Building your dream home begins with an accurate and realistic estimate of construction costs.
Estimating the construction costs of a home is a complicated and intricate process. Whether you use a software program or a simple calculator, the considerations will be the same. To calculate the construction cost of the home itself, you must ignore the lot price and "soft" costs such as permits, appraisals, inspections and developmental impact fees. The actual construction costs will be limited to labor and materials dedicated to the building of the physical home. Does this Spark an idea?
Instructions
1. Visit newly built homes that are similar in size and style to the one you want to build. Don't worry about location. Find out what the selling price is and subtract the cost of the land and "soft" costs associated with its price, such as permits, hook-ups and developmental impact fees. For example, if a 2,000-square-foot home is selling for $350,000, the cost per square foot isn't $175 (350,000 divided by 2,000). If the purchase price of the lot was $80,000 and total soft costs were $20,000, then the true cost per square foot is $125 per square foot (350,000 minus 100,000--the total of the land and soft costs---equals 250,000, divided by 2,000 square feet). This process will give you an idea of what size home you can afford to build and what materials are available within your budget.
2. Take detailed notes when visiting new homes. Inspect the wall material (plaster or dry wall), flooring (hardwood or slab), materials in the kitchen such as marble counter tops, number of floors, roof pitch and any appliances that are included in the new home. Talk to the general contractor and ask about what items and materials are negotiable and which are standard. For example, you may decide that you can live with Formica countertops in the kitchen as opposed to granite, or that you'd like to upgrade the refrigerator. By researching these costs early on, you'll have a better idea of what you can afford when you begin estimating your own costs.
3. Study house design plans to get an idea of the style of home you'd like to build. Hundreds of online sites and thousands of designs are available to review.
4. Seek estimates for labor and materials from subcontractors. Call electricians, plumbers, carpenters, drywall installers and window companies for estimates based on your design plans and materials. You also could call a general contractor to provide an estimate on the entire project. If so, ask him to break down the subcontracting jobs in as detailed a manner as possible.
5. Plug all the information you've gathered into a new-home-building, cost-estimating software program (see Resources). Most programs offer myriad low-end to high-end choices with cost estimates. Some programs call for a dollar figure for materials, in which case you'll use the estimates you collected. Others will provide estimates based on the materials you choose (three percent for double-paned windows, for example). Programs also include such factors as location and climate, taking into account local labor markets and insulation costs according to weather. This step is particularly useful if the estimates you received put you over budget and you need to make adjustments in materials, or the size and design of your home. You can make changes---without follow-up calls to contractors---until you arrive at an acceptable plan.
6. Adjust your input data according to the price estimate the program provides. Don't get discouraged or frustrated early in the process. Because you did your research, you'll have an advantage in knowing, for example, that a cheaper wall material in the laundry room will allow for, say, wood floors in the dining room.
Tags: construction costs, soft costs, square foot, cost square, cost square foot, design plans
