What is Involved When Building a Home?
By Jessica Elgin
You may not realize that you can build a home for approximately the same price that you can buy a home, depending on size, finishes, and lot location. Your building costs are typically between $110 to $150 per square foot. If you have the time and patience to get through the project, building your home allows you to get exactly what you want. With a little knowledge, a great realtor, and an even better builder, you can reduce the stress that is involved. Here’s an idea of what the process looks like:
- It is best to decide on the floor plan first. You can find thousands of floor plans online. There are also many companies and individuals that can draw these plans for you. Ask your realtor for advise on who they usually recommend.
- Find your lot. There are many factors to consider—location being the most important. Consider how the floor plan will fit on the lot. Are windows facing the sun or are they shaded? Are there views that work to your advantage? Are water conservancy fees paid? Are there any water shares? Have there been soil tests done? Are there any existing plans? Is there an HOA? A good realtor is invaluable at this point. They will be able to help you ask the right questions and make sure that there is nothing you have missed.
- Pick your builder. Depending on the size of the project, most realtors work with a few builders or have builders they highly recommend. Be sure you are comfortable with the builder. Find out if they have a good accounting system and if they are reputable. Ask for references.
At this point, you will want to get bids from the builders you like the best. Make sure that when comparing bids, you are comparing apples to apples. Know the specifics of what is being built, the finishes being used, and the quality of the material being used in construction. Ask a lot of questions so that there are no surprises. When utilizing a realtor for this step, there is usually a fee for finding the builder and negotiating the contract. This is the same as the fee that is paid to the realtor for finding a home and negotiating the contract and is often paid by the contractor as a line item in their billing.
- Sign a contract. Many builders use a cost-plus contract. This means that they will provide you the cost of all material and labor throughout the project. The contractor’s fee is added as a line item, which usually runs between 12% and 14% of the cost of the home.
- It’s time to start building! The contractor will pull permits and submit drawings for approval by the city, county, or local governing boards.
- Ask for an owner’s schedule. This will outline important steps in the completion of the construction. Many of these steps will require your input and can cause major delays if they are not done on time. The owner’s schedule will outline when finishes need to be chosen, when draws for payments will be made, etc. Make sure you completely understand what the builder needs from you in regards to this schedule. Asking questions up front can save you a lot of frustration later.
This gives you a good idea of what to expect. By asking questions, involving a realtor, and thoroughly interviewing your contractor, you can ensure that your home is completed on time and within budget. If you would like a list of a few contractors, give me a call at 918-924-0055.