When you're thinking about building a home, it's tempting to start by designing your dream house, but there are some essential steps that you need to take long before this. Before you even select your builder, you should have an accurate idea of whether you can afford to build a house in your preferred location and how involved you want to be in the house building process.
General Contractor
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The first step is to decide who the general contractor will be for building your house. You can hire a builder who will organize everything for you and deliver a completed house, or you can run everything yourself. This involves all stages of house building from initial budget and schedule through design to the actual building of the house. You'll also have to schedule and interact with all the trades, buy the materials at the right time and perform quality control of adherence to building standards. You need to decide between the cost of a general contractor and the time commitment and responsibility of doing it yourself.
Budget
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Your budget will govern all the rest of your decisions, so it's essential to spend time on it and to be ruthlessly honest when it comes to the numbers. In addition to calculating what mortgage payments you can afford and qualify for, include any down payment funds that you have and any other monies that you'll get during the time the house is being built. Also consider the costs of running the house, including taxes, utilities and maintenance. These will just be estimates until you complete your house design.
Costs
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Whether you're hiring a general contractor to run the show for you or doing it yourself, be aware of all the costs associated with building a house, so you can make wise choices about priorities and upgrades. Some of the obvious costs are architect's fees, materials, labor and building permits. However, don't forget hidden costs such as construction upgrades and inspections, and unexpected events including cost overruns and fees for missing deadlines. Remember also to figure in any new appliances, furniture, flooring, and interior finishes, as well as lawn and landscaping. If you need to find alternate accommodation while your house is being built, add in those expenses, too.
Location
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Selecting the area where want to live is just the start to finding the perfect location for your new home. Make a list of all the facilities that you need to have access to, such as schools, shopping and public transport, and check the list against each location you're interested in. If you want to build in a mature neighborhood, check the local municipal guidelines about knocking down old houses and building new ones. If you're looking at a new subdivision, investigate any architectural guidelines you'll have to abide by. Consider also the shape of the plot of land you'll need. Do you want a corner lot, a pie-shaped lot with a large backyard or one with a large front garden space? If you have a young family, then look for locations which attract people with children and have green spaces or playgrounds. One important consideration that links to your costs decision is how much the taxes in each location are.
Looking to build your dream home? Or interested in purchasing new construction? Either way, our guide to building a house has everything you need to know.
Things To Consider Before You Build a House
The new home construction process can be both fun and challenging. As you consider if building a house is right for you, weigh the pros and cons of each option listed below. Is it cost-effective for you to build? Do you want to customize your entire house or just some amenities? What can you expect during the home construction process?
Cost: Is It Cheaper To Buy Or Build a House?
When you compare the cost of a new build versus an existing house, there’s more to consider than just the price tag. Let’s look at some of the variables involved, so you can decide which one is worth the cost.
Financing
Unless you pay in cash, you’ll finance your new construction through a construction loan. Since these loans have higher interest rates than a standard mortgage, this can increase your overall cost for the home. In addition, buyers are expected to put down between 20% – 25% of construction costs. Mortgages for existing homes have more flexibility with down payment requirements.
Price per Square Foot
Since new construction is often larger than older homes, it may skew your perception of the price. While initially a larger investment, the cost of building a new home is often cheaper per square foot and provides more space for your money. For example, a 1,500 square foot home built in the 1960’s costs on average $148 per square foot. New construction, with 2,467 square feet, costs only $103 per square foot.
Architect Costs
Some home building companies have architects as part of their team. If not, remember to include your architect’s fees into your plans, which usually range between 5%-15% of total project costs. Naturally, this wouldn’t be an expense associated with an existing home.
Maintenance and Landscaping
Newly built houses will initially need fewer repairs and will be more energy efficient, further keeping costs down. On the other hand, older homes will already have mature lawns and trees, saving you time and money in establishing your yard.
Time and Involvement
Are you prepared to be involved in the home building process? It takes time and energy, and a willingness to learn. Will that take away from your work or family responsibilities? While this doesn’t have a dollar value attached, it’s important to consider.
So, is it cheaper to buy or build a house? While the sales price of a newly built home is typically higher (on average) than buying an existing home, they’re usually less expensive per square foot and you won’t have to worry about maintenance (for a while). On the other hand, financing can be more expensive and you might have added costs like an architect fee and landscaping for your new yard.
What Type of House You Want
When you build your own house, there are several different types: tract, speculative, and fully custom. The main difference between these choices is the level of customization.
- Tract – With tract homes, builders choose specific floor plans, all of which will look similar and have shared amenities. Here, you’ll have very little chance to customize.
- Speculative – Speculative (or spec for short) homes are similar to tract homes, yet some customization is available if you purchase early enough in the building process. While the builder chooses the floor plan, early buyers can select some personalized touches, such as paint color.
- Custom homes – Custom homes provide you with the most options. Buyers can choose their own land, floor plan, and all amenities. You have complete control over every detail to build your dream home.
Level of Design Control
As noted above, if you decide to choose a tract or speculative house, the builder will determine the number of bedrooms and bathrooms, as well as the exterior style. However, when building from scratch, you have more control over the type of house design and features you’d like to include in your new home. Consider what works well for you now, in the future, and resale value. For example:
- Is your family currently growing or downsizing? Will your aging parents need an in-law suite?
- Will you need a one-story home due to mobility issues at some point? Perhaps a ranch-style house plan would be better than a colonial.
- Will adding certain amenities (like a pool) set your house’s resell price point high above the neighborhood average?
What Are The Steps To Building a House?
There are many steps to building a house, from pouring the foundation to framing to choosing your paint colors. This guide will show you the process of building a house, so you’ll know what to expect each step of the way.
1. Building Site Preparation
Once your builder has acquired the appropriate permits, the first step in building a house is to prepare the land. During building site preparation, crews will clear the lot of rocks, debris, or trees. Their goal is to level the site prior to pouring the foundation.
2. Pouring the Foundation
Foundations are typically built on slabs, basements, or crawl spaces. They often consist of poured concrete with steel rods. Since concrete isn’t waterproof, your contractor will spray it with a waterproofing substance. City inspectors will examine the foundation before building continues.
3. Framing
During this step, the contractor will install walls, windows, and doors, as well as the floor and roof systems. What’s known as the skeleton of your new house is starting to take shape! Your builder will install a protective shield, known as a house wrap, to prevent moisture from affecting the structure, keeping mold and wood rot at bay.
4. Setting Up Plumbing, Electrical & HVAC
Once the house is considered “dried in” (i.e., covered with the house wrap), it’s time to move onto plumbing, electrical, and HVAC systems. After they’re installed, an inspector will approve your pipes, electrical wiring, and heating and cooling ducts. The builder will typically schedule wiring installation after the plumbing and HVAC ducts are in place because it’s easier for the electrician to work around the other two contractors’.
5. Adding Insulation
Adding insulation is an important step for controlling a house’s temperature and keeping cooling and heating costs low. Foam, fiberglass, and cellulose are common insulation materials. Your contractor will typically insulate exterior walls, and areas around a basement, crawl spaces, or attic.
6. Adding Drywall
Once the drywall goes up, your house’s interior will begin to look complete. Your builder will hang drywall and cover any raised surfaces, like seams or nails, with a spackling compound. They may use a texture spray to add interest to the walls. And finally, a coat of primer.
7. Interior Finishes
Once the drywall is in place, your builder will focus on interior finishes, such as the fireplace, mantle, internal doors and window sills, and decorative trim. You’ll finally get to see that paint color you’ve been agonizing over on the walls! (And trust us, it’ll look great!)
8. Exterior Finishes
Driveways, walkways, and patios, oh my! Things are really starting to take shape outside your new home too. The builder will complete exterior grading to ensure proper drainage away from the house and make sure your new yard is coming along nicely.
9. Installing Fixtures
In this step, your builder will install fixtures, such as light switches and faucets. You’ll also see your toilets and sinks added. Your HVAC system is now complete.
10. Installing Flooring
Next, your builder will install either hardwood flooring or carpets. When making your selections, consider which is right for you in each room of your home. For example, if you suffer from allergies, hardwood might be the way to go. Your new home will look move-in ready after this step!
11. Inspection
This final inspection, by a building code official, will give you a certificate of occupancy, which means it’s time to move in! If there are any problems, they’ll schedule a second inspection to confirm the builder corrected the issues. A pro tip for building your house – get an independent inspector as well.
12. Final Walkthrough
Also known as a pre-settlement walkthrough, your builder will show you the new home’s amenities and cover your responsibilities under warranty. Now is your chance to spot anything you’d like them correct before moving in. Take your time and examine things closely. For example, check to make sure they’ve included all of the features you requested and that all of the electrical outlets are working.
How Long Does It Take To Build a House From Start To Finish?
On average, it takes three to six months to build a new home from start to finish. Remember, your builder’s schedule is more of a guideline than a hard-and-fast deadline. Inclement weather, subcontractor schedules, and permit delays are just a few reasons that owners of new construction need to keep flexibility in mind.
Summary: Should I Buy or Build a House?
The process of building a house is not right for everyone, but if you talk to someone who’s built a custom home, chances are they love it. Buying versus building depends on factors like timing, finances, and personal preferences. Regardless of what you decide, BHHS Fox & Roach is here to support you every step of the way.