It’s our most frequently asked question, and usually one we receive even before we sit down with a new client:
What is your price per square foot?
The hard fact is it’s not universal, and if one builder quotes you $100/SF and the next quotes $150/SF, you’re not one bit closer to determining which one is going to build you a better home or which one is a better value. There are dozens of factors that go into that price, and even the calculation method used to determine a home’s square footage varies among custom home builders. But the most basic difference, everything else being equal, is which style of home you choose to build. With the same specifications, the same amenities and the same finishes, certain styles of homes will always cost more than others.
The “hierarchy of home prices” is as follows, from highest to lowest and I’ll explain why.
There is a simple explanation for the difference between a single story and two-story custom home. If you have a 2,000 square foot ranch home, you then have 2,000 square feet of roof and 2,000 square feet of basement. Whereas the same size two-story has half as much basement and half as much roof, so the two story will always be less per square foot of finished area. It’s important to remember that we’re talking finished square feet because in total area the ranch, if you finish the basement, potentially has 4,000 total square feet while the two story has a maximum of 3000 square feet (1,000 per floor).
Fifty years ago the Cape Cod was very economical per square foot because the builder just finished the attic area already built under the roof. But in today’s world the cape costs nearly the same as the ranch. The difference is that half of century ago labor was very inexpensive. Not so today. Because of that, most other style homes are built with a main roof structure that is engineered and constructed off site. These are the giant triangles, called roof trusses, that you can see on many modern homes if you take a peak under the roof. The framing crew simply has to set them up in place and then nail their sheathing on, usually in less than a day for a straight roof. The advantage of this, other than lower cost, is that the trusses are constructed in a controlled environment free of moisture and protected from the elements.
Capes on the other hand are usually built by hand with 2 x 12 rafters, on the site. Material cost for 2 x 12 rafters vs. 2 x 4 trusses is much higher, but the big difference is the labor cost to “stick frame” an entire roof. That additional labor and material brings the cost for capes right up there with ranches.
All of this is very important to consider in choosing your new home, especially if you’re a family that needs more square footage at a lower cost. Though for most customers, the decision on what style of new home to build won’t be determined simply by square foot cost. After all, you’re custom building a home because you have your own idea of what style you want and exactly what you want in it. And as you begin that journey, it’s important to keep in mind that price per square foot alone isn’t going to serve as a very good guide in comparing home building costs. It can still be useful, but you’ll need to dig a bit deeper to understand what that cost represents with any specific builder and consider how each style of home affects it.
Recommended article for further reading: http://www.designbasics.com/articles/10-things-you-need-to-know-before-comparing-cost-per-square-foot.asp
Did you know that there are actually three parts that make up the final cost of a custom home? This is something new to many customers when they start the journey, so we’re going to break it down for you here.
Many consider the cost of the home construction and the cost or value of their lot as factors, but there is actually one more key variable, and that is the cost in getting your lot ready to build on. This is also known for short as the "site prep".
Site prep is figured separately from the price of the new home because those costs are highly variable and are almost 100% determined by characteristics of your specific lot, independent of the style home you choose to have constructed.
Site prep includes the following, among other items:
Basically site prep is everything required to be able to build the house on your lot, and these costs can vary from as little as $10,000-$15,000 to as much as $40,000, in total. Additionally, it’s important to know that there are several different ways that builders charge for these costs.
If you’re building on a lot owned by the builder, these costs should be included in the price of the home. The builder most likely calculated them before he even purchased the property, knowing they’d be selling the lot as a package with everything included.
If you own or are purchasing your lot, as most of our customers are, there are three ways to account for the cost.
Method 1 - Standard allowance
The most common method is to give standard allowances for everything on the lot. This doesn’t require the builder to visit the site or obtain bids for all the work. Of course, if your allowance is $15,000 and the cost turns out to be $30,000, you're on the hook for the difference.
Method 2 - Included in home price as a service
Another common way is for the builder to get the estimates, add his normal profit and overhead and include it in the final price of the home. There's certainly less risk for you that way, but now you're paying several thousand dollars on top of the cost, if he includes his markup. There will also still be a clause that you have to pay the additional cost if say for example, they hit rock or have to go deeper for the well. That's fair since the builder can't know those things for sure, but you're still paying that additional profit of several thousand dollars for their management of this work.
Method 3 – Our Method
There are a few builders like us that will go out to lots you're considering purchasing, and inspect and evaluate them with you. We’ll also obtain exact bids for all the work that will need done. If you choose to build your new home with us, we will include these items in the final contract price, at cost, without any markup, and you’ll see the same invoices that we do.
Of course, as unforeseen circumstances can occur with lot work, we do include a clause, as do all builders, that you're responsible for any unforeseeable costs. But again you pay only cost for any work done, with zero markup by us, and of course we and the professional we work with evaluate the lot as thoroughly as we can to help lower the risk of surprises beneath the surface. We feel our way is the fairest for the customer.
Have questions on typical costs? Click here to get in touch.
We can provide you with an actual dollar for dollar detailed breakdown of what these typical site prep costs are and how much to they normally run. Just send us a note on our response page and we'll send out a complete realistic breakdown.
Have a lot and and interested in a free lot inspection? Just contact via our contact page by clicking here or give us ring at 434-266-1070 . There is no obligation, and we’ll out take a look at your lot or one you're considering buying, at no cost to you