Greg

Hi Greg,
You don’t need a Realtor or real estate agent to buy a home in a housing development that has its own sales force.

Photo courtesy of Meritage Homes

Here is a FAQ from Meritage.
“Q: Do I need a Realtor to buy a new home?

But Greg, if you need a Realtor to sell your existing home (and you probably will need one and probably should use one) and the builder/developer will pay ½ of the typical 6% on the new home, and you get the Realtor for your existing home @3%, it sounds like a good deal to me.

Typically, sellers pay commissions, even though it’s actually the buyers money.

Looks like you’ll be on both ends of that little conundrum, being both a seller and a buyer.

But remember, everything in real estate is negotiable, everything!
Carl

This one level home is perfect for a Sunbelt region. Steep pitched hip roof and stucco walls add to the curb appeal.

A Lanai (a veranda or roofed patio) and an isolated guest or teenagers bedroom with an adjacent full bath make this house plan a winner.

• 4 bedroom, 3 bath, 2-car Front entry garage
• Total Square Feet: 2501
• Footprint: 67ft. 4in. x 74ft. 8in.
• Standard Foundation: Slab
• Exterior Stud Type: concrete block 1st Floor Square Feet: 2501
• Estimated Cost To Build by HDA in Postal Code 75201 is $300,120, or $120 per sq. ft.
• This cost includes a General Contractor’s profit and overhead
• Estimated Cost to build this House using  the  “Residential Building Cost Calculator”, from Craftsman Book  Co is $287,200, or $115 per sq. ft. including the General Contractor’s markup of $33,394
• These costs do not include land or land development costs

HousePlansAndMore.com by HDA, Inc.PLAN # 592-055D-0500

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

Until you actually start getting bids from General Contractors it will remain approximate.

Carl

• deductions for mortgage interest
• deductions for real estate taxes
• capital gain exclusion for the sale of a principal residence

Combined with the home buyer tax credits available for qualified purchases of principal residences by April 30, 2010–up to $8,000 for first-time buyers and $6,500 for repeat buyers–the tax savings from home ownership make buying a home today a rewarding financial decision…Read the whole article HERE

(2) Conditions are ideal to purchase a home. Here’s why:

• Interest rates are at historical lows
• Home prices have decreased
• There is a large inventory of homes on the market to choose from
• For qualified buyers who purchase a principal residence before April 30, 2010, there is up to an $8,000 tax credit available to first-time buyers and up to $6,500 available to repeat buyers.
• Some states are offering special short-term tax credit loans to help buyers with upfront closing costs or down payments.

The best way to build household wealth is to own a home. Once you become a home owner…Read the whole article HERE

Find out more about FEDERAL tax credits HERE

Find out more about STATE tax credits HERE

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