prices will always vary regardless of overhead or profit margins because everyone is estimating. If you have two estimates at $275,000 and one at $225,000, STEER CLEAR! Of the fifteen to twenty homes we build each year at least three are for customers who had a contract with a builder and it never got started (after a long period of time and a lot of money paid to the bank) because the builder realized he couldn’t build it for the price he quoted. Last year was out of the ordinary. We had six, nearly a third of our customers, who came from another builder who didn’t deliver. My best advice, which I give at all First-time Homebuyers Seminars that I do for builders in Virginia, is that price is undoubtedly important, but reputation is the only thing you can count on. Unfortunately, it’s impossible to compare apples with apples because there are a hundred places for a builder to reduce cost that you’ll never, ever know to ask about. Ask for references from recent customers, check reviews, talk to local banks to see if they’ve had issues. In short, do your homework to find out if the builder has a reputation for delivering on time and on budget. You would do it before you buy a car, do it before you make the biggest investment of your life.
If you would like to talk with one of our highly experienced building consultants about finding the right lot and a free site inspection, building your new home or how financing works, please give us a call in Lynchburg at 434-266-1070 or Smith Mountain Lake at 540-912-0112.
Cost saving tips for building and financing a custom home
Building & financing a custom home can be confusing even under the best economic conditions. Throw in rising rates, labor shortages & sustained supply chain challenges & the task grows in difficulty & cost. Thankfully, there are things you can do to help ensure a smooth process & a cost that is as economical as possible.Read more
Spring 2022 Homebuilding Update
As we enter the 2022 spring homebuilding season, we enter with significant uncertainty. While new construction both locally and nationally has reached its highest level since 2006, challenges remain. If you’re looking to start building your home this year, there are several important factors that you should consider in that decision.Read more