Talk is cheap. Take baby steps. Take what you know and walk with it.

Prepare a list of your wants and needs and talk with local architects and builders about what you want to do with the budget you have. You most likely will bit get definite answers, but you will get direction.

Have the local architect you feel the most comfortable working with come up with a schematic design based on you need and wants, and site. Take that schematic design to the builder you fell most comfortable with and see if they think it can be built with your budget. If it can be built within your budget, continue on with your architect and builder. If it can not be built within your budget, have the architect and builder adjust the design until it meets your budget and is acceptable to you, and continue on.

Good luck.

@Mark Bischak, Architect, that's a great plan. Iterative. I wanted to have a basic understanding of what's involved before making those contacts, too. For the reasons of a) not wasting their time, b) having a gut feel if I'm told wrong information. I find this forum to be very helpful in achieving #a :)

"You mean if the spec house is 1.3, my version of that would be 1.3+650k"

Yep, and that is wild a** guess, but I am an estimator in real life (albeit commercial), and a one off will definitely be a hell of a lot more than a builder spec house.

What are the pros thought on the online house plans like houseplans.com? Are they awful? Or a waste of money? Fun to look at and a good place to get ideas…..but wondering if anyone has ever used them?

A plan created for one lot will not necessarily fit another lot. You will have architectural whittling costs to make the round peg fit the square hole. That is in addition to purchasing the full rights to build the plan, which would be very unusual for a custom architect to sell.

Any mill plan purchase would need similar redesign work to fit the lot and the local building requirements. No getting away from any of that. You might as well create something that actually fits the lot and your wants from the beginning. If you can afford to build at all.

Bottom line is, if you cannot afford to buy the spec home, you certainly will not be able to afford to build a custom home. A custom home is going to be MORE than an a spec home. By a lot. You're paying for the priviledge of things to be customized to your taste.

@Verbo, just to clarify in case I had my terminology wrong. Is it also a spec home if it isn't constructed until deposit, and one where you can make certain simple modifications like move a wall here, move a wall there. And yes, that price of spec home is already pretty high up there for my budget.

Spec is short for speculative. The builder is speculating that they can sell it for a profit after building it.

@catbuilder, I see. I forgot to mention that the 2.6M house is also a spec home. Different town, 20 miles apart.

My experience has been that millworkman's WAG on the 50% additional cost over the $1.3MM is conservative, but perhaps that isn't the case in other markets.

Years ago, we had a house built that was influenced by a house we owned in another city and had just bought the year before. Adjusting for a few minor differences and the lot cost, we foolishly thought the new house would cost about 20% more. Instead, it was more than double.

We're currently waiting on the completion of a new house being built on a cost plus basis. The builder's original WAG for the total cost was more off target than any we've seen. The pandemic played, and continues to play, a major role in delays due to material and labor shortages. Our estimated completion date has been pushed back repeatedly. We now expect to end up about 25% over budget and the only reason it isn't far worse is that we eliminated numerous features inside and outside.

Custom builds are almost guaranteed to take longer and cost more than a builder's spec house. If we hadn't wanted this to be our final home, after a dozen others, we would not have chosen to build.

What about the appraisal/resale of this custom home? If the build cost is 50% over a spec home, does the house then appraise for much-much less, and is immediately underwater? How can anyone get a construction loan for that project?

"If the build cost is 50% over a spec home, does the house then appraise for much-much less, and is immediately underwater?"

Comps from the area and depends on how hideous the build is.

"How can anyone get a construction loan for that project?"

With a lot of cash.............

Dissecting numbers is complicated & usually ends up with a number better known as "wishful thinking"

1. Should be similar size, design complexity & level of finish
2. Cost needs to be adjusted by time lag
3. Know the land & permit basis & differences

A whole lot easier to just ask a builder for costs to duplicate on your chosen lot.

People often pay more for their lot than the spec builder did.

The spec home's costs are from 12-18 months ago

Wishful thinking is "you can save enough DIY to make up for builder's fee"

@Jeffrey R. Grenz, General Contractor thanks for that. Would the builder be able to go by this level of detail? These were the only schematics that were publicly shown (mls listing, etc). Online permits don't seem to show anything at all in my town.

You are right about the differnce in what the builder gets the lots in my target town. But not in my current town. The price of a teardown is the same to all (as long as you are a cash buyer).

Also (in my case), the price of spec house is right now. It hasn't been built yet and is on MLS. It hasn't even gotten permits yet, as far as I could tell.

Reevaluate the teardowns as habitable residences. Or reevaluate your home size and want list. Or reevaluate getting a second or third job.

@Verbo, in my current town the teardowns are the only source of new construction. The town is 300 years old. What is being torn down is not really anything worth saving. It is mostly deeply neglected 1950s 1,200sqft homes with who knows how much asbestos, mold, and lead paint.
In my target town, nothing gets torn down, it is still a leafy town with lots measuring in acres (sometimes). There are plenty of neglected properties, but the economics of tear-down don’t work out. There is plenty of tracts to subdivide into neighborhoods.

If you pose it this way: extra jobs, smaller place or worse condition - I suppose I would take worse condition at this point in my life.

We would never have chosen to do a scrape and rebuild if this wasn't intended to be our last house, and if we couldn't pay cash for everything. If any of the options you're considering might leave you house poor, then step back and think hard before putting your future at risk. IMHO, it's not a good idea to borrow as much as a lender says you're qualified to borrow.

As for those spec houses, odds are that the listing price for the to-be-built house(s) will not cover everything you expect. I often see such houses advertised only to read in the listing details that the lot price is not included, or the photos are of similar houses with many upgraded features. The builder may have an allowance built into the price for flooring, cabinets, counters, etc. that might have covered the cheapest choices five years ago but will no longer be enough for vinyl and laminate even though the photos show hardwoods and quartzite. We've had that experience, too.

@JP Haus, you are correct. The spec indeed has allowances for parts of the house. 30k kitchen if I remember right. I have no idea what kitchens cost, but I see permits in that town for 50k (remodel). I’m assuming that’s more like the right spend.

Your locale may be different, but I see permits pulled by builders here for new houses that I know are selling for far more than the figure on the permits. Remodel permits may not reflect the full final cost. No doubt it's possible to fully outfit a kitchen for $50K, once you've paid for the structure and systems of the house, but will it be the quality and quantity you want? We spent a lot more than that on cabinets alone in order to get good quality.

Does the allowance cover only laminate counters? Nothing wrong with them, but they could be a let down if you expect granite or quartzite or Corian. Does the builder's allowance cover only cabinets that are, in the words of an outspoken but fondly remembered poster, cheepchinesecrapola (i.e.: poorly finished particle board cabinets that may look great at closing but are falling apart a year or two later.) A builder whose houses sold for >$1MM in a LCOL area (so at the top of the price range there) told me he always installed cheap cabinets and cheap HVAC because buyers didn't care about them and instead just wanted to see the bling.

Look at local stores and add up the cost of appliances, sinks, faucets, etc. Don't forget the little things such as a garbage disposal or the separate fixtures at the sink (not just the faucet, but a soap dispenser, air gap, air switch for the disposal, etc.) Consider the cost of providing makeup air for any exhaust hood that draws more than 400 CFM (not that you shouldn't provide makeup air below that, but generally it's now required at that level.) If you want an induction cooktop or range, will there will an added charge for the electrical service that's not built into the base price.

There are builders in our area who still only allow for $4 - $5/SF, installed, for flooring. Labor alone will likely cost more than that for porcelain tile or hardwood in the kitchen.

Take your time to educate yourself before jumping into anything.

@JP Haus that is exactly what the spec builder quoted $5/sq.ft allowance, $7k Sheesh :)

Edit: wrong info $5 for tile appliances were $7k

So we went down this road about 7 years ago to start. Trying to get a sense of costs. We live in Vancouver where the year down is 1.5-2 million and then you build on top of that. It’s madness. So we had to consider a lot of things. What would our house sell for, what could we build and for how much, where would we live in meantime. We met with many builders and many architects and interior designers to get an understanding of costs. Anyone not willing to engage in a general discussion on costs we said goodbye to. If someone can’t say in a very general way what a home costs in our area I don’t want to work with them. So we ended up with three serious contenders for the builder side and went with our gut. For design we should have looked more but made a rash choice. I am so glad we had builder chosen before design though as builder caught a lot we couldn’t afford. In the end we were about 20% over budget

"For design we should have looked more but made a rash choice. I am so glad we had builder chosen before design though as builder caught a lot we couldn’t afford. In the end we were about 20% over budget"

Design fees may represent as much as 10% of the total cost to design and build a custom home. When you consider that your builder is responsible for 90% or more of the total cost to construct a custom home and that your architect doesn't write checks for materials and trade labor, it's just plain silly not to include the builder as an important member of the design team. Those who would advocate "ABC" (architect before builder) please take note.

I cannot even fathom how over we would be had we got with with design first. All pour overages were site specific and avoidable.

@WestCoast Hopeful, thank you for your perspective.

I walked the house I want to clone. I personally didn’t see any complex geometries or unique finishes. To me it just had a good layout, simple staircase that spanned all 4 elevations. I did have Andersen windows that were probably on a higher grade than I care about. And of course the ceiling height As far as I could tell, that was the only unique and impressive aspect of the space. The style is modern Farmhouse, so I thought it was simple and understated. The trim on the inside was pretty much all blocky moldings except for crown. exterior had cement board, typical shingles and a few lines of metal roofing.

20% cost overrun would be a very undesirable outcome. Yaiks. It would make the property on the very upper limit of all the rest of the houses in that town. There is a perfect house on sale at that price right now, and it has not attracted any buyers. Btw, 1.5-2m tear down is bonkers.

We built. Loan in our name but had a GC do all the work. The size of the loan we could get for a mortage vs a building loan was interesting. The building loan was much lower. Have you talked to a bank? It's more of a gamble for them. We also had to move into a rental for a year. It may be different for you if the builder carries the loan.

We built right before everything went nuts with building supplies but were also over budget. Well, if you ask my contractor, we were right on the money. But in truth we paid for all the cabinets out of pocket (my dad built them, and we have A TON), some appliances, and also all the lights, plumbing fixtures, and other misc things. When the appraiser called to ask what the build cost I made sure my DH added those back in and didn't just give him the contract price.

You need to budget with a healthy contingency though. If you can’t absorb an increase of 25-30% more don’t build. There are so many unforeseen things that come up even with the best laid plans. Our biggest challenges were additional excavation and waterproofing costs, increase in lumber, concrete. Even with a great budget this stuff shifted.

"wrong info $5 for tile appliances were $7k"

First fallacy, getting the tile "may" be possible, but cabinets for 7K will be complete garbage. That is how they get you. Unreasonable allowances, and of course the home they show will have higher end everything, be sure you look at crap they are including and do your homework on prices beforehand.

Look, you've danced all around your fantasy of a custom build, without ever coming right out and saying if you have the required 1.5M in savings earmarked for the project. Because it will take every bit of that and more to do what you are dreaming of. You have to have a significant contingency. And no one wants to bring salvation army beanbag furniture into a new home.

Its not just the lot. Its not just the design costs. Its not just the bare bones build. Its not just the finishes. It is not just the furnishings. It is not just the upkeep, maintenance, and energy costs to live in the finished structure. It is all of that and more.

It is the fact that a one off plan, always has ”discoveries” in the build that cost you more. If you only end up using the extra 20% contingency over the estimated amount, you will be very lucky. And that estimated cost plus amount is already going to be double what you ”think” it should be.

Which is why you need to be examining this ”dream” as the potential for bankruptcy and divorce. Because that is a very real possibility for those who undertake a project beyond their means to fully complete at the level they dream anout. If the bank would even begin to approve a loan for someone so underfunded.

@Verbo I honestly would not want to own 1.5m in realestate, but then again, 10 years from now I’ll be saying what’s 1.5M. It’s what 400k used to buy in 2005.

As for dream house, I don’t think of it as a dream house. Dream house would have been in Fort Lauderdale with a dock and access to ocean. That dream died with pandemic and the price normalization between the north east and Florida.

My observation about the house I want to clone is - it is selling for 2.6M in my town, but it would absolutely sell for 1.7 and no more than that in my target town. I see a couple of examples of these data points. I know exactly how much the tear-downs/lots cost, that is fixed and open to the public. Construction cost has to be the same because it’s 20 miles apart, using the same suppliers and subs. There is a whole lot more profit margin in my current town than where I’m going, which should mean it is a little cheaper to build the same thing (in my target town).

But I hear you about the risk. Why should I put any of my money, time or happiness at risk for a year. Why keeping two mortgages for a year. There is uncertainty in interest rate that far out in the future. If financially it doesn’t make sense, I do not want to do it.

The "Northeast" consists of 10 very different states; could you reveal the state you are considering? A town or region would help too,

@RES2 I am 15 miles west of Boston. And I want to move 15-20 miles south of Boston.

@Chris I contacted the architect last night, asking them how much they would sell that plan. To my surprise, it is not 75k. It is an hourly rate for any alterations I want to make to that existing plan. Wow. I guess it kind of makes sense. If the plan was 75k, at $200/h it would be like 2.5 months of work to originally create such a plan. I'm not in this business, but it seems like a long time with the all the tooling that exist for architects nowadays. On the other hand, some other architect could very well have said: 75k, take it or leave it. Lol.

"it is selling for 2.6M in my town, but it would absolutely sell for 1.7 and no more than that in my target town."

I doubt 15-20 miles will amount to 30% drop in value, you will still be in a suburb of a major city, nope cannot see that happening.

Someone doesn't understand ancillary cost differences per location are not ”profit”. Markup is not profit. Someone is also greatly assuming about the real world profit % for builders as well. The national average profit line is 4-6%. All other moneys go to the overhead costs. Doesn't seem like anyone has paid a workman’s comp insurance bill in their life.

Permit values are determined by a building department "cost per foot" that is related to tract homes, minimal relation to actual cost. The value is used to develop permitting fees. When they need more budget, the numbers increase (like now).

Its not unusual for a custom to cost more than appraisal at contract time. That usually changes by completion.

If its worth $2.6 in one town and $1.7 in another, there should be a 8-900K difference in "land" value and maybe the expensive one was a teardown.

I'm about half that distance west of the center of Boston. 15 miles west would be the Weston-Wellesley area which is indeed expensive — much cheaper property to the south.

I designed a house for a couple in Dedham who ran into problems with ownership of the land and suddenly bought an old house in town. I designed a house in Westwood and renovated another. There are reasonably priced existing houses in Watertown, Arlington, Needham and Dedham. Take an architect with you when you look at land or houses.

All permits fees I've seen in the Boston area are a % of the actual construction cost ($20 per $1,000 in my city). The initilal fee is based on the cost on the permit application and the final fee is paid when the project is completed and based on an affidavit of cost from the owner. Of course, that number is not always reliable.

@RES2 Interesting. These are kinds of the towns we are talking about (without naming one specifically, lol)

There are existing homes, they trickle on MLS from week to week. For the most part they are in t a condition of the last family moving into it. If that happened to be 1999, that's the year of last renovation and updates. So every house would require some level of work, somewhere between a little kitchend update, to major updates (every bathroom, kitchen, rotting decks). List goes on.

The thing with building is it costs what it costs and the some. You can tweak it a bit but the basic cost to build a custom home is what it is in your area. You can’t will it to be less. Where we are we still ended up ahead. The lot is perfect for us and now has a house on it we love and can live in for many years, dare I say till kids are long gone, for now it’s appreciated in value and that’s great but also kind of irrelevant as we aren’t going anywhere. Before we built this house we bought another house with great location that needed a renovation. We did that renovation and kept it all neutral knowing we would move. It cost far less and we still got a nice house. Maybe you should be considering something like that if you can’t wrap your mind around new build costs

@WestCoast Hopeful, I am definitely keeping in mind the idea of buying an existing house. I am not into risky projects this stage in my life. But I will exhaust the idea of custom build at the same time as I'm going to open houses and see what's actually selling.

I should probably stop using "custom" because it's literally a spec home in my town. Lol

All 3 bathtubs and bathroom wall tile in my house were installed in 1903 when the original tubs (from 1891) were replaced. I reused the stainless steel double sink with drainbords from a renovation in the 50's. The original white oak flooring is priceless.

Most of my projects in Newton, Brookline and Cambridge have been renovations. The new teardown duplexes croping up nearby are atrocious.

@RES2 I live in an atrocious duplex. It is ugly enough to be exhibit A on someone else's ZBA (zoning board of appeals) hearing. Lol. Aesthetically speaking, I have no where to go but up from here.

Do you need to commute to work?

@RES2 No more commute. Thank you, covid.

Don’t forget to add in costs of tearing down a house if that factors in and even the cost of landscaping and hardscapes. An unexpected slope( because we didn’t get that survey… saving money) led us to building a crazy expensive and fortified retaining wall/planting area around half of the house. Trying too hard to save money can backfire if you are inexperienced like we were. Good you are on here gathering all the knowledge you can.

@Chris Good points. In my target town there will be no teardowns. And I would be looking for a flat lot, or at least one that is condusive for walk out basement (with flat parts where important). Secondly, I am looking at maps (i know no survey at this point), for any mentions of wetlands, streams, brooks, etc. I want a deep 8 foot basement with no additional water engineering. I saw one lot, for example where the adjacent lot had a new construction permit. They had all sorts of information on 100', 50' buffers from wetlands.That seems like trouble for a mold free basement. I think fighting nature with engineering requires a lot of money. It's not just a french drain and sump pump, it's probably more. At least that project had the experts hired to note down all the trouble areas.

kids?

@RES2, yes. 2 in public elementary school.

@elijahww I made the decision to build custom about 18 months ago, after weighing virtually all the issues you mention and also doing a lot of research. Here's where I am currently, if it helps. Hired an architect and builder - I chose the architect first, and worked with her to choose the builder, but did that quickly. They have worked together many times in the past, so no surprises there. Both specialize in design and building of green homes and have long track records. I am just now about to have construction drawings finished and will get a final estimate hopefully by the end of August. The initial estimates nearly caused me heart failure, because they were 25% above my architect's WAG, and impacted by Covid delays, supply chain, etc. My head was spinning because I was looking at construction costs 10% per sq ft above where brand new spec houses were selling not including the value of the land, which I already owned outright. Ballpark specs: I'm building in Chapel Hill, NC (not cheap, but not around Boston or NYC and I've lived in both, ha ha). House is 2200 sq ft (small houses are more expensive per sq ft), modern, high end everything, lots of green building materials and features including geothermal radiant heat, structural insulated panels for exterior walls, big windows and sliding glass doors (those cost a fortune, no getting around it). If the final estimate stays in line with the initial ones (crosses fingers, says some hail mary's), construction will probably come in at $420 to $480 per square foot - that's $925k to $1.05 million. And that does NOT include the architect's fee or the cost of the land. I expect this to be my only house until they wheel me into a nursing home or bury me in the backyard :) because I don't expect to be able to sell it and ever make a dime on it.

Yes, it's been totally terrifying already and we haven't even broken ground yet. But despite all the horror stories I see on here, my architect and builder have so far been outstanding and held my hand and guided me through every step. Once I got my head around the cost of what I wanted, I socialized it with my finances and decided to proceed. I of course had the option to go with a much cheaper build - stick built, not as green, lower quality windows and getting rid of the clearstory and walls of sliding glass doors. That's the really expensive stuff. The appliances are super nice, but those don't drive the price up $150k. Like you, this is not what I consider a "dream house" but it is, in fact, exactly what I want and what fits my life. Good luck on your decision!

If you have a home you are comfortable in, stay where you are. This is not the time to build. Market is down, cost is up. When the market cools (2025 is what experts are saying), start looking for the lot. You can't move forward without the land.

I'm on Cape Cod. A new listing was posted yesterday, for sale on Nantucket...are you ready? $56,000,000.

https://www.cbsnews.com/boston/video/nantucket-home-listed-for-record-56-million/

@mbfisher3 That is some impressive budget. Wow. It's pretty much in the luxury price/sq.ft category. Good for you. I know Chapel Hill went through the roof in the last 1.5 years. Way steeper than Boston suburbs. (I read about it)

I went thru my plan with my wife and nixed anything that's expensive. Andersen 400 series windows - OUT. 42" appliances - OUT. Removed 1 bathroom. My kids don't deserve their own bathrooms. But I still don't know what the WAG for it is. I'll share it with a few builders and know more about it. From this thread, it sounds like it will cost more than what I'm willing to spend and borrow. If that's the case, I'll be buying an existing home and have 99% of what I need anyway.

@judianna20, I do have an existing home (duplex), but after covid, both wife and I started working from home - permanently. She works out of our office and I, out of our master bedroom. We also do not have a guest bedroom, which we need. The duplex is 2,200 (2800 with basement). It's tight for 4 of us.