With a new house, you are always searching for the perfect design, a design that has everything you want and that suits your plot of land. The quality of building site can very greatly; therefore you should have an engineer inspect any site you are interested in purchasing prior to agreeing to the purchase. In addition, never purchase a building plot without having a soil test performed to be sure the soil is suitable building land. The engineer should alert you to this need and have this test performed. Often, the purchase of a building plot is conditioned upon satisfactory soil test. It is further conditioned upon satisfactory percolation test if a septic system is required. I have seen the cost to correct soil problems run into thousands of dollars, therefore please spend a small amount for the soil test. It is the least expensive insurance that you can purchase!
If you are considering building on land in an area that is not already developed, it is also important to find out about the following before you purchase:
The land’s zoning and what types of homes can be built there, any building restrictions that may apply, factors that will affect your overall building costs.
Find out about bedrock that may need to be cleared, the soil type and the slope of the land, which will affect drainage requirements, is the land subject to flooding? Will you need to erect fences? Does the new subdivision have sealed roads, kerbs, utility connections sewage and drainage? This information about your plot of land will give you an understanding of its unique advantages and limitations. You can then work to develop the final design for your home that best suits your budget, lifestyle and environment.
The first meeting with the building contractor, should be held on the site to establish the sites assets, to maximize the house design and minimize any liabilities the site may have.
The biggest problem that contractors run into with homeowners, are changes or additions to the project that has not been agreed in advance. In many cases the solution is for both parties to sit down and discuss exactly what the problem is and agree in writing any compromises necessary to complete the project.
If you can’t make up your mind on the important aspects of the design, look through the Builder’s Guide magazine for ideas on different design styles. The time spent in planning what you want in your home is worth real money to you. Contractors expect the homeowner to be reasonable and realistic in their expectations.
The contractor should offer specifications detailing exactly the items to be included in the house. Specifications are probably the most important part of the agreement, since it is so easy to forget things in today’s hectic world.
Those specifications should also be signed and agreed by all parties. Should you need to make changes, or any of the specifications seem vague or unclear they should be amended and put in writing, so that the homeowner and the contractor have a clear vision of the finished project.
With concise plans and specifications, there are no grey areas and everyone knows what is expected. The homeowner and the builder should initial those plans. If changes are made during construction to the original plans then all previous copies should be changed. This will help eliminate mistakes.
When the plans and specifications are completed, you should receive a firm price to build the house. The typical builder works on a margin of 10 - 15% of the cost price of the home. This margin represents the gross profit remaining after all direct construction costs are paid. The builder must pay all overhead expenses, all current and future warranty costs, all supervision costs, and much more out of this amount. Furthermore, there are normally numerous unforeseen cost items plus increased costs due to inflation during the building process that the builder absorbs. However, in reality it is a very competitive industry and most builders pay about the same price for the goods and services that they purchase.
Therefore, it is hard to understand why one builder could offer any special cost advantage over another. If there is a major difference in another builder’s cost per sq ft for the same home, you can be sure that there is a difference in the quality, features and finishes or some other tangible item.
If three different builders were to prepare a bid on the same home with the exact same finishes and level of quality, we would be surprised if there was more than a 5% variance in price between those builders. The problem is that this never happens, each builder will include different items in the home as standard and their trades will have different quality levels than the other builder, which make a very real difference in the price. This makes comparing builders prices almost impossible.
The important point is to find a builder that you trust. Everyone should agree exactly what will be included in the home as well as the quality level that can be expected. The end cost of the home will be a function of the home to which you have agreed.
Cost per square feet a commonly asked question of builders. It is impossible to give an accurate answer to this question until the plan is chosen, finishes are agreed to, and the home site has been evaluated.
Each home is quite different and the items included or not included make a major difference in the cost per square feet. There are probably several variables that can impact square footage cost due to home design, specifications, site conditions, and much more. Typically, as the square footage increases, the cost per square feet will decrease. This is because the same home, regardless if it is 300 or 600 sq ft. or whatever size, built on the same lot with the same quality will have the same amount spent for landscaping, utility impact and tap fees, driveway, pool, garage, and many more major items. As the square footage increases those common costs are spread over more square footage, which reduces the actual cost per square feet.
There are many areas in a home where footage can be added quite inexpensively. If the budget allows, this should be done since there will be a major spread between the cost and the appraised value of the footage.
Most customers expect an executive style home with executive finishes included as standard cost per square foot to build that type of home. This price should complete the home as specified on the chosen site. We would recommend the firm price method over any form of cost plus agreement. A cost plus agreement removes the incentive of cost control by the builder and you are leaving yourself wide open to many unpleasant surprises. Good business says to know the final outcome at the beginning to eliminate the surprises.