Utilities, possibly snow removal. Maybe yard maintenance. Not trash. Electric and water and maybe hookup fees.

closing costs and lawyer fees depending on your loan type and lender.

Insurance. Builder always has a policy but You still need some basic insurance for the property. Not too costly.

My first thoughts:

• Any discrepancy between what it costs to build your home, and what the assessor thinks your home is worth, based on local comparable sales of existing homes.
• Doughnuts and coffee for the hardworking folks who dig in the dirt and swing the hammers.
• Port-a-potties.
• Deli sandwich platters from Costco for the workers.
• Third party inspections.
• Cookies and lemonade for the dudes who're building your house.

I'm sure there are a million more -- but I wanted to be subscribed to this thread without just saying, "Following." lol

One devoted dame, how often did you take donuts to the site? What phases? Framing, finishing, etc.? We’ve just started and there was demolition and now it’s the mason Only and I’m not sure what days. framing starts in a couple weeks.

I was was just thinking of this but not sure what to do how often. Or how to get it there safely.

Never thougt of port a potties. Should the builder supply those?

To the op: forgot some. Possibly asbestos testing and remediation if there is any demolition of an existing structure. engineer fees for site planing and zoning board etc application fees possibly.

Repair of damage to existing paving possibly

our town requires cash set aside in a sort of escrow account in case we skip town in the middle of a build and leave a hole in the ground. Check local rules. Ours is about 4% of home Value.

A lot of the things I’m listing here are due to town rules. Check with your building and planning office

architect fees if you use one and not part of builder package. Also payments for the architects engineer

Ooooh, yes, architect fees, engineer fees, soil testing fees, and attorney fees.

I haven't started building yet; I'm still in the finding-land-appropriate-for-my-needs stage. But, when I get to the building stage, I will ask the builder for a schedule of the subcontractors *specifically for* bringing doughnuts and sandwiches, at least once, for each set of tradesmen.

I'm a stay-at-home mom, so I should be able to make daily visits, if necessary, to bring small edible gifts of appreciation for the subs. I want to give them a face to the project, with some genuine Southern hospitality, since it seems a lot of folks take these guys for granted. I also speak Spanish (although you can't tell by looking at me, lol), which I hope will help at least some of the guys feel more respected/at ease.

The HOA we will be building in also has a security deposit of around $20k to make sure you follow through with all the things you agreed to when they approved your plans. You get it back when the project is complete.

Do I like it? No, but I have seen houses sit partly unfinished for years or people not complete the things they agreed to do in front of neighbors and the zoning board. It also means if the HOA has to come after you, they are spending your money and not that of all your future neighbors.

DH is a bit of a messy gardener ... I have told him that his outdoor "housekeeping" will most likely be a problem. Where we currently live properties are walled/fenced and most can't see into your backyard. New property does not allow privacy fences and will be more open to neighbors. DH should probably put more time into his other hobbies when we move! As said in other posts, you need to do all your homework when buying into an HOA neighborhood and decide if you can live with those rules.

Is this a new build? Do you have General Contractor? What is size of house? Have you signed contract? The builder/general contractor should list details on what he covers in total cost of home. Do you have an “Allowances” addendum? If you can answer these questions, I can give you details on what to plan for in terms of additional cash costs.

New build, yes. I don't have a GC yet, although I have one I'm leaning towards. 1300 sq ft, give or take. No contract. I'm working with an architect right now. I was ALMOST under contract with another builder a couple months ago, (with a plan I created myself), but walked away before signing. The contract they gave me to sign did not address any of these things, and I didn't know to ask at the time. So am trying to better prepare myself for once I re-start the bidding process when our design is complete. I really don't want to find myself under contract and not having the cash to pay the things I need to because I didn't know to ask about it.

Bulit several times and have never bought donuts, paid utility - use or hook up fees, soil tests, HOA deposit (only 2 of 4 had HOA),

Did pay design/architect fees (except the one tract build).

I just finished my home it will be one year this July.
Hummingbird, first you need to find a builder search, research , go to the building departments of the city’s they build in etc...
You need a builder not a general contractor. I’m only saying this because this is your first build. Once you get savvy then a general contractor can be just fine, But not for your first home you’ll be in tears and I’m sorry but they don’t control the budget Your CASH money as well as a seasoned builder would.
Now what no one is saying here is the Builder controls what amount of money is needed e.g Ryan homes you don’t pay for extras but you get a cookie cutter home . Custom builds, I paid for the porter potty the dumpster Everything it is my house my build so nothing is free but I have a beautiful custom home. Now if your working with a Builder you will have to Make Draws from your construction loan so First you have to get the loan. Or if your lucky your builder will carrying the loan for you, just depends on your builder. But either way you need money you need a loan for the total amount of your home or you better have that cash Enough that’s going to cover your cost of build, And some reserve for allowances.

@onedevoteddame,

Hey I brought the crew lunches as well. I brought a light folding table from old home set it up bought pizza, McDonald’s, and soups for the guys. Your right on, you want to let them know that you exist and this is your home. I had a two year old at the time and I brought him with me, and you better believe it has an effect on how they treat you and your build. A little time and kindness goes along way!

I realize a lot depends on contract details, but we didn't pay insurance, utilities or anything beyond the conveyancing fees for the lot, the land taxes, and the regular progress payments to the builder until we had the Certificate of Occupancy. The rest (including the porta potty) was all part of the builder's overhead. We were 700 km away for the first four months of the build, so the tradies didn't get doughnuts or morning coffee from us. We did have to pay rent because our build, not surprisingly, took longer than anticipated and we needed a place to stay. Oh, and storage for the stuff after we moved out of our old house and before we moved into the new.

Tina - what is the difference between a builder and a general contractor? My bank requires them to have a general contractor license, which everyone I've talked to does. But their company names almost all include "builders" as part of it. So I didn't realize there was any sort of difference?

I have the construction loan ready to go. That's been the easiest part of all this so far. They're just waiting on me to submit plans and contract. I know how the draws on the bank work for the builder - they pay, and then submit receipts and stuff and the bank pays them back. If I'm paying for it, it has to come out of my cash - right? Or is there some way to add it to the loan?

A general contractor is a "builder". Sometimes people call all labor on the job "builders" or they call the onsite super the "builder".

Its a vague title, but has more of an "action" image when used.

Typically the home owner is responsible for all property insurance including fire & liability (typical homeowners insurance stuff). The GC should have liability, workers comp, etc.

Homeowner is ultimately responsible for all permits & impact fees, so contracts should be clear. They are huge & unpredictable until billed in my region ($50-80K) so I use allowances IF they are in my contract.

Some utilities (water, sewer, electric, gas) charge hook up & design fees, also unpredictable until billed (see permits/impact fees). It might be $30 in your town, but $3-5K in mine (CA). There might be separate utility impact fees.

HOAs like to collect deposits. These are now a homeowner responsibility.

My contracts are "fixed price" with allowances and/or exclusions. Utility usage for construction is not an allowance. Utility fees are usually an exclusion, but I usually give clients a list of what to expect, IF I know. Its a maze.

The rest is negotiated. Some clients want to purchase their own fixtures. Some builders only want to be responsible for certain items. Some banks want builders to be responsible for all. Depends.

I've built spec, custom on my lot and client's lot. No such thing as "general rules" and "general practices." And if anyone thought my building site was the place for a picnic, with two-year olds yet(!), sorry, my insurance and homebuilding licence would have been at peril if anything untoward happened. A building site is not a park. No matter one's good intentions.

And if anyone thought my building site was the place for a picnic, with two-year olds yet(!), sorry [....]

Nothing wrong with setting up a table, a cooler, and a trash bin just outside of the work zone -- say, at the curb -- and delivering napkins, food, and beverages for the workers to enjoy. And nothing wrong with having a baby, waving "hello," on your hip, as you carry the doughnuts in your other arm, on the way to the table. :-)

I’ve decided I’m going to ask the builder explicitly if he likes food or drink onsite. And if so what and when. theres no way we can be there daily due to work But occasionally. Like every week or other week

I’m not bringing toddler i think unless I have another adult To help! Carrying food and keeping toddler out of open foundation sounds tough

I’m leaving toddler at home i think unless I have another adult To help! Carrying food and keeping toddler out of open foundation sounds tough

I have a ring sling that I use to carry babies, which is like having a third arm. Highly recommended, lol. My oldest is also a huge help, for sure, since babies love her so much.

Setting up at the curb should avoid *most* of the construction debris. Care should always be taken, regardless of whether kiddos are present. Obviously, the decision to have children involved in visiting the site (and by "visiting" I mean everything from staying in the car, looking out the windows, to actively helping carry gatorade bottles to the cooler sitting at the curb) will depend on the parents, the kids, parenting style, and personalities of all involved.

I will respect my builder's space by keeping myself and my offspring out of the mess. He should respect mine by holding his tongue if he disagrees with my at-the-curb activities. It's a relationship, give and take, on both sides.

It isn't time to worry about "feeding the subs", so many more important issues. Once in a while, you an bring something, but it is so much more important at this point to get your "contract" in place, clearly stating what the details are and surely no small child at a construction site. Any builder/GC worth his salt will explicitly state what you as the "buyer" can and cannot do based on their insurance coverage. They are responsible for everything on site during the build, so you can understand this.

On the original topic I think out of pocket costs depend on how you build and if you are buying into a development vs doing your own thing

we owned our land and house and are tearing house down to rebuild. Just that one house. No hoa. So we Are paying more during construction than if we were part of a planned development. We also are responsible for utilities, asbestos testing, and other things which would not be a factor in a development. this situation also means more administrative costs for town boards and site planning. The overall cost is not more but we need more right upfront.

The escrow account is also called a “letter of credit”. This is handled by the builder if he owns the land (as in a development). If you own it the builder can’t do it as he doesn’t own the property to back the letter (not saying this quite right). So you need to have that money to be held by a bank or lawyer. This may depend on town rules)

Hummingbird - you were asking:I know how the draws on the bank work for the builder - they pay, and then submit receipts and stuff and the bank pays them back. If I'm paying for it, it has to come out of my cash - right? Or is there some way to add it to the loan?

ask your lender. I am almost certain ours allows self built items to be part of the loan but we have no intention of doing that so didn’t ask about the process. I think it is more paperwork and subject to scrutiny as they don’t want to cover non construction items

I highly recommend you find a local resource to be your "advocate" in this process. You are obviously a novice at this, and trying to advise you from a distance might not be the best process. Not sure where you are located, but look here on Houzz in the Pro section and see if there is someone who can help you do this. There are soooooo many traps and potholes in this process, I really want someone local for you. See if you can find someone from Houzz or if we know your location, we an possibly point you in the right direction. I just sent you my "Checklist" so hopefully that will help too.

following

Another possible out-of-pocket expense...

I was reading through some documents from one of the banks we're researching to do our construction-to-permanent loan. It says:

"Note that draws are only permitted for work completed and items that are already “attached” to the house. So if you order special windows and the manufacturer requires a deposit, those funds will need to be paid up-front out of your own pocket. Your lender would then reimburse you once the windows are installed "

Is this typical?

IMichael- yes typical but not applicable unless you personally buy the windows. If you give your selection to your builder and they get the windows they deal with that and it never affects you.

If you use a builder or G.C. I don’t think it applies. If you source independently or are your own gc then it matters

I dont think you need to hire a separate advocate as a homeowner, even as a novice. We didn’t (we’ll see how that works out for us...). However we got/ are getting advice from the builder, the architect, and the town planning department. As well as the lender. those are the major sources of information!

However when interviewing builders and architects it can be good to understand their experience in guiding people through the process. It’s best if they have built similar projects in your exact town.

And you will learn from reading and just show up to the planning office.

We did our own zoning and arb applications And hearings. You can hire people to do that for you but not necessarily needed.

Flo, I just saw your checklist - thank you soooooooo much! It'll take me a while to dig through it all, but it looks really comprehensive!

What type of person do I look for as an "advocate"? What sort of business would they be running, or what services would they offer that I should look for? (I don't know anyone personally who has built, so don't have friends or family to help - they all think I'm crazy for trying, and perhaps they're right, lol)

Look for a designer who has construction experience. Not just "decorator" but true designer who has projects you can see or talk to owners that can help. Project Managers with experience with new building. Some architects might have references too. Call several people and you will probably find someone you "click" with. That is important. You will need to budget for this as a separate cost, but it will be well worth it and they can help you avoid major mistakes. Even though your square footage is small, the same principles apply to most builds.

Where are you geographically? Maybe someone here can give you a referral.

Kind of near the Colorado Springs area. Place I'm building being a small enough town I'm not comfortable naming it publicly.

It may be beneficial to talk to this guy up in Superior, Colorado: Summit Studio Architects.

We have allowances in our contract. One item (tile) specifically says that the allowance includes labor. None of the others do. Halfway through the build the builder is saying that labor is our responsibility in all of the allowances. We thought that because those other allowances didn't mention labor, the labor was built into the contract price of the house. We are very angry.

Kathy, that is normal and customary in our area for the allowances. Do you have funds left over in your allowances on the materials you have selected? If so, I would expect those excess funds could/would be credited at the end. Having said that, IME the contract allowances are generally lower than the actual cost unless you specified materials and their cost upfront in the contract. It's a builder strategy to low ball the allowances so the contract pricing looks favorable to you initially. IMO it's one of the areas that needs extra examination before signing. I have seen this come back to bite buyers particularly in the land/lot development phase.

Fortunately I have already determined exactly what I want for most items - I'll either get them written into the contract, or make sure my allowances cover the items I've decided (plus a little extra to cover things that increase in price before they're purchased).

Whether or not labor is included in allowances should be spelled out. If tile specifically said it and the others did not, I feel you made the appropriate assumption. I would lawyer up.

We have allowances in our contract. One item (tile) specifically says that the allowance includes labor. None of the others do. Halfway through the build the builder is saying that labor is our responsibility in all of the allowances. We thought that because those other allowances didn't mention labor, the labor was built into the contract price of the house. We are very angry.

I’m very confused by this. Are you saying that the price of your home — and consequently the loan or loans (construction/mortgage) you’ve secured — doesn't include the electricians’/plumbers’/HVAC/painters’/finish carpenters’/flooring installers’, etc., fees to hook up/install the items which typically have an allowance, like lighting, plumbing fixtures and flooring?

I cannot imagine that he would charge us for masonry work because we have a brick allowance, nor would I expect to pay for light fixture installation. The labor in allowances thing was on our radar when we did contract negotiations. We had the discussion during that time. When we examined the contract and noted that the tile included labor but nothing else did, we assumed that the labor on everything else would not cost us extra. In hindsight we should have had a lawyer look over the contract before we signed.

We estimated what we would need for materials allowances and put a spreadsheet together comparing our 4 bids item by item so that that each bid was as comparable to the next as much as possible. We specifically asked for allowances that were materials only because we have no way of controlling labor costs. We negotiated some of the allowances up and made notes on the ones that were too low to allocate an amount in cash that we expected to pay at closing for the overages. Our selections to date have been made based on our understanding of the contract. This builder did not have the lowest adjusted bid. We chose him because he responded to us promptly and because he was recommended by a friend.

There is no wiggle room in the allowances. We knew the allowances were a little low on things like hardwood. That allowance is $3.19 per square foot. We found a nice one that we like for $4.50 per square foot. We're over the allowance without including labor.

We will consult with a lawyer.

Unfortunately, it may be too late to argue the point of labor costs which were not itemized other than for tile work.

The fact you specifically excluded labor from your allowances seems to define the problem.

Regardless, good luck with your project.

Whether an allowance is purely materials/items or inclusive of labor should be clear. Often the builder will show an example of that can be installed/included for the allowance given. The best practice allowance should be based on something real & reasonable. Reasonable might include purchasing through pre determined suppliers who have a relationship or provide a level of service the builder expects.

Some here will argue that the homeowner should make all selections prior to bidding a project, but that usually results in an above budget bid. My preference is to price allowances, and pre select items that fit in the desired budget range.

Examples: 30" range vs 48" Wolf/Thermador will change the cost of install from about $50 to $600 so when I have an appliance allowance, it indicates that the larger appliances and built in refrigerators will incur added install costs.

I use a carpet allowance $____ per yard (including the cost of installation). Often clients switch to tile or hardwood without considering the higher cost of install, which is usually a shocker.

Light fixtures are purely cost of fixture, FOB jobsite. Adding or reducing fixtures is a change order due to circuitry.

I am confused by Kathy's comment that they specifically excluded labor (except for tile) from the construction contrac, but now is upset that they builder is now charging them an extra cost for labor.

What am I missing?

Before you consult a lawyer, gather more information and ask the builder specifically about the hardwood. $3.19 would not include labor in this country. You should be only responsible for the difference ($1.31 psf). When you make the selection, ask them to calculate the difference showing what you will owe.

The contract lists allowances for items. What I meant by 'excludes labor' is that the term 'labor' is not attached to those allowances.

This is the wording on the paragraph for interior flooring:

"Hardwood in all rooms not including the room over the garage, stairs, bathrooms, and laundry room. To be selected from builders' samples or a $3.19 sq ft material allowance. Carpet in room over garage and stairs. $12 a yard allowance. Tile in utility room and bathrooms/shower ($8 sq ft materials and labor). "

We aren't interested in a lawsuit at all, but we would like to get legal clarification about our obligations should there be any problems at closing.

In my case, GC paid for insurance on the build - I paid for insurance on the land itself (which I owned, the GC did not). He paid electric for most of the time he worked here - when I moved in and he still had work to do, we switched it to me. Since we had to dig a well, I paid for that directly to the well company. It might work differently if you are tapping into city water.

Since I could pick the appliances and tiles and lights I wanted, I paid for all that directly, and had them delivered. (He didn't do "allowances".) He picked fixtures and paid for those (ie, toilets, tub, that sort of thing - I simply told him I wanted "tall" white toilets, and he shopped for those). I picked paint colors and he bought those, and counter tops, while I picked them, he arranged with the fabricators to buy them and install them.

The second paragraph depends on what you work out with your contractor, but if you are on a well system, it will nearly always be on YOU. As no one can guarantee how deep a well has to go.

As far as treats for the workers - that was difficult. No idea who would be on site with the GC, when I came up, and he was diabetic. Thus, donuts were out. (I won't eat them, either.) He had his own microwave here. So ideas on that were difficult. But that's a small out-of-pocket number anyway.

Some thoughts that go through my head when I read the OP concerns. I am a rookie who only built once, but it was plenty to know how challenging the process is. I really cringe when I read post posts about costs and "unforeseen out of pocket" costs. There are so many. I could not imaging building without full well knowing in advance you are going to blow through the budget. The nonsense about going over 10 or 20% are not true, even if you are disciplined and don't deviate from the plans, which is nearly impossible. Thats half the fun in building is changing your mind midstream because you wanted something a bit different, who cares the headaches and extra cost. There is a moment in time when you can adjust the sails and you do. I know this goes against the advice of the pros like Virgil who like to see every single thing spec'd out and written with no change orders required and thus no surprise bills, but that seems a fantasy to me. Not that it's impossible, but that seems to me that if one were to do that, you would have all the plans and specs done, and then just walk away and have someone call you when its done a year later, because everything should be all on the plans spelled out. What could go wrong with that?

I had so many surprise costs, its comical looking back and thinking of them all. Plus changing my mind all the time..plus its impossible to stop searching and exploring for better things once construction starts...plus its a usually once in a lifetime thing..plus its a great time to splurge so you don'y have regrets about skimping out along the way. I understand that some folks want to build a utilitarian structure at bare bones pricing, but for all the others who are trying to get a nice quality home without surprise costs along the way, I would recommend not building. In fact, I can't believe there is not a sticky thread right at the top of this forum about what one should seriously know going into a new build. It should be written clearly and colorfully for maximum effect. All the pitfalls, dangers and concerns all rolled up into one. The first line of danger should be a warning that the budget will go over by at least 35% under the best of scenarios! I will start working on a thread for other rookie builders. Seems like a worthy cause.

Well...your future thread should be very interesting.

Certainly there are a variety of risks for cost control when designing and building a custom home.

Sone of these may be predictable; some not, such as unexpected changes in materials or labor costs, adverse weather, etc.

When it comes to "more controllable" extra costs, I'd point out the potential danger in the following:

1. The "oh let's just add this" syndrome during the design stage. It's often easy for consumers to keep adding and adding things to be included in the design.

2. Lack of a thoughtful "needs" list versus a "wants" list. Or cinstantly adding to or changing the "needs" list.

3. Preparing a "bare bones" set of bid and construction documents, thinking this will suffice and will save money. In fact, the skimpier the documents, the greater the possibility for assumptions, changes and unwanted work by a builder.

4. Including a large number of "allowances" to be included in the bid/construction document. This may be particularly risky if the allowances are unrealistic for the desired quality of construction. This, together with skpy documents, may be the two greatest areas of financial risk.

5. Not understanding the specific type of construction contract to be used and how change orders are handled in each type of contract.

6. Owners changing their mind once construction has begun, resulting in change orders.

7. Allowing a builder to unilaterally make changes to the project and not follow the construction documents. Favorite builder comments to owners are "do you really want this like this?" and "I can save you some money if I just..."

These are some of the more common ways in which project costs and quality may get out of hand. There are other, to be sure, but these are some of the common ones.

"Hardwood in all rooms not including the room over the garage, stairs, bathrooms, and laundry room. To be selected from builders' samples or a $3.19 sq ft material allowance. Carpet in room over garage and stairs. $12 a yard allowance. Tile in utility room and bathrooms/shower ($8 sq ft materials and labor). "

How I would interpret this:

$3.19 - hardwood materials

$12 per yard includes cost of pad & installation (typical of carpet, that's a pretty average cost)

$8 psf tile materials/labor is doable, but not in CA

Each of these when included in the contract & loan, provide a complete project.

Would the bank consider septic, grading/paving, propane, land site prep, utility hook up as part of a construction loan?

Mrryo Villa, yes those hard costs are legitimate site prep expenses in construction loans.

All the land prep and building expenses need to be provided to the lender up front as part of the construction loan approval process. Not because the lender is going to cover 100% of the construction costs, but because the LTV is based off the whole expense and you don't want to short change yourself when building. After all, the lender will be expecting a contingency fee for cost over runs too.

Edit: My last sentence isn't worded right - the lender doesn't charge a contingency fee, the lender expects the borrower to have contingency funds for cost over runs.

As to the amount financed, it is always the borrowers choice. The lender has a max amount, and anything under the max works unless you go under the lender's minimum loan amount (not typical at all).

This probably depends a lot on location, but in my neighborhood, I had to pay a construction deposit and a sewer tap in fee.

As for labor, I had an allowance for hardwood but paid $2 sqft labor, same for tile - I paid the labor. This was all pretty much spelled out in my contract.

I changed my mind about 100 times during our build, upgraded everything, and went over all my allowances. However, I knew I was going to go over. We had extra cash and I didn't want to include overage expenses into the mortgage and pay interest on them when we could pay cash. But even with all that, I only went over about 15%. Of course, I had an awesome builder who never charged me for changed orders (unless the material had already been ordered, like a door, which happened once).