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Can you afford it? How to know before you commit!

Posted by Autumn.4 (My Page) on
Thu, Sep 27, 12 at 21:11

Hello all-

I am wondering how you go about determining roughly what something will cost to build before you invest $$ in a plan/architectural design. How do you figure out if your aspirations are within your affordability to then move forward with an architect/plan purchase?

We have a pretty good idea of what we want but not enough of an idea on what it will cost. We have done some rough costs that we can figure out - windows, flooring, etc.. But there are huge gaping holes in a lot of it - framing, electrical, plumbing...

My assumption:
You need blueprints to be able to have a builder/subcontractors cost out the build.

Dilemma:
Developing a plan or purchasing one to be able to have it quoted only to find out it's way out of your reach and then you've already sunk costs in something you cannot use.

Where do you start? Who's on first, what's on second??? What is needed to get a rough idea to get started?

Help....thank you.


Follow-Up Postings:

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RE: Can you afford it? How to know before you commit!

A qualified architect should be able to keep costs in check provided you explain your budget.

Another rule of thumb is to understand what $/sqft is in your area for the level of finishing you like (around here, it's $200-300/sqft). Some costs vary wildly across the country, other things (e.g. Sub Zero fridges) cost the same no matter where you are. A real estate agent and/or contractor may be able to give you some advice in determining this figure.


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RE: Can you afford it? How to know before you commit!

I asked that same question when we started. I would say look at what homes in your area are going for that are similar in size and finishes, to get you started. Of course keeping in mind that in most markets it's cheaper to buy than build.

One thing that I was confused about was the price per square foot calculation. I always assumed it would be based off the square foot number listed in house plans. When our plans were finished, the square footage number (used to estimate the cost to build) was a few hundred feet higher than I thought. The reason being it included all heated/cooled space (including wall space, etc) which generally isn't included in the square footage number listed on websites. This made a BIG difference in our cost to build.


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RE: Can you afford it? How to know before you commit!

Well we brought floorplans that were similar to what we wanted. When we met with contractors we brought that plus details like the type of finishes we wanted (for us we were not going to budge on shingles, trimmed out windows) but we could do cheaper flooring and other finishes. Contractors seemed to have any idea from that about if they could help us. We chose our contractor because we liked him and his process. We had the budget meeting and we are 12K over, but we are still getting a pretty great custom house for a good price. The more you know about what you want going in, the easier it will be for contractors to know if they can help you.


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RE: Can you afford it? How to know before you commit!

sorry for all my typos! my two year old was jumping all over me on the couch!


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RE: Can you afford it? How to know before you commit!

Thanks for all of the responses - it helps to know where to START!

Caben-ouch - I am so glad I'm not in your neck of the woods, lol. I am not sure what it is here right now but I'm thinking (hoping, praying) more like $100-150 sq/foot. We have 2 architects that we want to consult with and hopefully we'll gel with one of them and can get started that way. I am hoping they will be able to help us with less expensive elevations for a given floorplan.

Sadiect-didn't know that about the square footage - thanks. We are hoping to do some things ourselves and mid range finishes so I hope that helps keep the costs under control.

Sweet.Reverie-Hi there! I have been following your plan. I really like it - just couldn't figure out how to get a pesky garage latched onto it without killing the views. You are 12k over what you *thought* or from another price you were given? I think 12k doesn't really sound that bad compared to some horror stories I've read. Scare you silly to even take the first step. When does the 'budget meeting' come into play? We also want trimmed out windows, etc but not high end appliances - just 'mainstream' I guess you'd say. Thanks for your input. I'll be anxiously watching your build!

Looks like we need to set up a consultation with the architects next and go from there.

Thanks again.


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RE: Can you afford it? How to know before you commit!

"A qualified architect should be able to keep costs in check provided you explain your budget. "

Maybe.

Sometimes.

It depends on their experience building houses of a like type in the same area.

Labor costs from Town X may not work very well in Town Y just a few miles away.

Material cost and delivery, excavating travel to get equipment to the job, etc.


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RE: Can you afford it? How to know before you commit!

I think this is a great question! We are stuck in a similar situation - we want to go ahead a make an offer on the lot we love. We can afford full price but plan to start with a lower offer, which is typical for our area. If our lower offer is accepted, we could go ahead and start the build now. If we have to pay full price we need to wait until Jan. 1. But we don't know which offer will be accepted UNTIl we make the commitment! Our overall budget for the house could also change depending on the lot price.

Once we get the lot we can get our architect started and get a more specific budget. Otherwise we are guessing a number per sq foot. We know we are willing to budge on some parts of the build but not others.

Don't you wish we had a crystal ball with all the answers!?


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RE: Can you afford it? How to know before you commit!

For a semi custom type spec house, add 10-20% to the price that almost new homes are selling for in your area. For a true custom house with midrange choices, add 20-40% to the cost of what homes are selling for in your area. For a high end custom, start at 40, and as you well know, the sky's the limit on that one.

Plans that a builder has built before and is familiar with and only allows you certain choices will be the least expensive type of build. Even so, it's still more money than buying something that already exist. It's like buying a year old car vs. a brand new model. "Mill" plans tha have been built by others in other locations and that come mostly pre engineered and only need lightly tweaking for your needs and location would be the next in line when it comes to cost to build. If these plans include lots of unique features and shapes, then they too can be as expensive as a true custom home. Unique one off plans are usually the expensive to design, engineer, and build. You pay a premium for that "new car smell". So, if you are going that route, you need to be prepared to pay for it. The only exception to that is if you are building a giant custom rectangle with budget accouterments. And even that will be more expensive than buying existing.


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RE: Can you afford it? How to know before you commit!

Brickeyee-thanks for adding yet more ?? to my already growing pile! It really is somewhat of a crap shoot isn't it?

Parkview-yep. One big question mark after another. Our goal is to build for what we sell our existing house for or maybe 10-20k over and nothing more but that is yet another ? mark. Ugh! We haven't had any realtors over to give us a ballpark yet. The other thing is that if we sell before building we'd know the price but then we end up renting (and moving twice) which would be just as costly as building first then selling and just paying a mortgage until the house sells (we will only have one mortgage, house paid off next month - WOOHOO). Either way we'd have a payment for a bit. I must say I am thinking it'd be pretty dreamy to not have to show and keep clean a house that has 2 very active boys and a 70# dog living in it! Back and forth on that one.

Hollysprings-We browsed existing but couldn't get past the thought of buying something that you know you will need to update the whole entire thing! In that regard I'm not sure how much it would be cheaper and then you are living in chaos the whole time. In the end - we couldn't really reproduce the property we found so we went for it. I doubt we'll ever move. I know there are no guarantees but there are no plans to ever move once we are in. This will be our one time build so hopefully we get it right the first time! Not going for giant and not going for high end but would like something quaint or a little teeny bit out of the ordinary. Likely because the house we are in now is a spec house and it's just like the next one. Nothing unique about it whatsoever, total cookie cutter. Thanks for the breakdown on the different kind of plan scenarios. That at least gives a range to go buy which is better than nothing!


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RE: Can you afford it? How to know before you commit!

Autumn.4 - I'm just going to tag along in your back pocket. You are asking great questions that are rolling around in my head but aren't fully formed yet. Your description of what are trying to accomplish and the plan on the other thread are very similar to our goals and style preferences which is odd because we are in a very different life phase than you - empty nesters! Keep plugging away and asking questions - it's certainly helping others besides me.

Deb


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RE: Can you afford it? How to know before you commit!

Deb-I think that's great as we hope to be in the same house as empty nesters! That's part of why we decided to go to a 1.5 story and keep the master on the main floor. For now it offers some separation and privacy and later hopefully private 'guest' quarters. Trying to 'look forward' but it is tough to envision for sure. Glad I am not alone. We do not want to 'over' build. So hard to fit all of the elements in a 'smaller'(to me 2,000 sq foot is not small) footprint!


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RE: Can you afford it? How to know before you commit!

Yeah 12K over what I hoped to spend. So that is pretty close :) We also have 2.5 acres and are getting a pretty big chunk back from trees and we are building on the flattest spot on our lot- so that will cut down on costs as well. We are also not building a garage for a few years down the line since when we do build one, it will be detached with a mother in law. Even though we are "lower budget", I think I am going to totally love our house. DH is doing quite a bit of the finish work which will cut costs (his brother is a pro painter, so they will do that together and DH is going to install some tile and pavers). What helped us was being really, really clear about what we wanted.

The budget meeting was after our builder bid everything out. So we have a giant notebook full of bids for everything that needs to be done. Our builder presented all the costs broken out plus things we had control over. We made a few adjustments and ended up 12K over the original amount I wanted to spend. The other thing that helps is that our builder is not a high end guy- he is used to building in my price range. :)

I am not going to lie- I have been majorly stressed out since this process started and I think that will continue! But it will be worth it to have our perfect house in our perfect town. We found houses we could buy that might be cheaper, but the costs to get those houses to where wanted were MUCH higher than building. My area is also unique because our town is really hcol but surrounding towns are not.


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RE: Can you afford it? How to know before you commit!

We thought we did our research in advance, however there were still a lot of "soft costs" (pre-construction) that we didn't take into consideration.

Here is a list of things to consider, some of these were were prepared for, others caught us by surprise!
- Civil Engineering (topography, grading report, drainage plan, septic plan)
- Design Review by the county/city
- County/city fees in addition to overall permit costs for grading, changing the entrance to the lot, drainage design review.
- Soil tests/soil engineering
- Structural engineering (if not included in your design costs)
- Local school fees

As for the cost to build, before we started a plan we talked with a few builders to get an idea as to what kind/size of house we could afford. Then we worked with a designer who drew up a preliminary plan with dimensions, and elevations, but which lacked true construction drawings or engineering. We then used those plans to get preliminary bids from builders, made several changes based on the feedback supplied by the builder and THEN gave the designer the go ahead to finalize the plans. If we would have made those hangs after the plans had been finalized it would have cost us quite a bit of money, so it was worth taking the time mid process to basically have a sanity check on everything.

We will have the final bids in a few weeks, so I will be able to come back with feedback then regarding how close they were!


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RE: Can you afford it? How to know before you commit!

Sweet.Reverie-thanks for your honesty. I was about nauseous the other day trying to figure this all out. This is quite stressful - I am not much of a gambler, pretty conservative so this is unnerving. I am okay with a few unknowns but if feels like EVERYTHING is! Good to see someone else with a build more in our size range too. We are in the same boat as far as a budget build ourselves. We'll be doing a lot of the work to save on $. Absolutely agree on existing homes and the cost to renovate. In our area the savings just isn't there unless its as you want it at purchase. What is hcol?

Laura12-thank you for the list! We are hoping to do a few things over the next year so that its not everything at once. We plan to work on putting the driveway partially in, drill for a well...cut trees. Good to know that you can get quotes off of a preliminary plan vs. construction drawing. I will keep that in mind when we talk with the architect! Please do come back and report how the bids shook out for you.


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RE: Can you afford it? How to know before you commit!

hcol = high cost of living

autumn can I ask you where you found the 1.5 story plan you are working from? I'm not yet on the building bandwagon but my DH thinks it's inevitable so I'm trying to get my ducks in a row and find a plan to tweek for us. The idea of starting with a totally blank page gives me hives!!! That's why my thinking is to remodel rather than build but I may lose that battle.


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RE: Can you afford it? How to know before you commit!

One more resource for you, the information on BYOH (Build Your Own Home) was very helpful, and the calculator provided on that site was remarkably close to the preliminary bids we received. Could be a good place to start.

As for who is on first, second etc. I suggest a splatter approach. We started with a builder, who recommended a designer, then things didn't work out with the builder but the designer suggested new builders. I think upfront it is good to talk to a couple of designers/architects and a couple of builders and then go from there. It helps if the designer/architect and builder also have a previous working relationship.

It has been stressful, but I'm certain it will be worth it in the end.

Here is a link that might be useful: BYOH site


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RE: Can you afford it? How to know before you commit!

Hi Deb- believe me - I have spent hours looking through ranch plans and then another zillion looking at 1.5 stories. Oy. Here is the link for the one we are seriously considering:

Laura - I am hoping it will be worth it too!

Here is a link that might be useful: Lamare 1.5 Story


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RE: Can you afford it? How to know before you commit!

What is your lot like? We lucked out with a lot that has a driveway, water/power/cable to the building site and it the wetlands on the land were all mapped and approved by the city. There was a septic previously approved which we resubmitted but then had to change it because of the position of our house- so the whole septic thing ended up costing us $2,500 when I thought it would cost much less. The driveway on our lot cost the previous owner 15K to put in because it is long. The water hookup which was also paid for by the previous owner was going to another 1,000 or so. All that stuff adds up! Then there is the sales tax! lol. It never ends!


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RE: Can you afford it? How to know before you commit!

Budget for a 30% cost overrun and your budget will probably (but not necessarily) survive the build.


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RE: Can you afford it? How to know before you commit!

Be prepared for shocks! I just got started with my build...and got the first bill...a whopping $7000 over estimate! Why? The contractor said the cement contractor did not include the foundation and floor in the garage and since I am doing cost plus, this was mine to pay. The contractor said I could take it up with the cement guy, but this is a very small town and the cement guy is a SIL of my brother, so makes for a sticky situation.

I am a 70 year old widow....missing D H, who was supposed to be here doing this with me....so will go it alone and hope for no more surprises!


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RE: Can you afford it? How to know before you commit!

I echo what the others said about building in a buffer. We went quite a bit over the builder estimate and we were cost plus. I think he didn't spend enough time estimating our home and WE paid for it! We did make some changes along the way that probably amounted to a 8% overage. Then there were things that happened that weren't predicted - huge retaining wall driveway. (We thought it would be much less of a magnitude than it turned out to be.) And then there was builder under estimating. With all that said - we still got a nice home at a great price per square foot for our area. And we finished out a good part of our basement, and when that is taken into consideration our price per sq ft goes down even more.

We did what you are considering - we stayed in our home while building. It was paid for - we took out equity on the home to use on the build in addition to a construction loan. We put our home on the market and were fortunate to sell right before our new house was finished, so we moved from one to the other. I have a home based business and it would have been hard to be in a rental and have the space I would need for my business.


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RE: Can you afford it? How to know before you commit!

We did a lot of research and still we were caught off guard with soft costs. We're looking at 25% more then expected. Impact fees etc... EVery thing adds up.


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RE: Can you afford it? How to know before you commit!

I'm here - sorry. Busy weekend of football and 10 yar old birthday party.

Can someone explain the 'cost plus' and the other type of contract? I have seen in it on here but I can't think of what it's called.

Sweet.Reverie-our lot is pretty flat and very sandy soil so we should have no trouble putting down a well or having septic done. It know it's already had a perc test done and we did call the well drillers in the area and thus far they haven't had any issues with the water table there. Natural gas is close...not sure about electric. We checked all of that before we bought it but we haven't forked over any $ yet. I think we'll start with part of the driveway next year to just get some costs out of the way.

Downsy-That would be fabulous to have the build/sell work out with such awesome timing! I am not banking on that but I can dream, right? It's a little scary that they can estimate that far off and then you end up having to pay for their rushed or negligent guesstimation. I could handle 8% - especially if they are changes that you initiate but the other stuff, I am sure that was tough to take. Your home is gorgeous - looks like a very cozy and homey place to live. We want to at least get the basement drywalled and mudded but I'm not sure we'll be able to afford it with the build.

Laura12-we do have a couple of architects that we want to look at but not sure at all about builders. We are doing some asking around. There are so many builders that have went under in our area - after economy went south in 2008. Good call on the looking for those with past relationships to help keep things going smoothly (or so I'd hope).

Annie - my budget may or may not survive but I am really wondering what the odds of my sanity and marriage making it through in tact, lol! Thank you for the percentage.

Phoggie-I have been checking to see if you've had any updated build photos. I hope things are going well for you. Thank you for sharing your experiences.

agentslim-looks like 25-30% is the range to go with. Are you finished now an that is what it ended up being?

Thank you all again for sharing.


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RE: Can you afford it? How to know before you commit!

Sweet.Reverie-I should say electric is close but I'm not sure how close and hopefully it will be undergroud. We see both right around where we are building so I hope that means the newer homes an utilize underground. Gas is at the road right by the driveway (but it's not that short either).


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RE: Can you afford it? How to know before you commit!

"Cost plus" means the builder is providing you the house at their cost "plus" some other fee (e.g. a fixed fee, a percentage of the cost, etc.) The sales pitch for this type of contract is that it's very flexible for changes "on the fly", and they can potentially pass on more savings to you if the price of something drops. The downside of this approach is, there's no incentive built into the contract to finish, and in my own (admittedly very limited) experience I've never seen any bid come back substantially less, but have seen a few situations when something's worked out being more expensive. A fixed contract gives you some protection against this kind of thing. Of course in a fixed contract you still have allowances which can fluctuate. You will want to find out with your builder exactly how they expect the allowances to work. Does their allowance $ buy the same as $ out of your pocket? You will want to know this since it can have a major impact. You will also want to be clear on what suppliers can be used for allowance items.


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RE: Can you afford it? How to know before you commit!

Allowances in a fixed price contract are for those who haven't done their homework to spec out their materials. And they can bite you BIG time. It's where every single fixed fee home goes off the "fixed price" rails ---along with the "upgrade while we're at it's". In other words, with a cost plus contract, you can view the sub's actual quotes for labor and materials, and you have a bit of negotiating power to ask the GC to perhaps consider using another sub if the price seems out of line. With a fixed cost, the GC assumes the worst, and fixes the fee for that work on the higher side. If the electrical work comes in under or over his budgeted number, you'll never know, because that information is not going to be available to you because you're not going to see any "savings" or have to pay the overage. The GC will have to come up with the additional money to pay the electrician, or he'll pocket a bit more profit on that portion of the build. If he's done his estimating well, he'll make a profit at the end rather than take an overall loss on the project. For cost plus, the GC's fee is guaranteed, and he doesn't have to worry about taking a loss because of poor estimating. You are the one that will have to pay the extra $$ needed for the electrician---or keep those savings to put elsewhere.

As an extreme generalization, if you are doing a budget build, with more budget material, then a fixed fee is usually a better idea for the homeowner to enter into. If you are doing a higher end build, with higher end materials and where there are a lot of unknowns, a cost plus is more to your advantage.

However, in either case, the contingency fund that you keep in reserve is VERY important, as are the actual specs for the build. Remember that you will get exactly the home that you specify in writing, nothing more, and nothing less (if you pick a good builder!). Also remember to make sure that the change order procedure is written into the contract and doesn't unduly penalize you for changing your mind about some material selection after the build has begun. But, also do keep in mind that there are often "hidden" costs associated with "just" changing a material out. A natural stone floor needs a stiffer subfloor and more care in the labor to lay than does ceramic tile. So, that will be additional costs incurred beyond "just" the cost of changing from a $3 ceramic tile to a $7 natural stone tile. And that's why it's important to do as much research as possible on the front end before you ever even buy a lot. Costs are only "hidden" if you yourself don't understand the build process almost well enough to GC yourself.


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RE: Can you afford it? How to know before you commit!

Most builders won't do this but you could try to get a GMP + Fix Fee

The builder gets a fixed fee for doing the work, then gives you a GMP for all the other divisions of work. These divisions are set up as allowances that you control. He has to give you 3 bids per area of work.

At the end of the day if the total expenses go over the budget he has given you a Guaranteed Maximum Price. If it comes in less you keep the savings. If it were me I would offer 33% to the builder as incentive to bring his costs in as low as possible.

To do this you will need a good idea of what a reasonable GMP price should be for your market.

OR

Do a whole ton of research and specify the heck out of your home and ask for a lump sum price for the work. But you have to spec everything.......everything.


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RE: Can you afford it? How to know before you commit!

We are building for less than the resale market. That includes high end items like marble in every bath, custom inset cabinets, upgraded trim, enclosed deck, finished basement, sound proof room...ect. The ATL market is at a bottom because it was such a boom town here more than many places during the height. Also the crash here was about a year later than other places. Builders are HUNGRY for work and fight for it. The lot was a foreclosure in the best school district so that really helped.

We are doing fixed price because we wanted the surety of our price and many of the high end builders here work that way 90% of the time. I also had spent over a year researching the things I wanted so that helped.

I am building for way less per sq ft than I have seen others mention on here. I think it is just dependent on your market. Prices are starting to creep up and interest rates so we had a perfect storm right now to be able to afford this house.

That said it took us a year to find the lot. We were new to GA and took our time getting to know the towns. While we were looking we got pre-qualified with a few banks for their construction loans. This is important because a normal purchase loan is less stringent.

Another note...This 7200+ sq ft house cost the same as our NYC 500 sq ft condo. So market is VERY important. So take anything someone says with a grain of salt unless they are in your specific area.


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RE: Can you afford it? How to know before you commit!

I just survived building a new home. We moved in last month.

All I can tell you is that everything costs more and takes longer than you think it will. Seriously. The unexpected costs just keep coming....

Someone mentioned an unexpected retaining wall. Yup, it is things like that. More loads of fill, changing the shape of the patio, impacting the landscaping - all of a sudden you look up and realize you're over "budget" by $7k, in just that one area. It seemed like every time I turned around there was another permit fee, inspection fee, water fee...fees, taxes, and inspections galore!

You have to go into it knowing some things are going to go wrong, and chances are really good that it is going to cost more than you expected/hoped for.


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RE: Can you afford it? How to know before you commit!

Autumn

We have barely gotten approval from the city. Soft costs alone were a 20% Surprise. We hope the build has minimal surprises.


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RE: Can you afford it? How to know before you commit!

We're just now wrapping up framing and are already over by about $20k due to increased lumber costs and higher than expected framing labor. Our contigency buffer is almost gone already and we the rest of the build to go. :( While I don't regret building the house we chose or going with our builder, I sure wish we have invested in the plans and received hard bids from contractors based on the actual plans and not just a sketch as it might have led us in another direction. I would have gladly eaten the $1600 the plans cost vs. the extra $10,000 framing a complicated roof line did.


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RE: Can you afford it? How to know before you commit!

Parsonse-ouch - that is what I am afraid of with our plan - very complicated roof (to me it seems). That is one of the things we want changed with an architect right away before we even price. It sounds like pricing is sort of a 2 step process - one that could be very ballpark with a sketch and then after we yay or nay that we'd get more detailed plans for firmer pricing.

Agentslim-good luck - I hope you do to! It seems like everyone has one surprise or another...

I think we are going to get it priced and depending we may just wait another year to save more $ before we start. I don't really want to wait but that might be the reality of it.


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RE: Can you afford it? How to know before you commit!

We debated to wait a year as well. But we figured if the rates went up in reality we wouldn't be saving anything. So we went for it!


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RE: Can you afford it? How to know before you commit!

There have been lots of good answers and good experience posted here, which, hopefully, will help the original poster and all of the other lurkers in a similar situation.

At the end of the day, one can't get a realistic estimate, much less a contract price, without sufficiently detailed architectural drawings and specifications. Any price, on anything less, is just asking for surprises, extras and add-ons from less than ethical builders. There's simply no money to be saved by saving (or eliminating) the essential architectural drawings and specifications.

Folks worried about their budget would do well to find and consult with an architect experienced in the type of residential work that is envisioned. An experienced architect can quickly tell anyone if their desires and budget match. As someone said above, it's a lot better to spend a few thousands early in the process than spend tens of thousands on surprises or changes during construction.

When it comes to financing and types of contracts with builders there are many, many options. All of them, however, depend on a clear and sufficient set of architectural drawings and specifications.

Good luck with your build.


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RE: Can you afford it? How to know before you commit!

Thank you virgilcarter. We did find an architect near that has pics of builds that are similar to what we like and we plan on contacting him for sure. Who knows - maybe he'll have a previously used floorplan that will fit our needs or at least be fairly similar to what we like.

Agentslim-I hear ya. So many things swaying in the wind and I also think about materials going up if the market continues to slowly steady itself. Part of me thinks same difference as we can be saving for extras (within reason) while we are in the construction loan phase anyhow. Can't wait to see how the rest shakes out for you.


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RE: Can you afford it? How to know before you commit!

Two of the four builders that we're considering met with us and looked at the plan we found online, not the full set, just the online one-pager. One took about a week and the other two weeks getting us a "ball-park" estimate. They each broke it down somewhat and included allowances for appliances, lighting, tile, etc. as well as specified windows, bathtub types, flooring, etc based on what we discussed during the meeting. They were both very close to the other's estimate and one said although it was a ballpark estimate based on just the drawing of the plan, he felt it would be close since it was so similar to a plan he just finished building. Now that we have a lot and the "ball-park" estimates and know we can afford the house/lot, we're going to purchase the full set of plans and will meet with them again to give them more info on what trim we want, doors, cabinets, etc. so that we can get a more "firm" quote. In addition, I asked each for their list of vendors so that I could get a better idea of the allowances I need. I visited the appliance, plumbing and lighting places. I'm trying to be as detailed as possible when giving them the full set of plans so that I don't have a lot of overages. We're going with fixed cost. Not all will give ball-park quotes but at least it gets us an idea. FWIW, my ball-park estimates were way under what I expected so it will be interesting to see how things shake out. Interestingly, both builders that gave us ball-park estimates said that they're initial estimates are usually higher than the final detailed estimated using the full set of plans. Be skeptical of ball-park estimates. I am but it does at least give you a starting point.


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RE: Can you afford it? How to know before you commit!

So many good responses in this thread. Types of contract, down payment, square footage, overruns, custom, types of finishes, roof line, and on and on.

We recently moved into our new home - 6 weeks shy of a one year construction period. Our builder assured us the house would be complete in 6 months. What he did not tell us is that he would be filing bankruptcy three months into the build. Lesson learned - ask the builder about their finances. Check with their suppliers - are the bills paid on time, do they pay by credit card, will you pay the suppliers? Do your homework. I was so p----d that I went to every meeting there was about his bankruptcy. One attorney told us not to waste our time - "just accept the money is gone." But,another supported us and processed our discharge dispute. For the next five years we will receive monthly payments from the former builder - approximately 75% of the down payment. I can't argue with that because he did pay some bills and his employees.

We have been paying interest only payments for months and will finally have a mortgage in a few weeks. We are mid-50s and pretty savvy financially. I learned a great deal during this process. Unfortunately, we have paid for labor and materials twice and three times over. We depleted our cash reserve and I never thought I would be "cash poor" again. We worked hard for many years to save and now we get to do it again.

The posters on this forum are seasoned and intelligent. Read their posts many times. This a great resource!


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RE: Can you afford it? How to know before you commit!

A good resource to check out your builder is with your lender. Our loan officer nd construction liaison have worked with him several times. literally just finishing a job with them says before mine.

The bank many times can be a resource as to the finances and reputation of builder.


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RE: Can you afford it? How to know before you commit!

That is very true gaonmymind.. the trust my loan officer has in my builder has really helped my own confidence. I think one of the best things we did is find a builder who could actually show me budget sheets and floorplans for homes he built in our price range- plus referrals to those customers.


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RE: Can you afford it? How to know before you commit!

Here is our story...
We have owned a lot for the past six years, I worked in construction for eight years before going back to school and becoming a software engineer, i have been studying building costs ( http://www.nahb.org/generic.aspx?genericContentID=527 ) and the economy for the past nine years and was fairly confident that I knew what I was doing, I was wrong....
We started this March with a fairly large, house plan design shop (South Ogden Utah)...they do house plans online and custom plans. I would now be wary of any place that has aggressive marketing/overhead as they have to recoup this costs from their customers. I explained to them our budget (300K not including lot) after I had a copy of the initial concept plans I took to them to a my father in law's friend who is respected home builder, he said this plan is complicated and will be expensive to build, so we had them simplify the plans, but what we ended up with was something more complex and expensive to build...when the plans went to engineering the design place called and said that there were some problems that could be overcome but would cost more to build, I asked how much, they said call the engineer, engineer said 20K more, I said remove the feature to reduce costs, they put a large window in the middle of a set of stairs, that I caught at the end after their internal quality control review, Their solution was to delete the 6050 window, the problem was now the plan looks out of balance without a matching window..I had to come up with a solution of resizing and moving windows and gables around.
When I started getting bids in May for our house I was quickly realizing that this house was going to cost at least 400K if not more...so I was quite dissapointed with my initial set of house plans.
We started to think maybe we should bag the building a house and buy one but we own the lot and would take a loss if we sold that lot and we couldnt find any houses that fit our needs. So I found a small one man drafting shop whose father was a contractor and understands building costs a little more. At each step I stressed costs and had my new contractor friend review it....and we are now hoping to start building this fall...So life is full of lessons and I the big lesson, I thought I would be able to build the perfect house, what I realized is that that is not going to happen I will be able to build a nice house that I really like but not perfect..I also learned that once you get in the pipe (dig a hole, sign/pay house designer) there is no turning back and what you end up with in the end may not be exactly what you had in mind.


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RE: Can you afford it? How to know before you commit!

@jwill96 - AMEN!!! Can I make a confession? I do not like the new house. What we envisioned is not what we got. The drawings were different than how it turned out. As I write this message, i glance over to see a kitchen that will soon be FIVE months overdue. Our kindhearted cabinet maker does not know how to say no. I just want this house done.


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