Best cost-saving advice for building custom home?
Meg S
3 years ago
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millworkman
3 years agoJJ
3 years agoRelated Discussions
Advice Before & During Building A Custom Home
Comments (20)I think the distinction between semi-custom home and truly custom construction is significant. I've done both plus lots of renovations. In our custom build, we had a fabulous GC. The way he liked to do business was to spend countless hours up front getting into excruciating detail about building products. Once we had cost out our desires, it became apparent that this house was going to cost a whole lot more than we had anticipated. We owned the land. The unknown costs lay in porches and basements. We all agreed that we needed another plan. (We were using William E. Poole plans) I went home and quickly found another plan that would work with a few modifications. It had smaller porches and we ditched the basement in favor of a FROG. It was a smarter build thanks to my GC. We owned the land and had more than 60% of the construction cost in cash. The bank loved us. Low risk. They only got involved when we were close to finishing up. I think we had one construction draw and a final inspection. Our GC suggested that we mutually determine his fee up front. It was a flat amount. This way, he was assured that he would be paid and make his profit. We paid him in monthly installments. The last payment would be withheld until we had release of liens from all of the subcontractors and the GC. Any costs would merely be passed through his accounts. There were no mark up on materials and services. They were entirely at his cost. I was given a copy of all of the receipts. He would present a months worth of bills and receipts at a time. There was one or two items that he needed the money a little faster. I think the framing material was an example. It was a pretty big bill as I recollect. In the areas where a guestimate was required in the budget, he would tend to overestimate. This way the surprises were pleasant. The hard work was done up front. We used those surprises to finish out the FROG. I ended up sourcing the appliances, the plumbing fixtures and the decorative electrical fixtures. He was a little leery about that, but I had everything ordered and stored in my garage ahead of time. I would take them over the day before they were needed and have them on site. The appliance dealer kept my appliances in storage until I was ready. The only plumbing fixture that I had the plumber order was two real cast iron tubs. I didn't want to be responsible for transport or installation of those. The GC had such a great time working with us, he and his brother, decided to do all of the interior finish carpentry themselves. They were used to working on projects that were 50% bigger than our home. We fit right into their schedule. It had been a long time since they had gotten to work together, they wanted to do it. They did a beautiful job. They built my mantle and an arched pocket door from a picture I provided them. They did a beautiful job. Semi-custom building, now that is an exercise in frustration. I'll never do that again. The answers in semi-custom building always seem to be no....See MoreBuying Land, Designing and Building A Custom Home, Part 3
Comments (0)Tips for Buying Land, Designing and Building A Custom Home, Reposted Part 3 This is the final posting for my article on Buying Land, Designing and Building A Custom Home. Part 2, Continued was just posted. The original posts, Part 1, and the initial Part 2, were posted in January. Unfortunately, for reasons unknown, the remainder of the article disappeared after posting. This posting, Part 3, is the final posting of the article. Part 3: Building the Home This is the third and final part of “Tips for Buying Land, Designing and Building A Custom Home” Bidding: Competitive bidding or negotiated construction contract: These are the two general approaches for selecting a builder, or general contractor, for construction—each approach has its own pros and cons. Do some due diligence to understand and identify which is best for you. Your architect can advise you about both approaches and which one may best fit your situation. --Types of construction contracts: Many consumers don’t know that there are three primary types of construction contracts, each of which apportions financial risk in different manner: 1) Lump sum or fixed price (which apportions the financial risk to the builder, who always includes a contingency within the fixed price); 2) Time and materials which apportions all financial risk to the owner; and 3) Cost plus, (which may provide some measure of shared risk) which means the cost of the work (materials and labor), plus typically the builder’s OH and profit. A derivative of the Cost Plus contract is a Cost Plus with a Not to Exceed Amount. To encourage the builder to stay below the Not to Exceed Amount, it’s common to share all savings below the amount 50% to builder and 50% to owner. --Allowances: An allowance is simply a “place holder” inside the contract for construction for one type of work or another, which is not fully detailed, specified or identified completely. Multiple allowances are typical when abbreviated or incomplete construction documents are used for bidding and construction. Allowances are often not a good idea to allow in a construction contract because it allows some builders to put in a sum much too low for what the consumer may actually want. Should this happen it opens the door for a subsequent change order for the builder which will increase the overall cost and profit of the project for the builder. The best strategy for allowances is to have NONE. Zero. Take the time to properly design. detail and specify everything in order to avoid unpleasant surprises created by insufficient or inappropriate allowances. This may be the second most important tip in this article! --Change orders: A change to the specified scope of work described in the construction contract is called a Change Order. Change Orders should always be in writing from the builder, with a description of the changed work, together with the total and complete cost and change to the schedule. The owner must sign the written Change Order and authorize the builder for the work and cost before proceeding with any work. Always carefully read the contract for construction, before signing, to verify the terms and conditions for Change Orders. Do not accept other or lesser definitions for Change Orders. Make it clear, in writing, how Change Orders are to be prepared and managed. Construction: Getting started: Once a contract for construction is signed by owner and builder, it is the builder’s responsibility to confer with the owner and advise about the schedule and sequence of construction. Regularly scheduled meetings with the owner and builder are identified, and the builder identifies who will be in charge of the construction site on a daily basis. The builder is the general contractor, responsible for selecting, scheduling, supervising and payment of all of the other specialty or sub-contractors required for completion of the project. --Complete construction documents vs. abbreviated documents: If one has worked with an architect and has had complete construction documents prepared—properly detailed drawings and written specifications—the construction phase will be much smoother, more orderly and with few surprises. That’s because the builder has complete documents for construction which represent everything desired by the owner and necessary to complete the project. On the other hand, if the owner thought they could save money by only having abbreviated documents prepared, the construction phase is likely to be challenging, with many requests from the builder to the owner as to what the owner wants to do, what selections and finishes are desired, and a host of other construction phase decisions which are required. In addition, there may often be errors in construction arising from a lack of information in the documents, causing the builder to use his best judgement, but which may not meet the owner’s expectations. As a result, changes and revisions may be required during construction which often result in change orders, increased costs and schedule delays. Many owners complain about the frantic pressures and uncontrolled costs during construction, and the majority of these may result from abbreviated and incomplete documents meant to “save money”. The old saying “You get what you pay for…!” is more applicable than many consumers recognize, with the added, stressful and unexpected expenses during construction more than offsetting the costs to prepare complete construction documents in the first place. Take your pick on how you wish to proceed with construction! --Construction observation & administration: Architects provide services to owners, to represent them and their interests, during the construction phase, if retained to do so by the owner. Without an architect, it’s up to the owner to monitor the accuracy and completeness of the construction as it progresses, and to be aware of the construction sequence and schedule. --Progress payments: If a lender is involved they usually their own terms and conditions as to the frequency and amount of progress payments which are acceptable. Always ensure that the terms and conditions from the lender are those incorporated into the construction contract. Architects also provide services to owners to ensure that proper and timely progress payments are made. Without an architect, it’s up to the owner to receive, review and act upon the builder’s requests for payment, and to determine if the billings and the amount of work performed correspond with one another. Always obtain a release of liens statement from the builder for each payment, indicating that the builder has paid all applicable specialty and sub-contractors for the billing period. Without such evidence in hand, the owner is open to liens filed by these contractors if the builder does not pay them on a regular and timely basis for their work. --Retainage: It is common practice (and good judgement) to withhold 10% of each progress payment, so that there is a 10% retainage at the time of substantial completion, final punch list and close out at the conclusion of the project. Ensure these terms are included in your construction contract. --Substantial completion & occupancy: Substantial completion is the term used to designate the point in construction where the owner may occupy the project for its intended use. There may still be outstanding minor work and/or corrections, which will be noted on the final punch list. --Final punch list & close out: The final punch list is compiled by the owner and the builder, working together, noting all minor work and/or corrections which may be needed and which must be fully completed before final payment of the retainage amount. --Certificate of Occupancy: Some jurisdictions require that a formal Certificate of Occupancy be issued by a Building Official, and all code violations remedied by the builder, before an owner may occupy the project. In such cases, it’s the builder’s responsibility to comply with jurisdictional requirements in a timely manner and to keep the owner informed....See MoreNot our 1st home, but advice for our 1st experience building a home
Comments (25)Hi, David, Given that your stated preference for choosing a stock plan, I suggest you have three basic options with regard to selecting the land: 1. ) Pick the land and then find a plan to suit. 2.) Pick the plan and then find land to suit. 3.) A hybrid of 1.) and 2.) Include a study period as a contingency in any land purchase offer. The study period enables you to consult with various professionals to assess the feasibility of your project. If, for whatever reason it's not feasible, you get to walk away and don't get stuck with a piece of dirt. Keep in mind your total investment includes land cost, survey/architectural design/engineering cost, site development cost, home construction cost, landscaping, and any decorating such as window treatments. If you have Realtors involved, be aware they'll expect (okay, the right word is "demand") a referral fee for recommending builders and it's likely to be one of those hush-hush, under-the-table costs. Get real-world cost information for each category and test your budget against reality so you don't end up owning land that you can't build on because you overspent on that category and don't have enough money to build the home you want on it. Real-world design cost information comes from architects and designers who do that work for a living. Real-world site work comes from site work contractors who do that for a living. Real-world construction cost information comes from builders who do that work for a living. Get your cost information from the wrong sources and you can end up with an unpleasant "surprise."...See MoreSave on Home Build
Comments (22)Slab cheaper than crawlspace - crawlspace is customary in many warmer areas but a slab will do just fine. Brick and stone are fairly expensive compared to Hardie which is expensive compared to vinyl. Like massive difference. Ditto the LVP - which can also be used in bathrooms and becomes way cheaper than tile. I am going to duck now but don't be afraid to use J&K cabs - they are great value. Builders still use dumpsters in my immediate area but we had a homemade one on our last build in a very picky suburb in a high end neighborhood. Always had a portapotty. It is a long time into the build before you can have a functioning toilet. I suppose the dumpster issue may be dictated by jurisdiction. Construction cleaning is very expensive. Easy to DIY - some of which can be done over time like getting stickers off things. Sawdust out from drawers etc. Partially finishing can be a permitting and code issue. You may need to separately insulate areas that aren't completely done. That can mean getting to a finished floor but that depends on jurisdiction. In some jurisdictions, planning heating and cooling can be tricky for a partial house. And some will get quite snarky as they may expect you to be trying to minimize tax burden by finishing without permits right after CO....See MoreJJ
3 years agostrategery
3 years agoCharles Ross Homes
3 years agoMeg S
3 years agonhb22
3 years agolast modified: 3 years agoshivece
3 years agoRachel
3 years agocpartist
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3 years agosprink1es
3 years agoamodernmountainhome
3 years agoVirgil Carter Fine Art
3 years agolast modified: 3 years agoJeffrey R. Grenz, General Contractor
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