Try OBing sprice. A lot of headaches come with it, but the reward heavily outweighs those headaches

All good points from marys1000. One thing I'd add is that in the current market, all of the houses that you have been touring to get an idea of cost to build are simply inventory. Chances are that the builder has adjusted the price of those homes because he/she has high carrying costs each month (When they run the numbers, they are able to see the spread between pricing low and selling fast or pricing high and sitting on inventory/interest payments...in this uncertain market-they're probably trying to sell fast.), so when there is someone asking for a house to be built for them...that's guaranteed cash. You are helping them subsidize their carrying costs on their unsold inventory.

With that said, the market IS uncertain, and I think that builders are willing to negotiate. Custom doesn't have to be more expensive than a spec house, but you have to be very, very good at negotiating (and at finding a builder who is willing to negotiate). Good luck.

Thanks for the responses. Just to clarify, for comparison we have been looking at homes in subdivisions but built by individual builders that go in and buy a lot and build a spec home, not tract builders that develop an entire subdivision and have lots of buying power.

But we have our own lot (5 acres) that we want the home built on. We have to drill a well and septic and know ballpark what that will cost for our area (we know the well is variable due to depth).

There are numerous reasons, one of which is that some builders charge an "aggravation cost" for dealing with owners.

Are the houses really apples for apples? Spec houses usually have more simple features to keep the price down and to attract the most potential buyers.

Also, the builder makes money off the mark-up on the lot. Since you own the lot, he might be building in some additional profit elsewhere.

To a certain extent it is also a class issue. You are in a different market when you talk custom build vs. buying in a new subdivision.

Usually, only people that are well off hire a builder for a custom built house whereas a run-of-the-mill house in a subdivision is marketed to the quintessential middle class.

Basically a custom builder views you as a rich cash cow and prices his product accordingly.

Real simple in builders terms -

Spec
-Buy a lot
-Choose from 5 or 6 plans to build a house
-All lumber/material/quantities/spec sheets are known
-Order, schedule and build
-Been there, done it, built it - no homeowner dictating anything, no headaches.

Custom-
-Talk and try to sell to potential home builder
-Draw up spec sheet/plans for house you've never built before
-Account for any extra's on any materials/lumber/etc.
-Account for potential liability in terms of potential mistakes
-Train/go over every detail with all the subs for something you've never built before.
-Subs have never built this before and will charge more to builder
-Deal with homeowner before/during/after the build.
-Deal with potential issue of not being paid or money being held back.

You figure it out. If you were a builder, would you rather build a spec house and sell it, or deal with someone on what they want to build. With the headaches associated with that - it's sure to cost more and they are going to profit a bit more. It's not hard to figure out.

If you really are comparing apples to apples and not a basic house to a custom house....there still are reasons why what you are finding may be true.

The price of a finished house is driven by the market around it and not directly by what it cost to build. If a builder builds a house at a cost of $200k, he probably hoped to pay himself by selling it for $250k. If the market gets slow he just wants to cut his losses (interest costs) and get his money back so he drops it to $210k.

Meanwhile,although the costs of land and building labor may be down due to the market.... materials, financing, taxes, fuel, etc. may be just as high or higher, so the cost to build that house may still be $200k. And nobody wants to go into a new build planning to make no money...so you get a quote of $250,000.

It is very well accepted around my area right now that you can get a lot more house buying something already built, new or used, than the exact same new house you have built just for you. I owner built a custom home a year ago and went into it knowing it would cost about the same as buying an existing similar home....my motivation was more to get exactly what I wanted, done my way as opposed to saving money. I knew I could buy just as "nice" of a house, maybe even bigger, for the same money but why live with oak, siding and white if I want cherry, brick and stainless?

"Usually, only people that are well off hire a builder for a custom built house whereas a run-of-the-mill house in a subdivision is marketed to the quintessential middle class."

That is the most ridiculous thing I've ever heard! ROFL

We owned our lot (not in a subdivision...sits on 80 acres of open space) and are building for about $97/sq ft. What part of the country are you in sprice5105? A lot depends on the market where you are.

we have been looking at homes in subdivisions but built by individual builders that go in and buy a lot and build a spec home, not tract builders that develop an entire subdivision

I don't know if it equates to 35 more a foot but its still quite a bit cheaper for those builders to go into a new subdivision and build than it is on a truly individual lot.

I know when I built on an acreage I had a tough time finding a builder that would build a small(er) house "out in the country" (it wasn't that far) not only does gas become an issue but what they called "windshield time" for the builder and all the subs driving to and fro. Deliveries cost more etc. etc. etc. It can add up fast. Especially when you add on faster cheaper in someone else's subdivision.
Back they they had more options in town, you should have more luck comparing different builders now, I would think there are more out there scrounging for work -> but it is going to be more expensive.
And when I had geothermal wells dug - they never did see any water so it was good I had a rural water district line going by - so I wish you luck on that.

""Usually, only people that are well off hire a builder for a custom built house whereas a run-of-the-mill house in a subdivision is marketed to the quintessential middle class."
That is the most ridiculous thing I've ever heard! ROFL

Stupid cow.

Here in the DFW metroplex, virtually all new TRUE custom construction (meaning on a private lot outside a newly developed subdivision, a one-off design by an architect) is seven figures. Hardly middle class. The VAST majority of homes When I meant custom home, I didn't talk about some custom double-wide in a cow pasture in BFE, like you are thinking about, apparently.

jrldh, you are being too harsh. it DOES depend on the area.

i know several people who have built 2700+ sqft custom homes for less than 50.00 per sq ft. they are 100% custom, because around here people tend to draw out what they want then get an architect to do blue prints.

also, if you want it 100% finished, all you have to do is walk in with your stuff, you will pay more. many people do a lot of the work themselves and a few hundred in savings here and there adds up quickly!

my ex and her husband have built a few house onthe side just to sell. they built them for around 35.00 a sq ft. sold for 60 a sq ft.

Well, harsh.... I understand, it depends on the area, but if I get a reply calling my comment the "most ridiculous", then I suspend my manners.

jrldh, the tone of your post is not in keeping with jessica's tone
and the name calling is out of line.

I am in the DFW area also and we are building a custom home now. We wanted to buy either a new spec home or a not too old used home but could not find one that had some of our top requirements. We looked at probably close to 100 home before we bit the bullet and made the decision to build.

I was very reluctant because I also could not understand why the new spec homes were priced less per sq. foot than the builders wanted to build a custom. I guess I agree that part of the extra cost is that the builder has to spend a lot more time with the client. OUr builder has been to all of our architect meetings with us - several hours. She only builds about 5 homes a year so she is the on site supervisor to all her builds. She will be helping us pick everything out along with a decorator. So I think part of the cost is her time.

Plus, when she builds specs, she just modifies one of the previous plans she used in another neighborhood so her architectural fees for specs are extremely low. Our fee will be high since we designed our home from scratch rather than modifying an existing plan. She accounted for the fee in her price. (Not all of it though....)

I still don't completely understand why the customs are so much more.

When we built several years ago, we ran into the same problem.

In our area in 2004, it cost about $90-$125 a square foot to buy an existing home including the land and landscaping.

We had already bought our acreage and I was so disappointed that a custom home would start at $150 a square foot not including the land or landscaping. That would be for the basics.

My husband and I decided to try to find an existing home. If we found one we would sell our land and basically our dream.

We could not find a home that had what we wanted and we decided to bite the bullet and go ahead and build.

We did find a builder that fit in our budget but we had to do a lot ourselves ( all the landscaping- some painting- flooring- stone on the front porch- bonus room etc.)
We still went over budget by about 10 percent.

It can be done but you have to be prepared to do a lot of the work yourself. Our builder let us do a lot of our own work. Most we interviewed would not. Also, you may want to consider GC'ing it your self.

I had to interview a lot of builders before we found the one that built our house.

lucky: You know what, if somebody out of the blue writes an unnecessarily rude comment, I'll be doubly rude back. That said, I am sorry I insulted cows.

Another thing to consider is that builders are throwing in upgrades in hopes of selling spec homes: granite countertops, hardwood floors, etc. With the market being what it is, people *can* buy very nice homes in subdivisions for less than they are paying for custom homes and oftentimes, the "extras" are nicer. We are in a similar sitution - we had to build on our farmland so we pretty much had to go with a custom build. I recently expressed my frustration to my BIL, saying that we had to use laminate countertops and laminate floors but we could have bought a new house in town with hardwood and marble for what we're paying. He immediately responded "But then you wouldn't live HERE!" And he's right. You'll be happy you are on your own 5 acres. Getting back to your post... The first builder we looked at came out with a bid of $145 a sq. ft. (back in 2004) We decided to re-think our decision to build. This year we found a new builder and after all is said and done, we will pay about $80.00 a sq. ft. We were very pleased and surprised. (This does not include the cost of the land - we already own that). This cost is spread out over the entire house, septic, well, (but not the landscaping) Keep looking at builders. The building process is soooo confusing the first time! As I said in another thread, find a builder who will let you go anywhere for your flooring, light fixtures, plumbing fixtures, etc. This will allow you to shop around and get the best price. I was very shy about asking this of our builder and now I realize I should have been more forward. One thing I liked about our builder is that he sat down with us after we picked a plan and asked specificially what we wanted in the house (hardwood floors, tile, carpet or laminate? Maple cabinets? Cherry Cabinets?) etc. Once he knew what we wanted, he took our plans to his subcontractors and asked them to bid it, then he came back with the prices and we had a very good idea of what we were getting in to. Also, the builder made suggestions to cut costs - like changing the roof.
The building trade is really slowing down so keep meeting with builders and find one who will work with you at a cost that you are comfortable with. Good luck!

I think those telling you to keep looking and talking to builders are right on. It is a dependent on your area and the local home building market.
We toured a home similar to the one we are planning to build. The asking price was about $600k, sales fee: $30k, lot cost: $150k so $420 was labor, materials, overhead & profit. The house was about 3800sf. So about $110 psf. We have been quoted pricing from $100-115psf for the size and type of home we would like to build. So that pricing seemed about right. When we asked the builder at the show home about his house it opened up a discussion about our property and our building project, he felt he could duplicate the home we were standing in on our property for about $150 psf. - I'm sure he could! :) House right next door, similar situation builder threw out $115 psf. Each builder is different and there are some who like the security of building a pre-sold home vs spec. We talked to a builder who was willing to build the exact same home again for us at a reduced price because, he had built it before and he would not have to put up his own cash or have carrying costs during construction. Too bad we didn't like that house!
Good Luck to you.

jrldh - I've never owned a cow or lived in a cow pasture (nor am I building in one). The name calling is childish. I was simply pointing out that making a broad comment about class and not being able to afford a custom home was ignorant, at best. Just because you live in market like that, doesn't mean the OP does. Or do you know him/her personally? Maybe I missed that part.

Well, I never claimed that my comment is an exhaustive treaty about custom home building and class. I started with "to a certain extent", which you might have overlooked. I didn't paint with a broad brush.

About childishness: If you start with calling my comment "the most ridiculous" you ever heard "ROFL", well, then you set the playing field accordingly.

I stated my opinion that your statement was ridiculous and I still believe it was. But I never said YOU were ridiculous. Calling people names is far more personal. You were out of line.

And I don't care to carry on this conversation any further. It's rude to the OP. My apologies, sprice5105. I hope you get the advice you're seeking.

You poor flower. If you can't handle personal attacks then watch your own mouth. Calling someone's comment the "most ridiculous" "ROFL" isn't as benign as you make it sound.

I am surprised by the comments. It is cheaper (for the most part) to build around here. For example: custom build=2 acres, approx $70,000; custom house with upgrades (granite kitchen and master bath, foam insulation, professional grade appliances, special order lighting and fixtures, etc) approx $95/sq ft. Same house in same neighborhood at resale=$135-$145/sq ft.

I came here for some advice and instead I feel like I'm listening to my kids argue. You people need to listen to yourself. I'd be embarrassed.

I'm a small builder in the Mid-West. I don't think a lot of potenial home buyer's know the true extent on how much it really cost to build a home. I will list a few items most clients don't think about.

Sewer Tap fee $3500., Water Tap fee $2500., Building Permit $1200.- $2500. Decent lot $75,000- $115,000, Excavation $3000.- $10,000., My liability insurance prorated on building 4 houses a year $1500. per house,surveying $900., Trash Dumpsters $700., Porta-John rental for typical build $550.
Total approx. $100,000 before one nail is driven.
Hopefully this will help explain why building a new home is so expensive.

I didn't read the whole thread (sounds like I'm lucky I didn't). It is also cheaper here to buy a ready built home than to build by the time you finish the concrete work and landscaping. Think how much landscaping cost when you finish a house.

Basically, that stuff is "thrown in" on a finished house.

janbanks & redlover, bring up interesting points...things are 'thrown in' to sell spec homes, how do I get my builder to 'throw in' some stuff?! LOL! I guess the reasoning is...the builder is trying to attract a buyer so he/she is willing to add *key* extras to make the home more desirable taking a slimmer profit margin or making up the extra cost by cutting corners in other areas, but on a custom home the builder has an owner footing the bill so each item is charged for plus the profit and overhead on top...thus making 'the same' home cost more. That makes sense to me. Not that I am thrilled about it. LOL!

There is an answer to your question sprice and it has been answered by several here on different replies.
1) the market is in a funny state right now, so already built homes are selling for less so the builders can get rid of the financial burden of holding on to a house, that while was being built was sure to sell fast, but hasn't. All they want now is to sell them so they have dropped the price to meet the market. I know of several houses in my area that were started when the market was really jumping in this area. I mean finished houses were selling quick, and everybody and their brother wanted to buy or build something. People were selling their existing homes for inflated prices that the realtor's cooked up, to take advantage of the market, then everyone's tax value's went through the roof to match the recent selling prices of the houses next door. Then the prices got so high that people said: "no way" and now we are here. Those houses that were started in the boom of things are sitting stagnant, and the prices have dropped to help sell them, hence the buyers market, cause when the market rolls around again, these buyers will be sitting on a lot of equity. The people that bought the houses in the jumping market now fear they made a mistake since they know they'd be lucky to sell the house for what they paid much less a profit.

2) You, a person wanting to build a house has nothing to do with the market from where the builders are standing. You are the opportunity for them to build a house in todays funny market for full profit margin, meaning no discounts. The housing market changes a lot, and this type of market is what we know as the buyers market..not the sellers market or the builders market. In this market one can build a house that will not appraise out, a house that will lose value in the short term, and a house that may never reach the equity levels of the buyers house, but it will turn around. Question is: who has enough lettuce to ride it out and who goes under.

Note: this is only my perspective, I don't do the whole real estate thing, maybe thats why I'm so poor, or not as poor as I could be.

we're in the same boat. the quotes we're getting are laughable in this market (which will worsen). much to my dismay we are waiting until the spring. we know the builder we'd like to use has nothing lined up except for an occasional room addition. building has come to a halt here. dh thinks he should "come to his senses" by april and come back with a more reasonable rate. he calls weekly and sometimes drops by (which we don't mind), basically he's showing his cards. i hope dh is right because i would have liked to have started by now. patience ...where do i find patience?

Thank you all for your replies. I understand a little bit better now, although that still doesn't make it any easier! LOL

But alas, we have finally found a builder that we really like that builds beautiful homes and will do ours cost plus 10%, so his quote makes our home about $110sqft(before the well and septic) which is much more do-able.

There is finally light on the horizon!!!

fyi: low and behold the builder called today. he "just happened" to be by the lumber yard today and he needs to "tweak" the numbers but he can take at least 4% off our total. it seems his price for lumber has dropped. when i told him we were investigating the possibility of buying a new house he then told me his number would come down even further since many of his subs are in need of work as well. i told him we are sitting on "all kinds of money" and need a new house and that i'm sure i could be happy in something already on the market. "well, let's just see what i can do first..." he told me. yeah. that's what i want to hear. i think once spring roles around he'll be running a red tag sale.

We built our home because it was less expensive than buying an existing equivalent house.

The price did not include landscaping: we are doing that ourselves, but even when we factor that in, we are still ahead financially by building. No, we did not GC ourselves; we used a builder. The builder we used does not build spec homes- they only build on owner-owned lots.

I guess it must be a regional thing.

katescouros...Whooo hooo.....way to negotiate. Hope his price drops enough for you to get started soon!

kateskouros, that is awesome news. Now it's time to play "how low can you go"!!! Keep us posted.

Amy

I live in the Northeast and everything is so expensive. The lot i purchased is not even an acre and it ran me 185,000. The lot is situated perfectly with water shed protection boarding three sides of the lot. I chose to go Modular for roughly around 90 a s/f. stick built was around 125 a s/f. I had one estimtate at 225 a s/f the GC asked me what I thought and I replied TO HIGH. In this area buying and building seems to be about the same to be totaly honest the problem is finding land

anthem (Nov. 9 summed up the reasons best)

To which, as other posters have noted, you can add market conditions.

During the last bust here, 1990, a tract builder I know bought his personal home from a desperate speculator. He saved tens of thousands over building from scratch. People outside the business usually have ridiculous notions of the margins in homebuilding.

Before I built my own home, which I'm now selling, I seriously considered buying back one of my ten year old customs. In retrospect, it would have been a good move! I sold it for about $990,000 in '90. Ten years later, the owner let it go for $718,000. Value now: $1.2-$1.3. And I would have saved myself 8 1/2 months of aggravation.

Infill city lots where I build are now upwards of $1 million. I've been waiting for them to come down ever since they hit $700k two years ago. So far, though, US-style housing woes haven't hit north of the border.

builder called again to tell me his price for plywood is down 50% ...and upon further investigation he just sent his eldest to college ($47K per year) and is trying to sell his boat as well as his shore house. now, i really LIKE this man. i know his family and i want to be fair but i also want my house. he asked if he could come back and talk to us after christmas. whad'ya think? do we let him squirm some more and wait until spring? well, it looks as if that's what we're doing since we have to find a new engineer. that's another story so let's not go there but this little bump in the road doesn't seem like such a bad thing. i will invite him back before the new year to see what he's proposing. in the meantime there are multi million dollar homes sitting empty all over town. it's not pretty. i've just asked dh to make the house a little wider, thus adding some square footage. i figure since everything is on sale, why not?

Some of those pre-built may be on sale at less than they cost to build-- fire sale prices to stop the bleeding, to mix my metaphors. Some new homes in my area have been on the market for over a year, and the prices have been dropped by 25, even 35% from original asking.

Unless there is a floor plan or features or location you REALLY want but can't find in the pre-builts, it can be a great way to save a ton of money. What you'd save in house payments would get you a lot of nice vacations, etc.

Another factor I didn't see mentioned is scheduling: if your builder is between jobs and trying to meet payroll, he'll be far more willing to cut the profit margin.

My 2 builds differed by 40%.

There is another factor that no one has touched upon.

I am a Plumber and I have spent many years earning a reputation amongst the local builders and plumbing inspectors as being a stickler for detail, to the point that often an inspector comes on the job site and when he or she sees me standing there they barely go through the motions of an inspection, relying upon the fact that they know my work. In return, I can command top money amongst the builders and I am still in high demand because they know that I will get the job done on time, in budget and have no follow-up problems.

Along comes Mr & Mrs gotlotz acting in the stead of a competent GC and they immediately begin giving me attitude. NO problem. The first thing out of their mouth is that they will not settle for the quality of work we do on tract homes. Fine with me, never let it be said that I cheated you out of your bragging rights, I just add an additional 10 or 15% aggravation fee for putting up with the attitude. The quality of the work speaks for itself.