By the way, I know it can be argued that we did not really stay "on budget" given the 15% increase from the initial number, but my point is that at that juncture, it is not a surprise and you can make the decision whether you can afford it or not (ie you control the situation), whereas after you start, it is more sometimes more difficult to swing that type of increase out of pocket and it certainly is a "surprise" at that point.

Very good advice... if you know everything you want, you can then adjust things to stay within your budget (e.g. willing to get cheaper trims/interior doors in order to get better insulation)

But there are cost overruns you cannot control. Excavation where you hit a big rock that needs to be blasted. Digging deeper for your well. Some bad weather / workmanship / delays that prevent other trades doing their job. Etc.

So to me, the 10 - 20% buffer in my budget is to cover those types of cases.

Very good advice! This is exactly what we plan on doing including very detailed plans of location of switches and light fixtures, closet fixtures, etc. We feel we need to do this as we will be building 1.5 hrs away from where we work so not easy to hop on over during normal work hours.

I know that it is possible a few of the things we pick will be discountinued or on back-order too long to wait so we also plan to have a couple of choices for most items to make sure if we can't get A then go to B. This is to avoid us holding anything up in case they can't get a hold of us immediately or we would have a hard tiem to decide, plus we will know the costs ahead of time for making those substitutions.

Excellent advice! If I knew then what I know now....I would have started with the exact plumbing fixtures, cabinets, lighting and so on that I knew we wanted. As a result we are guess what??? 15-20% over the original budget because of upgrades and other choices we have made.

Great advice... for a perfect world. But I live in Murphy's World and he doesn't play fair!
I just don't see how someone can pick everything out prior to the beginning of their build. What if you buy all the same fixtures and one gets broken and now you find out that the style is no longer made by the manufacturer? What if that appliance you picked out 1-1/2 years ago, before you started building, has an internal gas leak, you're no longer under warranty and you now need to repair it? What if your architect doesn't do something to code that sets you back thousands of dollars (for me that's the ghost of insufficient trusses being built). And, if you pick things out but don't buy them at that exact moment then you KNOW you're either not going to find it available again or it's goin' cost more. Even if you say, I want Wolf, and St Thom Creations, and wide plank flooring things still can change....prices, availability, workmanship.
Just the way it is.....

We picked out styles and in some cases specific models or lines, but waited to actually purchase until things were either needed or I found them on sale or clearance. I saved 20% + additional rebates on appliances, 20% on our doors and windows, 10% on our cabinets, etc. If I had not already had a good idea what I wanted, I would not have been prepared to make the quick decisions that saved us so much.

We're not finished yet, but at the last budget meeting our GC told me that we are under budget on almost everything. The monolithic slab went over budget due to engineering requirements, but so far that is the only over budget item.

For people building a home with one type of decor or a certain style, this is easier to do. No way would I have wanted to select everything ahead of time--in fact, the few things I did, were discontinued, not available at the time I needed them, or didn't work with other items I had to substitute because of other unexpected changes.

I regret selecting my appliances and faucets early because the builder insisted I do that before we even signed the contract. As much as I researched before the build, I became more knowledgeable during the process and had access to more information and was able to make better selections, so for me, I'm glad I didn't have everything selected beforehand.

I agree with Demi & Kat wholeheartedly.

I thought I made all my selections in the beginning. I spent hours in stores, online and pouring over catalogs before a contract was even signed. However, as the project progresses things change including my knowledge about products and processes.

I had a vision of what I wanted my house to be from the beginning and that's the house I'm getting, except better. The flexibility of making selections as the house progresses has made it even better than I originally envisioned.

I'm over budget due to upgrades by about $35k and the house has taken entirely too long to build (not necessarily due to my selections & upgrades but it has contributed slightly to the delay). I think if I would have rigidly stuck to my original selections, I would have a lot of regrets right now.

Just to answer a few of the responses (thanks):

I know that there will always be unforeseeables when building--usually having to do with the lot. In fact, most of my overgage was due to having to haul dirt.

Second, I was also concerned about things becoming unavailable, on backorder, out of stock, etc. We had everything picked out by August and moved in May. We never had a single issue. Fact is, prices hardly increased at all as well. Lucky, I guess--I don't know.

Also, we only selected things before signing the K--not purchased them so there were no warranty or repair issues or anything like that. Our goal was not to have them in hand but to select things so that we were not working from allowances.

Finally, this certainly would not work for everyone, I know. We have no regrets at all about what we picked out and did not feel tempted to change our minds afer we started seeing the house built.

We chose nearly everything before we started, and in fact many of our choices were in the bid package. Didn't do much good. The builder waited until the last possible minute to buy everything. We had a constant litany of no-longer-availables and price increases. I'm convinced that one reason he waited was because he knew that the price would go up, and therefore increase his profit. We really had to scramble to make last-minute substitutions. And then the builder cited the amount of time (a couple of days here and there) that he had for us to come up with substitutions as cause to ask for extensions and demand additional payments. Plus, in several cases, the builder simply made substitutions without a change order.

Do your research ahead of time, but wait on your choices until a few weeks before the items are needed. Give your choices to the builder, fully specified by model number, quantity, finish, etc. And make him tell you the specifc date that he's going to pay for them.

Shooter,

I think you're wise for having clear selections in advance. It may be great for some to fly by the seat of their pants. In fact I'm sure there ARE some that have been in the business long enough to do exactly that. I'm just not one of those people. I understand that there will be certain bumps in the road in this process but I also know that I'm going to be spending an enormous amount of money in this process and it's my OBLIGATION as a consumer, husband, father and head-of-household to be a good steward with those funds. I will be as detailed and diligent as possible in budgeting, planning, defining and executing the various pieces in this process from Clearing to OC. There will be bumps along the road....hell there may even be a bombshell or two but I won't be put in a situation where I am held out to be taken advantage of because I haven't done my due diligence. I will not be the cause of hold ups, pauses or stalls. I will be able to clearly account for any overages and avoid them wherever possible. I will fight tooth and nail to stay as close to the original scope and estimates created in the beginning of this process. I'm not downing the "seat of the pants method" but if I used it I'd end up with mismatched finishes, code violations, a serious injury and possibly an angry bank muscling in to foreclose. I know, I know some will say this "creed" will fall like a ton of bricks when the saws and drill get fired up but nonetheless...this is the way it will go for us.

I haven't made final selections or purchases yet, but I'm doing my homework so when the time comes to purchase I'll at least know what's out there, what I can afford, etc. It takes me so long to make up my mind on things anyway, I couldn't do it any other way. I have 2 3" binders filling up with information for everything for each room in the house. .

Don't get me wrong guys. I did my homework too. And, I truly believe we had a very good idea of what we needed and what we wanted and the cost of each from the get-go. I think anyone starting a build blind to it's cost is at best a romantic but more likely an idiot. I'm just saying that as someone that thought we had all our ducks in a row we still have gone through a very tumultuous build. People starting out need to understand "carp" happens. Sometimes nothing you do right can down-play fate.

We chose a slightly different path. We researched and selected everything - flooring, lighting, plumbing, appliances, cabinetry, countertops, etc.

We then used those selections to define our own allowances. This approach ensures that our allowances are adequate, but still affords flexibility should we want to modify our selections.

"Posted by billyc (My Page) on Thu, Jun 7, 07 at 15:54

We chose a slightly different path. We researched and selected everything - flooring, lighting, plumbing, appliances, cabinetry, countertops, etc.
We then used those selections to define our own allowances. This approach ensures that our allowances are adequate, but still affords flexibility should we want to modify our selections."

This is exactly the way we planned as well. I made sure every allowance was adequate for each stage because I had already researched everything, even down to the handles on the kitchen cabinets. Then I added 15% or generously rounded up for "just in case". I planned for the most expensive possible choice and in most cases, the budget is overstated. I'm hoping that we actually end up under budget, but we'll see!

We are far too spontaneous to pick everything out ahead of time. We did the same as billyc and arebella, but we did just guess in some of the things, like lighting. We talked to friends who built and found out what they spent and went from there.

We made sure to price everything not on sale even though we are planning on buying most stuff on sale or online. We also made sure to add tax and then 15%. We feel our budget is inflated, hopefully it turns out that way.

We are acting as owner builders, so this method works well for us, ymmv.

You don't need to have all of you final selections made - just know the quality. For example - cabinet vendor, wood, finish , and door style. Once you establish your quality level - then a reasonable allowance budget can be established for cabinets. You can change the final selection later (but watch out for how the change order clause is worded). As long as you stay within that quality level, you can get close to or stay within the allownace. Builders often use their "standard" as the basis for allowances - and that standard is probably not going to match your expectations. That is why it is very good advise for you to establish the allowances - based on some early selections - where possible so that your expectationsfor qaulity and cost can be met.

In our build - we did this and were able to stay within 2% of all things under our control. But beware - there are some allowance items that are tricky to estimate. For us - the electrical (not the decorative lights - but the outlets, switches, special circuits) and the excavation allownaces were a joke, and we had know way of knowing it at the time the contract was signed. Even if you pick everything out ahead of time - you should keep a reasonable mangement reserve (10 to 15%) to deal with oopses. If you are building custom - and need well, septic and there is any potentail to hit rock shelfs for the foundation - you must be financially prepared for the potential of very large overruns.

I agree that it's good to pick out everything ahead of time and not make change orders. Those are what cost you more money.

BUT, and this is a big but, in our build at least, there were overages that could not be anticipated because they were due to problems created by having inadequate blueprints, an inadequate contract and a bad builder. Of course, this being our first build, we did not know that our blueprints and contract were inadequate nor did we know that we'd chosen a bad builder.

All in all, we only went over around 4% from our initial start price. So not bad at all in my mind, especially considering that some of that was from excavating costs that were not able to be anticipated. Who knew that we'd hit bedrock?

So, allow for $1,600 for the extra days of digging due to bedrock.

And then, add in poor blueprints that did not allow for a load-bearing wall to have adequate support in the basement nor for knee walls in bonus room to adequately support roofline. Cost? $1,200

Stairs needed from garage to house because garage ended up taller than planned due to the aforementioned bedrock. Cost? $300

Back upstairs window wouldn't work with regular brick, needed brick-and-a-half trim to go around oval part of palladian. Cost? $250

Extra trenching needed for electrical conduit. Cost? $200

Garage door needed to be placed on tracks higher than anticipated due to extra height in garage, again as a result of the bedrock issue. Cost? $500

Extra protection added when bricking to keep water runoff at a minimum. Builder hadn't budgeted for it, but seemed like a reasonable item to add. Cost? $250

House was on too steep of a slope for our preference. Hired bulldozing company to cut back hill. Cost? $1,500 (Obviously completely optional, but it was necessary to keep water from running down the hill and pooling at the back of our house. Money well spent.)

So...those are just a few items, and nothing too expensive, thank goodness. But they give you an idea of the items that could not be anticipated until we were faced with them during the build.

The only option we added during the build was to switch from carpeted stairs to hardwood stairs at a cost of about $300. Oh, and we removed a window from the master bedroom after it was framed and we realized that our furniture wouldn't fit if we had windows on every wall. That actually saved us a few hundred $$$ because they returned the window. We paid a 20% restocking fee, but it was more than offset by the cost of the window being deducted from our window package.

So, while I wish we could have picked everything out in advance, it wasn't possible. We did stick to our allowances for electric, plumbing, appliances, cabinets, etc. In some cases we spent less than our allowances and were given a credit.

But, even with a fixed price contract, there are too many variables to anticipate every problem in advance. Especially when you're a first-time homebuilder.

Next time, we will do better and it will start with hiring an honest builder who isn't trying to nickle and dime his customer.

NEXT TIME?!!?!!?!!?!!!

kats, shhhhhhhh!!! don't tell my husband I said that!!! ;)

(but we have been saying if we ever find more acreage a few years from now then we might be tempted. we love our five acres but 10 or 20 sound nice, too!)