It wouldn't even be close! But, we negotiated an unbelievable contract (if I say so myself!), and I really don't see how my builder is making much $$$ off of our build. We think that we are saving about $70 sq/ft with our current GC and contract. (Based on sq/ft comps in our neighborhood) Of course, I also know many people whose experience is completely opposite.

I'd be curious as to what others' opinions are on this...where do you think you'd get the best savings when you build vs. buy? (Overall percentage saved...not total $$$ amount.) Do you think it would be from a high-end home or a more modest home? I don't want to get into a debate on what constitutes a high-end home, so just use your own impressions of the two categories! I'm thinking high-end...

Of course, this could all be moot if I'm the only one who chimes in that we're getting more house for the money by building...

Portlander here. Yes, we are ended up paying less than if we chose a home already built. Maybe 15% lower...depending on each neighborhood. Plus, we wouldn't have had the opportunity to get everything the way we wanted. Well, most everything anyway. Building was a challenge but worth it in the end for us.

Good Luck!

P.S. When you are getting "guestimates" be sure you are comparing apples to apples and not just straight square footage. Upgrades can be a world of difference.

Lindy

I second that emotion...There is simply no way we would be able to go buy the type of home we are building with the land in this area for this price. Not even debatable.

Same here. I think my builder is making very little money on our house.

Our appraisal before construction was $460k and our fixed contract is $320k + 1 acre is $50k. I'm told that the first appraisal was based off of neighborhood comps and the second appraisal (which will happen before we switch to perm) is more detailed taking level of finish into account and our finishes are much nicer than other houses in the neighborhood. We've also paid out of pocket an additional $20k for upgrades. So at this point we are $70k below appraisal and my builder thinks the second appraisal will be $50k more. Sweet!

Thanks everyone. On the "guestimates" I am looking at it will say the Average cost to build the home is $441,000 Medium is $555,000. I am sure we will be going with the medium. It will be a modest-high end home, but will not have a Viking stove or a $4000 refirgerator.

This is something we will do in 3 years when we are no longer paying for two in daycare (Can't wait!!)

A couple other questions, when you hire the builder, that is all they do correct, build the home? They don't install kitchen cabinets, bathroom vanities, etc? Would I hire a general contractor to oversee those things like flooring, countertops, paint, etc?

We actually just went through remodeling out kitchen and doing floors, cabinets and countertops, so I have great resources for that.

Customdecorator,

A builder is usually a general contractor, and yes they do typically install cabinets, etc. That's not to say you can't negotiate something different, but they normally do "turnkey" (ready to move in) work. I've done 2 additions and 1 major remodel, and I can tell you that it's much less expensive building it from scratch. Go for it and good luck!

Thanks Laurie, that is what I figured, but was not quite sure. I mostly post on the decorating forum and hear so many stories of people firing their GC and just doing it themselves, so that is where the confusion was for me.

I have lots of time, but all the info I can find out now, will be less stress when the time comes. Of course we will probably be living in DH's shop while the house is being built so that will bring on tons of stress.

Hi,
We are west of you (Discovery Bay near Port Townsend). Like the others, it cost us less to build than to buy already built. That was one reason we did it. The other reason is that we simply could not find what we wanted, where we wanted it, in our price range. However, our build did not include landscaping (which we are doing ourselves right now). I've seen people build and immediately put the home up for sale at a profit.

when you hire the builder, that is all they do correct, build the home? They don't install kitchen cabinets, bathroom vanities, etc?

Our builder WAS the GC. They had a superintendent who was supposed to oversee everything. The builder subcontracted the foundation, framers, electricians, etc. They had their own finish carpenter who put up cabinets and did the trim work. I think that is pretty typical.

Note - the builder did help us get our permit, but their help was limited. I did the legwork carrying papers back and forth....

We are in a very expensive building market with a decreasing real estate market. We will be spending less than buying an already built home but we are doing the work ourselves.

We even looked at the cost of having a company come in that builds spec houses and that was about the same price as buying an exisiting home in our community.

We do live in a very rural area and the cost of existing houses in the more populated areas are much higher. the balance may be tipped in the city.

We would have spent significantly less if we'd bought a house, but part of that is timing (a big part) and part of that is that we wanted a certain type of construction (ICF) which we couldn't have bought at all.

We closed on the land & the building loan right at the height of the FL real esate boom, so at the time, there was nothing available within our price range that was halfway decent. Now, though, we're seeing houses with land for $50K-100K less than what we spent on ours. We could have taken a portion of that money saved and upgraded countertop, floors, maybe bathroom tiles, but we still wouldn't have had the ICF construction, and we still wouldn't have had the floorplan that we designed.

Cheers!
Heather W

Here is a link that might be useful: Our ICF Home Construction Journal

We're in FL and paying much much less to build (we are acting OB) than if we were to go buy one w/a builder trac home. Probably about 30% less, at least. We did pay alot for the land though which had an existing home which we tore down. Once it's said and done, we will owe maybe 50% of value as we are paying cash for the build but cost per foot (custom w/high end interior) about $160. We know our construction quality is excellent which is obviously so important in this area. Builders and exiting homes are $200 plus per foot. And then you're only getting builder grade quality for many things.

We are in NJ and we built 8 years ago so we have definitely experienced a tremendous runup in appreciation. Our house would now sell for 3 times what it cost us to build. Our land alone experienced tremendous appreciation. It's probably worth 4 times what we paid. (And I say that because vacant lots in an existing development are extremely hard to find today). We bought the land 9 years ago at a steal. I am ashamed to say that the current car I drive cost about the same as what we paid for the land back then!

C

LOL Caroline about the Car. I just got rid of my huge Denali and am driving a Diesel Jetta. I am at the point right now that I no longer want a car payment and would rather have that money go into a house payment that will appreciate than a car that depreciates. So, I won't be a cool soccer mom anymore, but that's ok with me lol

We wanted to build here on our property in N. CA. We were actually going to be seriously upside down in it when it was finished. There is just nothing around this area like the house we wanted to build, with the finishes we planned to use. You can buy existing homes for much less than you can build in this area. In the end it just was not a good idea, so we scrapped that plan.

We just purchased an unfinished home in AL. The bank appraisal came it at almost double what it will cost us to finish the house (including construction/materials costs plus the purchase price of the "shell"). And as Kelly mentioned, the final appraisal should be even more than that when they take into account all of our finishes. We are doing high end (although no gold plated fixtures or anything....). We WILL have the Viking stove and the expensive refrigerator. LOL!

There's not really anything quite comparable to what we bought... considering property size and square footage in the area. But existing homes with less square footage/less property are still more than we will be spending. Yah! Just makes me happy that it's appraising for significantly more than the cost. That's a good feeling. :o)

Of course, with the cooling market, it probably is a moot point anyway. :op

I'm really confused here. Are you assuming that your finished home would actually sell immediately upon completion for the appraised value? Whose appraisal is it--the bank's?

And are you including in your "cost" ALL your costs? Attorney's fees, permits, architect/design fees, land costs, everything?

Unless you're doing your own work, or building where it's currently cheap to build, and/or building a house of the same (builder-grade)quality as what you could buy, I just don't see how you can build cheaper than you can buy.

pinktoes- I'm not assuming that my house would sell for the appraisal. I'm basing my comments above on the comps in my neighborhood. Similarly sized and finished homes are selling for $230/sq ft...we will finish ours completely (including all that you listed above) for about $162 sq/ft. This price per sq/ft takes into account the money outside of our fixed-price contract that we have spent on change orders.

My home and the comps are all what people would consider high-end...they are all custom built (well, some started out as specs...but they don't look like spec houses! Our neighborhood convenants and ARB wouldn't allow that!) , full brick, metal or lamarite roofs, hardwood flooring, heavy millwork , granite countertops, and all are on 2+ acres in a gated golf-course community. We are going a little further than the comps in our high-efficiency HVAC system, custom cabinetry, all Wolf/SZ appliances, upgraded Andersen windows, generator, Toto fixtures, etc.

We are doing none of our own work (although I'm there so often I may as well be!), my house is definitely not builder-grade, and I don't think it is that cheap to build here...although we do have a lot of immigrant labor since we're in Virginia.

So, I'm not using the bank's appraisal...that doesn't mean anything. However, neighborhood comps do count...and based on those I am saving a huge amount of money AND I am sitting on a nice chunk of equity in the home.

I don't know if my situation is that easily copied b/c we negotiated a pretty unbelievable contract which I am very happy to have!!!

dixiedoodle: Sounds great. How did you get such an unbelievable contract? I'm assuming if comps in your neighborhood were build in roughly same time period, then everybody had same cheap labor, similar materials costs, etc. Only variable would be a builder who chooses not to make all the profit he can? Now there's a rarity!

customdecorator, we're north of you on Whidbey. Be sure you and the GC are on the same wavelength about your interpretation of "modest high-end home". What does that really mean to you? Tom

We have not built our home as yet, but based on our land value, the estimated budget for our build and what local new construction is selling for we will come out ahead. I have noticed several high end spec homes jump in price just prior to completion, perhaps there is a premium to be paid for avoiding the hassles and stress of building. In addition on a spec house a builder has to include realtor fees, carrying costs and perhaps a little extra profit for the risk of not having an owner to share the burden with. After all, the house may not sell and he could be stuck. I think there is also confusion on what constitutes a 'spec' house. My definition would be *any* home built without an owner/buyer whether it was $250k or $2.5 million. I would expect to pay less for a custom home on my own land than the *exact same* home built by a builder 'on speculation' of finding a buyer. For example, we were considering a plan that was built near to us and the asking price was $970k, the land cost $385k the realtor fee is $48,500 and the builder would have had various costs associated with the build that we as owners would be burdened with on our build- utilities,interest etc. So if you back out the land cost of $385k since we own our own land...that would leave $585k - take off the realtor fee...$536,500 and when asked to 'ballpark' the cost of the house built exactly the same on our land the builder quoted $470k. So if you assume that the house would actually sell for $970k and our cost including land and home was $855k (385k land, 470k house) we would come out ahead. This may not happen for everyone in every market of course and the only way you will know for yourself is to do the research in your area. A good realtor and a good construction lender can be very helpful in this area. Hope that helps.

luckymom23: I think to make the proper comparison you need to add in ALL the costs you will incur in building your home. Specifically, all the costs you would not have had if you had just bought one of those spec homes:

--cost of getting your plan or getting it ready (stock plan you bought or designer/architect design) and all costs associated with it (shipping costs; redesign costs; any certification for bldg. dept. costs; if an architect, all the recoverable costs they bill in addition to their design fee)

--surveys, engineering fees, all consulting fees and expenses

--for us, all the printer cartridges and paper and a multitude of books, subscriptions, etc. required to learn enough to build and to communicate with all the parties during the process (expenses we wouldn't have had if we'd bought "off the shelf")

--attorney's fees for reviewing your various contracts along the way

--etc, etc.

In the competitive market we're in, there are some hidden fees related to the fact that custom home builders build a much lower volume and thus can't compete for sucontractors on equal footing with higher-volume spec builders. They pay a bit of a premium for that and sometimes experience delays, which always cost, while waiting for subs.

Custom builders have higher materials costs than spec builders because they generally build fewer homes and can't get the volume discounts. Yes, there are some spec builders who build just a few houses all scattered around, but that's not the norm.

Custom builders have to tie up more of their time with the owners of a custom home. Spec builders make all the decisions without being delayed while we choose our countertops or rechoose our countertops when ours are no longer available. Every screw up, every decision requires more time with a homeowner on board. Time the spec builder doesn't have to invest.

So, if you're having a GC build your house, I don't see how , on average, you can come out ahead. Comparable quality, lot value, and location included.

I'm obviously doing something wrong. Maybe liivng in a big city that is unaffected by the current slower market; I just don't know. What's the trick?

I think we saved a lot of money building on our own compared to similar homes that were built to be sold by a real estate agent.

Our cost per square foot is about the same/maybe a little less but we have several upgrades compared to the others....covered decks, hardwood floors on first floor, extra large deck and patio, larger windows, extra insulation, top of the line lumber/floor joist/sub floors customized electric and house surround.

I could go on and on. At first glance, it might look like we paid the same but when it comes down to it we got a whole lot more bang for our buck by using a builder and starting from scratch on our own lot than if we went to a neighborhood and bought a completed home.

The thing to remember is to compare apples to apples.

To the OP's question of getting "more house for the money" if you build, for us the answer is yes. Ours is an architect-designed one off home with some funky features that do not have mass appeal but that we liked and wanted, so, to us, the extra cost was worth it because we are ending up with a flexible design that suits our family and lifestyle. We could not care less about resale or appreciation of the property, but we do care about having a house that works for our family and that, IMO, is priceless. Also, it is our general life philosophy to focus on value, not cost, and for us the "value" of a home that meets our needs and - let's be honest - desires, is worth the extra cost of building.

To counter what some others have said, we are in the minority, cuz it is definitely costing us more money to build than buy, probably to the tune of 20+%, but to us it's money well spent and we went into it with no illusions. We're building on 2 acres of rural, lakefront land in an area with just a few summer camps and two other year round homes, so there are no spec homes, no HOA approved plans and no comps and our builder isn't a production builder, so no great savings on materials either.

sandyponder

Pinktoes,

Most of the items you mentioned would be necessary to the construction of a spec home as well and would be built into the final cost.
However, for arguments sake... if you include ALL those things you mentioned as 'extras' do you think they will come to $115k?
Assuming that they will, we would still be breaking even- not paying more. On the other hand, even if you only back out the realtor fees we would be ahead by almost $50k.

I do not know what part of the country you are in, if things are really 'hot' perhaps builders of custom homes are able to charge whatever they want and that is why it isn't working out for you to build for equal to or less than you could buy a similar house for. It may also be due to upgrades you have chosen. If that is the case then you are getting more as well as paying more. However it is obvious by the other posts that *some* people are building their homes for less than they could buy them for 'down the street'.
I am in Oregon and our real estate and custom home market are doing well. The argument of custom vs spec in regard to volume pricing and sub availability does not hold for our situation. When you are asking a specific builder the price for a specific house those variables are taken out of the equation. In our area there are large and small custom builders to choose from. If you are choosing one builder over another and feel that volume pricing and sub availability will be better with a larger builder then go that route. You may not come out ahead cost wise though, a larger company may also have higher overhead which will be passed on to you. A smaller builder may get the same pricing and preferential treatment from suppliers and subs it just depends on the individual case. I have heard some subs say they prefer smaller builders because they get paid faster. Some suppliers offer volume discounts some are same price for everyone. The important thing is the quality of the job you get and that the price you pay is reasonable to you for what you are getting and the local market.

If a builder does not like to work with homeowner's and indicates to you that it is more work and will charge you more, then leave that builder to his spec houses and find a builder who appreciates the fact that the owners provide a guaranteed sale. Homeowner's may cause delays but they are usually motivated by the fact that they are paying interest and want to move into their new home. On the other hand a spec house may be completed more quickly only to sit for months on the market on the builder's dime.

I think we all must figure out what makes the most sense in *our* building market and find the best fit with a builder in our area. To do our research and know what our goals are. If it is important for Customdecorator (or any of us) to build for less than she can buy similar new construction for I would say she can probably do it if others in her area can. It won't just happen though, she will have to do her homework and make choices that keep her budget in line with her goal. Often when a consumer builds a custom home they buy the land and plan their dream home and build it. They are not thinking resale and the big picture at that time. They get caught up in the excitement and the 'while we're at it we might as well'... You think *maybe* some custom builders realize that and that prices are adjusted accordingly? :) A spec builder of course must look at the whole thing differently. They do not have the same emotional attachment. They look at lot cost, development cost, carrying cost, local sold comps, overhead & profit and what is left over is house budget. The more they save on the build the more $ they will make in the end. Perhaps the real 'trick' is thinking more like a spec builder and less like a homeowner. If that is not for you then you are not doing anything wrong you are just making different choices.

In my area, it would have been cheaper to buy a home than to build. If I put my house on the market I feel confident that I could NOT get what I have in this house. The landscaping and retaining walls that we are doing now are costing us a small fortune.

With that being said--we still chose to do a custom build and do not regret the decision. We do not plan to move ever unless we have to, and planned a home that will work for us in our senior years.

Most of the pre-built (spec) homes here do not have the quality of materials and construction that we have.

I would NOT count on being able to build a home for a cheaper price than buying a used home.

It is difficult to generalize on what would be cheaper buying or building. There are way too many variables. I just finished a pool using a GC and he also does custom homes and said it would cost $300/ft to build my house. It did not costs me that, but I was very physically involved and spent a lot of time researching. It really depends on your goals. Mine was to build "our" house. Saving money when possible was nice but that was usually by me doing more work not skimping on material/features. A problem with a GC is they typically add 20% to any changes even if there is really no extra work involved. Bottomline though you can only get exactly what you want by building it yourself.

We will come out cheaper but it's because we bought the lot years ago. Our exact same house (a spec by our 3rd choice builder) is listed for sell at 20% more than our highest estimate to build. The only difference is they have a bonus room over the garage.

Our pre-constrcution appraisal is at 22% above the highest estimate to build (28% above the lowest estimate to build).

We would probably come out the same, but only because our lot more than doubled in value since we purchased it--we paid $100,000 for the 1.66 acre lot in 2004 it and it would now sell for at least $250,000. I agree that it is the landscaping costs that can make it more expensive to build than to buy, at least for us. Landscaping can be really expensive but the cost of new landscaping isn't always reflected in the market value of a new, custom house IMO. Spec homes typically come with minimal landscaping, IMO.