Hi Richard,
Nobody retains the unused monies.
The normal and most accepted way allowances are used is as follows in an example of a $300,000 contract price, including a $10,000 appliance allowance.

Appliances come in at $8,000.
Now the contract price is $298,000.

Or, Appliances come in at $12,000.
Now the contract price is $302,000

I’m going to assume that there is a conflict that you are in the middle of, so I am going to explain to everybody the how and why of building allowances (or contractor allowances) and contractor bids

Allowances are used in new construction or remodeling to allow a General Contractor (Builder) to arrive at a contract bid (price) without having to wait for the homeowner (you) to select all the finish and/or decorative materials (and often labor) and products that most homeowners want to select. These items would include, but not be limited to, cabinets, floor covering, appliances, wall coverings, light fixtures, plumbing fixtures, etc.

They should NEVER include structural items, such as foundations, framing, windows, wiring, HVAC, insulation, concrete work, etc., as a homeowner would not know what would constitute a fair allowance for structural items.

A home owner can and should shop early in “the game” so that he or she knows how much allowances should be for decorative and finish materials and products.

The following is from my “Home Building-Budget-Allowances” page on Build Your Own House.

“A General Contractor may supply these allowance numbers based on what he or she feels is adequate, but it is up to the buyer to investigate the dollar amount of each allowance for each category that has an allowance to see if it is enough money to adequately satisfy their “consumer needs.

In other words, the buyer(s) MUST “shop” BEFORE signing the contract.”

We’ve been researching costs to build an addition to our house here in Honolulu. Your site doesn’t list Hawaii, so I thought I’d contact you.

In discussing with architects and draftsman, we’re getting widely ranging estimates of $100- $350 per sq foot for an add on of a free standing 1000 sq foot residence over our current lanai. Any input is appreciated or info on how to get an accurate estimate.
Mahalo!
Don

Aloha Don,
(Note to readers: I had to look up Mahalo It is an Hawaiian word meaning thanks, gratitude, admiration, praise, esteem, regards, and respects)

Unfortunately, you did not give me any of the particulars of your planed addition that affect (greatly) the cost of building a home addition.

Photo of a Lanai courtesy of LA Times Crossword Corner

So, I ran the cost to build calculator found on my “Getting Started” page for building a simple 1,000 sq ft addition in the city of Honolulu.
I used the “Quality Class” # 6, building to minimum code (cheapest), all the way through (No HVAC, only a wall unit A/C), and came up with a total cost of $93,283 using a room addition contractor (General Contractor). That obviously, comes out to $93.28 per sq foot.

You could easily triple that cost depending on the quality of materials and design you choose.

As I have stated in previous posts, the cost per sq ft for small structures (home additions) is almost always higher than for larger structures, because subcontractors may want a few more dollars for their labor because they could be earning more on a larger job for almost the same amount of time, and because expensive costs such as roofs, foundations, etc. are being spread over a smaller sq footage.

Anyway, it’s interesting that I came up with a number close to your lowest bid.

As they say, you’ve only got one way to go, up!

Aloha, (I found out Aloha can also mean “Goodbye”),
Carl

(Aloha Mr. Heldmann,

Thank you for your assistance- greatly appreciated.

Mahalo nui loa- Thank you very much.

Don)

Chris

Lot with a small building envelope

Hi Chris,

Buying land is one of the most important components in building a home.
Besides accounting for 25% or more of the total cost of building, all real estate boils down to location, location, location. It is important to know as much as possible about the process of buying land.

When I wrote “Is it a buildable lot” I meant, will the construction of a home will be allowed IF, and only if it meets all the requirements, restrictions, and criteria of the local building inspection department, zoning department, health department, etc.

Lots or building sites in general, even acreage, are deemed ““un-buildable” for any of the following reasons:
• Unsuitable for a septic system
• Water tables have been proven to be unsuitable
• NO water available
• Inadequate road frontage
• Too steep for safe construction
• In a flood plain
• Too small to qualify for a home site
• Possible endangered species habitat
• Zoning may not allow a residence there.
• Been used as a toxic dump site at one time,
• There may be some mineral deposit there that is hazardous, such as asbestos, radon, etc.

However, even if a lot is deemed buildable, it may not be buildable for you because, as you say in your second to last sentence, “Even if a lot is buildable, a permit might not be issued for the design I want.” In other words, it may be “buildable”, just not “desirable” for you, or for your project.

But someone can and probably will find a suitable house plan for that lot.

I found a “buildable” lot that was undesirable because it had so many “easements” and “setbacks” on it that the space left for a house (called the “building envelope”) was considered insufficient by other builders to build a house comparable to the neighborhood. (See survey above) With a lot of planning effort on my part, I made it work! The house sold in the framing stage!J

Before you, as you say, “retain an architect, survey the lot, test the soil, design a structure, have the plans reviewed, and see if a building permit is issued for my dream house, all for a lot I do not even own”, you can talk to the building inspection department to find out FIRST if it is it is a “buildable” lot.

Then talk to them (You are NOT applying for the Building Permit at this time) as to what requirements or criteria that must be met for an individual’s house plan. (They are there to help believe it or not.)

They may require that the house face a certain direction. When a lot is a corner lot, this is often a point of contention. You may be allowed to apply for a variance.

They may require a certain percentage of the lot’s surface area be left permeable for proper drainage and you have plans for extensive paving.

They may have other guidelines for house design and/or house placement on the lot. Ask them!

Another source of placing restrictions on what you can and cannot build are “Restrictive Covenants“, also called “Deed Restrictions” because they are recorded with the deed when they are made by a previous owner of the land. They can be quite restrictive, and they are legal and binding as long they don’t discriminate.

Some examples of deed restrictions are:

• What size house can be built.
• What colors the house must be or not be.
• Which way your garage door must face.
• That you have to have a garage door.
• Driveways must be of a certain building material.
• What style of home must be built and/or what kind of siding must be used.
• Many, many other restrictions are often found.

By the way Chris, the seller should provide a survey of the land at their expense. (There probably already is an existing survey.) The seller should bear the cost of a soil analysis as well.

Chris, thanks for writing and helping me expand this critical subject matter.

Best of luck,
Carl

Thanks,
Ron

Ron,

Through the ”70s and well into the ’80s, 8 foot tall ceilings were the rule, and bathroom ceilings were typically dropped to 7 feet. Today, 9 foot ceilings are the rule.

My home plan website, http://www.originalhome.com/, allows our customer to select between 8 and 9 foot ceilings. Most select the taller option. However, we haven’t seen enough interest in 10 foot ceilings to offer this as an option.

The primary reason to build higher ceilings is aesthetic. Taller spaces generally feel roomier and more comfortable and more luxurious.

There’s definitely a regional difference in ceiling height preferences. Southern climates generally have higher ceilings because warm air will rise to the ceiling while the lower, inhabited area of the room stays cooler. As you point out, this means that taller ceilings are more expensive to heat.

You’re also correct that it’s slightly more expensive to build taller ceilings; the walls are taller and require more material. Tall ceilings also require a larger budget for taller windows and doors which must be proportional to the room height.

For a further discussion of this issue, you may want to look at this NY Times article:
http://www.nytimes.com/2006/01/22/realestate/22nati.html

David Moore, AIA
Original Home Plan

“Dear Readers, Do you have a question for David?
Click here to “Ask the Architect”.
Carl”
www.byoh.com

Ryan,

I think you’re onto something.

The market value of any house is largely determined by location, condition, and size. You can’t change the location, so if you want to increase your home’s value, you have to fix it up or expand it.

Unused attic space above a garage can provide an excellent, cost-effective opportunity for expansion. An existing garage foundation can almost always support an additional floor without modification. If the roof is tall enough, you may be able to finish the existing space beneath it. If not, it may be possible to raise the roof or add dormer windows to it.

Make sure you can make good use of your new space on the 2nd floor. If the master bedroom is adjacent to it, the space can be used for a study. If several smaller spaces are adjacent, you may be able to create a hallway between them, and use your new space as a bonus room.

My home plan website, http://www.originalhome.com/, has many examples of how this space can be used. You may want to look in our plan gallery for some ideas.

Good luck,

David Moore, AIA
Original Home Plans

“Dear Readers, Do you have a question for David?
Click here to “Ask the Architect”.
Carl”

My father built the home I grew up and he has offered his contracting services. He asked me to get 3 independent home builders quotes for labor per square foot.

Based on your article in May 2008 for Illinois, it looks like around $50 per square foot for labor.

Do you have any recommendation on Chicago home builders? I am trying to find some guidance on which of the many home builders in the Chicago area to use, as there are so many.

My budget is around 500k which includes materials, labor, and purchase of the lot.

Leona

Hi Leona,

Actually, my May, 2008 IL example was for the Chicago suburbs, and it wasn’t $50 per sq. ft., it was $87.61 (See “Cost to Build a House in Illinois”)

Design Connection, LLC  Plan n586

As for finding Chicago area General Contractors or home builders to build you a new home, I recommend you contact the nearest local association of NAHB (National Association of Home Builders) for member names.

Here is a link from NAHB to find an association near you: FIND YOUR LOCAL BUILDERS’ ASSOCIATION

You could also visit areas where the types of home you desire are under construction, and get the names of builders there.

You could also visit building material suppliers or home centers for names of builders that do new home construction.

Friends, friends of friends, open houses, a local “Parade of Homes”, local Home designers and/or Architects, etc. are also excellent sources for getting names of local home builders

Get at least three references from each builder you contact and check those references.

Be sure to get those three references from each builder!

The references should be from satisfied customers and my feelings are that if a builder can come up with three satisfied homeowners, you could be number 4.

Get three building material supplier references as well to make sure that they pay their bills on time.

A bank reference would be wise too as new home construction lenders have to approve builders.

If you have any other questions as you proceed, let me know.
Carl

But, I will show you how to determine the approximate cost to build a home, any home in any state.

You will also learn approximately how much the Builder’s (General Contractor’s) profit is.

Why would you want to know how much it costs to build a house or how much profit a builder makes?

Why wouldn’t you? Knowledge (information) is power.

When you know the cost of building a home before you even decide whether to build or not, you are in a better position to decide what size, style, and quality of home you can afford, based on your budget of course, and you are also in a better position to later bargain with a builder.

Before you spend money on home plans for a house you can’t afford, I’ll show you how you can determine what you can afford.

The basic cost to build a house is determined by the size (square footage of living area), design (shape), and the quality & quantity of the materials (and the builder’s profit & overhead)

Here’s a recent letter I received that typifies the dilemma that most people face when trying to decide what to do when it comes to building a new home.

NOTE: This analysis of the cost to build a house will not include the land, any land development cost, or any financing costs.

From: David in Denton, North Carolina

Carl, We are in the process of designing our house and I’m trying to get a cost
estimate of what this house will cost us before we go get plans drawn of a
house that we can’t afford.  We basically have designed a 40 X 50 rectangle
shaped house around 2040 sq. ft. living area with brick veneer, and with vinyl eves.
It will be a 1 story home with a huge unfinished bonus area in the attic to use as storage.
It will have an attached 2 car garage with an 8ft. concrete wrap-a-round porch on the sides and the front.

Any information on an estimate for this type of house would be greatly appreciated.
David

Hi David,

You are wise in trying to determine affordability before spending money on home plans.

I learned that the hard way on my very first house when I had to “toss” the plans I had already purchased and go back and start “at the beginning”, right where you are. But I didn’t have available the “tool” you have.

The cost to build a house is determined by the size (square footage of living area), design (shape, etc.), the quality & quantity of the materials used and the builder’s profit.

Using this excellent tool called the “Residential Building Cost Calculator”, from Craftsman Books, leading experts in construction cost estimating, you can solve your dilemma.

Let me walk you through the cost estimating process using this tool. It is not only an easy and fast process, it is fun.

Image courtesy of  Houseplansandmore.com

The first question you will be asked is “How many corners does this home have?

The more complex the shape of the house is, the more expensive it is to build per square foot of floor area.

The second question you will be asked is “What is the total living area of this house?”

Larger new houses cost more to build than smaller houses but larger homes generally cost less per square foot than smaller homes.

Ranch style (single story) homes cost more per square foot than 2 story homes of the same size and quality.

The third question you will be asked is “What is the quality class of this home?”

New homes vary widely in quality and the quality of construction is a major cost variable.

For the purpose of a preliminary cost to build a house, to see what shape, size, and quality you can afford, I recommend choosing the “Quality Class 6” all the way through, for all choices.

If it turns out you can afford a certain style and size, you can always upgrade your choices!

Now you’ll answer just a few more quick questions and then you’re done.

Is there an attic, balcony, basement, garage or exterior porch?

Is this home in a housing tract?

Is this home built outside the metropolitan area?

What heating and cooling does this house have?

How many fireplaces in this house? And, is it a one story home or multi-story?

What State and Zip code?

You now have a rough estimate of the cost to build a new house based on your input.

Is the cost to build estimate on target? GREAT! If not, start over. It’s FREE and it’s FUN!

Well David I came up with a total cost of $237,607, for a 2,040 sq. ft 1 level home (not the house in the above image) with wrap around porch, central heat & air conditioning, 1,500 sq. ft of unfinished attic space, excluding land, but including the Builder’s or General Contractor’s Markup of $29,579.

Click on image to enlarge.

Good luck,
Carl
byoh.com

The company can build me a 2000 sq. ft. house on 1/2 acre starting at $162,000. My concern is that it’s on a slab and not a crawl space.

This is obviously a very simple house with nothing for add-ons.

Does this sound like anything I should pursue?

I have been approved for $185K with my mortgage and I am trying to get as much as possible for my mortgage.

Oh, this is my first house also!

Thanks,
Chris

Hi Chris,
What I would do if I were you is find a local Realtor familiar with the area and have the Realtor “pull up” comparable sales (comps) so that you can compare “apples with apples”. Then you’ll know if you are getting a “good deal” on the proposed house.

$162,000 for a 2,000 sq. ft. “simple” house, including land (lot) and land (lot) improvements sounds like a good deal in today’s housing market. You’ll know more with the Realtor’s comps.

Any “good” Realtor would be more than happy to do this for you, even if you are not really looking to buy a house through them. They know they have made a friend for life

Slab foundation

As for building on a slab foundation vs. a crawl space foundation; I built homes in SC for many years and personally, I would prefer a slab foundation in SC.

The soil will be either clay in the Piedmont region or sand in the coastal areas, both of which lend themselves to slab foundations.

A properly constructed slab foundation should not cause you to be concerned.
Hope this helps,
Carl

We have a budget of $300,000 for our new home.
When we deduct the amount we still owe on our land ($55,000), we have
$245,000 remaining with which to build.

Do we have to deduct the amounts for the well, septic, etc. before determining the amount we have to build the actual house? Or does that all get included into the cost per square foot?

I hope this makes sense.
Thanks
Marsha

Carl, I was looking at the two websites you suggested that have the Free Cost to Build Feature and was wondering was is included in the estimate. Are kitchen (cabinets and counter top), bathrooms and floors included?

Is this the estimate price for the bare walls? It is something to take into consideration when planning a budget because if those things are not included, well, you have to add quite a few dollars to that estimate.
Thanks,
Danny

Hi Marsha, Hi Danny,

Two questions, one answer.
These questions come up all the time and apprehension over what is and what is not included in a typical home building cost estimate is normal.

Here is an image of a cost to build estimate I did for the Sacramento, CA home.

Click on image for a larger view

As you (both) can see, other than specialty items or upgrades (i.e., Geothermal Heat/AC), the items mentioned by both of you are included.

You should keep in mind that the cost to build for this example, or any house plan, can vary considerably depending quality of materials selected, and on actual bids for labor and material.

The estimate for this house is an approximate one based on “average” quality materials and a slab foundation.

Until you actually have home plans and go out and get actual bids, all you will be able to have is a rough estimate of the cost to build your home(s).
Good luck to both of you,
Carl

“Hello, I would like to know about how much I’m looking at $ wise to build a 2 bedroom home in LA County, California.
I already have the land.
Are permits usually included in the total cost?
If not, what is an approx cost for permits?
Cynthia”

Hi Cynthia,

Yes, permits, and fees, are included in the cost to build for all homes in all states. The cost of permits and fees will vary widely from state to state and from locale to locale within any given state.

The cost of permits and fees can range from a few hundred dollars to several thousand dollars.

A phone call to your local building inspection department can give you a run down on what permits you will need and the approximate cost of permits and fees.

Permits are usually required for building, electrical, plumbing, HVAC, insulation, well, septic, driveways, grading, etc.

Fees are required for water and/or sewer tap-ins, and any other services provided by third parties.

I did a cost estimate for this 4 bedroom house in San Bernardino, CA, back in March of 2008. (The cost to build this house today in 2009 should actually be less!)

You’ll see a “Breakdown of Building Costs for this house on “Cost to Build a House in California”

HOUSEPLANS.COM – PLAN 18-1036

The cost of permits and utilities was $1,941.

Use the “Cost to Build Calculator” (It’s free!) found on my “Getting Started” page and play around with different house sizes and qualities.

Just as a useful tip, you’ll find it doesn’t cost much more to build an extra bedroom or two.

You will also find that it is easier to get financing on a 3 or 4 bedroom than a 2 bedroom house.

A 2 bedroom home will “take a licking” on the appraisal your lender will order.Always build for “resale”. Lenders are always looking at resale value, you should too.

Good luck,
Carl