How Much Does it Cost to Build a House?
0 Comments | Posted by armchairbuilder in Build Your Own Home, Owner-Builder, Save Money
So how much does it cost to build a house? This is one of the first questions people ask when they start thinking about a new home. And now more than ever, building a new home is one of the best options as the inventory of existing houses on the market continues to drop.
Before we dive too deep into the details for cost estimates, you should know that Armchair Builder currently has a free promotion available for owner builders. Instead of you going through the hassle of buying expensive cost books or spending weeks putting together estimates, we thought we would do it for you. For a limited time, if you purchase The Complete Armchair Builder Product Package from our ESTORE, we will give you a rough cost estimate for your new home. This is a great opportunity for those just getting started on the process to build a new home. Check out our video below for more details.
How Much Does it Cost to Build a House Video
Components of Cost
There are basically two main types of costs for building a new home. Hard costs are those that are directly related to the construction of the home. This includes all material and labor. The second major type of cost is what professional builders refer to as soft costs. These are basically all other expenses that don’t fall under hard costs. Things like insurance, loan fees and interest, permit fees, utilities, portable toilet rental are all examples of soft costs. So, when a customer asks a builder “h0w much does it cost to build a house”, they are typically seeking the total of the hard and soft costs excluding land.
Methods for Determining Cost
It’s important to distinguish between the methods to determine costs to build. Each method is used at different stages of the process to build a home. Even though it’s the most accurate way to estimate costs, it’s way too time consuming to bid out the project to trades and suppliers at the beginning of the process. This is when the rough cost estimate becomes necessary.
Rough Estimates – Great for deciding whether a certain lot and house plan will fit your budget. When people ask, how much does it cost to build a house, they are typically looking for a rough estimate. Rough estimates are created early in the process by gathering information from multiple sources including: national average costs, local building adjustments, and builder knowledge. Typically, rough estimates aren’t broken down into detailed line items because it just doesn’t make much sense at the early stages of the home building process. At the beginning, you’re just trying to see if your ideas for the lot and house will fit your budget, prior to dedicating time and money to the project. This is the rough estimate.
Estimated Cost to Build -A local building professional, or builder consultant, has unit prices that can be used to create an estimated cost for a new home. Unit costs are expressed in terms of dollars per square foot or dollars per lineal foot, where the measurement is directly related to the specific activity. So for example, if we were looking for a unit price for drywall, it would be expressed in terms of dollars per square foot of wall and ceiling. These unit cost estimates will be more accurate than the rough estimate because they are actual costs the builder consultant has paid recently for similar new homes built in the area of your lot. By knowing the recent unit prices for each activity to build a home, an owner builder can apply the unit prices to the estimated quantities to determine the estimated cost for a home. This is typically used later in the building process when you have chosen a lot and house plan and need a more detailed estimate.
Detailed Cost Budget – This cost summary will be used to submit for a construction loan and to reference throughout construction. Your house plans and specifications are complete at this time. The most accurate depiction of your costs, the detailed cost budget will be determined by bidding out each activity to trades and suppliers. After selecting the best company for each building activity, you will have your best answer for your question…How much does it cost to build a house on my lot? This process takes weeks to complete properly, so you probably won’t want to start until you have finalized all the details are ready to build.
Hopefully we have answered your question…How much does it cost to build a house? And if you think you would like to save some real money and manage the process yourself, stop by our free resources page, How to Build Your Own Home.
