Is home building on your mind? Just what is the cost of a new home? Many production, modular and manufactured builders have set starting pricing for particular models and homes. Of course, you can usually add features for additional cost.
If you’re thinking of a semicustom or custom home you’ll need to get an estimate of cost based on the design you have in mind. To do this you will need to discuss what it is you want in your new home with home builders. Before we dive into the information make sure to download the free new home Steps Guide above on the right, it’s fantastic and covers everything you need to know about home building.
Let’s go over in steps how to get the cost of a new home.
How to Get the Cost of a New Home
Cost of a New Home Step 1: First get a list of home builders in your area you would like to get estimates from.
Cost of a New Home Step 2: After you have a list of builders, call each one and discuss your project for a couple of minutes. Ask them to send you a brochure/information on their company. If you felt comfortable when talking with them and they follow up on sending you information, then you might want to keep them on your list.
If you have a long list, I recommend narrowing it down to three.
Cost of a New Home Step 3: Once you have your list trimmed down, it’s time to get more detailed with each builder. But before you talk with each builder you need to do a bit of prework.
When getting builder’ bids you have to be extremely careful. Estimates are complicated. The number one key is to make sure you provide everyone with the same information so you can get an “apples to apples” estimate. This is where I’ve seen many people make mistakes—they didn’t provide each builder with the same information resulting in a mixed bag of estimates.
Let me explain in more detail…
…Many builders do a ONE-page ESTIMATE for the projects with little to no description. Sadly, what happens is the customer has no idea of what they’re getting or not getting and it’s usually the low bottom line price that catches their eye. Once the contract is signed, the builder takes the liberty to decide what was or wasn’t included.
For example, I heard about one builder who told their customer that acid washing their brick home (cleaning off the excess grout off the brick) was not included in the price and the customer was charged the cost to complete the wash. A one page description doesn’t say how much of anything is included, but the PRICE pops out and sucks the poor customer in. And in the end the customer is bombarded with UPGRADES adding to the original low estimate.
What is worse, these folks are left in a position were they have to come up with thousands in cash, since their construction loan was only approved for the original estimate.
Here is a similar, but slightly different builder tactic used to win jobs.
Some builders mislead consumers with what I call “allowances” in the business. An allowance is basically an allotment of money set aside for you to choose items you want for your home. Common allowances include lighting, cabinets and flooring, to give you a quick example. But in general there’s an allowance, divided into categories (category meaning cabinets, concrete, drywall, etc.), for everything that goes into building a home.
The trick comes in when the builder sets your allowances at an unreasonable amount for the size of the house you’re planning to build or the details you want to include. For example, the builder might give you an allowance of $2,000 for lighting, when a more realistic number is $3,000. Now imagine if they did this for each and every allowance.
They would have the low price to offer you and it’d probably be very appealing to you.
But what happens is you end up going over your allowance budget, making the bottom line price the builder estimated rocket sky high. And in most cases the final cost equals or exceeds other builders’ estimates.
Now I’m not trying to scare you, but this is pretty serious stuff.
Cost of a New Home Step 4: There’s only one way to get an apples-to-apples estimate, and that is to take the necessary time to list out your detailed specifications for your home design. Break down the specification into groups of allowances such as cabinets, framing, concrete, lighting, etc. This takes a lot of work, but is well worth the effort and eliminates surprises and disappointments down the road.
Cost of a New Home Step 6: Review the estimates and ask questions.
Cost of a New Home Step 7: Make a decision and select the best home builder for your situation.