How Much Does it Cost
to Build a New Home?
Discovering the true cost of new construction is one of the most common questioned we get asked. Unfortunately, construction is so complex, it is difficult to find a quick answer.
What Makes Up the Cost to Build Equation?
Many factors will combine to produce the true, overall cost of a construction project. Some of them are:
• The cost of a land purchase
• Soft costs – fees which must be paid to certain entities
(building department, power companies, HOA’s, etc) and management fee charged by the contractor
• Hard costs – materials and labor components
• Financing costs such as closing costs on a construction loan
The Builder will only be providing you with land cost and financing cost if you are buying the land from them. If you found the lot on your own then you will need to consult your Realtor and Mortgage Lender to get a true picture of the land purchase cost and financing cost.
Only True Way to Find Building Cost is through Multiple Bids
Where do you start to find the true cost of your new construction home? A quick search of the Internet will yield a host of “cost to build calculators.” Some are free, while others require you purchase a product or service to gain access to the proprietary “software.” In either case, most of these programs use only national averages and vague terms to produce a cost to build number. They may help you get in the ballpark of what it will cost, but will fall short in providing an accurate estimate. The most comprehensive technique for discovering the true cost to build is through the pursuit of labor bids, fee estimates, and material pricing through multiple bids.
Where the Online Construction Cost Calculators Fail
An online cost to build calculator may say your home will cost $425,000 to build – but does this include building department fees, travertine floors, and stainless steel appliances? More than likely, it does not. The only way you can narrow these estimates is to actually contact the building department and receive a fee estimate. The online calculator may say your floors will cost $10,000. However, you will find out it costs more once you factor in tile, grout, adhesives and labor. As you can see from these examples, there is more to a bid than just relying on a national average. However, by doing the legwork in receiving estimates, bids, and other costs from multiple builders, you can discover the viability of building a home.
Don't Let the Builder Trick You When Giving You the Bid
Homebuilders and management companies may try to remove some of the construction cost components or substitute cheaper materials to present a cheap cost per square foot. But make no mistake, an accurate cost to build represents every cost you will have to incur to complete your project with the materials you desire. This makes it imperative to account for every fee, material, and labor bid. This way you can compare competiting bids on a fair basis.
Reasons Why Your New Construction Bids Differ
You want to know why one bid from one builder cost more than another. There are a number of possibilities for having different numbers for the cost of your construction from the builders:
You want to look at the more expensive builder's bid and determine if:
1. The more expensive builder is trying to make extra profit on you.
2. The more expensive builder is charging you more for the same materials.
3. The more expensive builder is using more expensive materials.
You want to look at the cheaper builder's bid and determine if:
1. The cheaper builder left out some costs in their bid
2. The cheaper builder is using less expensive materials and possibly less quality materials.
If the builders are showing you different material cost because they are using different materials then it is going to be very hard for you to compare their two bids. You are not a construction expert. You most likely do not know if one material is better then another. You do not know if the allowances for the lighting package, plumbing package, etc. will actually cover the true cost of what you want.
How to Keep from Being Tricked by the Builder
The only way to protect yourself is to give the different builders a complete floorplan and building specification list. This complete set of plans and specifications will list absolutely everything going into the home. You will see before hand the quality and detail of the materials being used in the construction.
You will be able to get a true "apple to apple" comparison by giving the same plans and specifications to different builders for their bid. You will be able to tell instantly if the builder is trying to make extra profit on you by charging more for the same materials or labor. At the same time you can ensure that the quality of materials the builder is going to be using is up to your standards.
Let Your Professional Real Estate Team Save You Money
Building your home is a long process and can often be expensive. You can protect your interest and you wallet by involving an experienced New Construction Realtor and Mortgage Lender help you through the process. Assistance they can give you include:
- They will be able to guide you to professional builders with good reputations.
- They will be able to tell you when something is wrong with your bid.
- They can also be another "squeaky wheel" harping at the builder to make sure you get what you want out of your new home.
Phyllis Frankel Realty Group has years of experience helping clients buy and sell new construction. Our agents have helped Buyers purchase new homes in Jacksonville, new construction in Ponte Vedra Beach and new condos in Jacksonville Beach. In addition, we have assisted builders in designing their floorplans for new homes and condos, to marketing them to Northeast Florida Buyers and getting them sold before the completion of construction. Call us today at 1-800-999-0245, 904-273-0125 or 904-732-5530 to get started today.