Building a house involves trade-offs. Many of the decisions you make are based on costs, and by creating a detailed list of product specifications, you make decisions on paper before you start spending money.
This approach worked for me when building our fourth home. My list four pages long, and developed by visiting homes under construction before the Internet. Here are a few of the trade-offs made to manage my budget, which allowed me to come in just five percent over budget.
- Where the initial goal was to extend the house plans 4 feet, we cut this back to just 2 feet.
- With a wall of glass and 4 sliding patio doors, we switched 2 of the doors to fixed pane windows.
- We took out 2 pocket doors and replaced them with built-in shelving.
- The biggest savings came by replacing our below ground heat sink with a full basement.
Where did we go over budget? Most of the overrun came from upgrading our cabinets, plus some light fixtures. We also upgraded the flooring in the mudroom, kitchen and family room but installed the tile ourselves, so there was no additional cost.
Building a House Involves Builder Allowances
Your kitchen is the most expensive room in the house, which makes sense given all the activities that happen there. It's common for builders and remodelers to give specific allowances for all the items you'll be selecting. Some builders will give you an allowance for cabinets, appliances, etc, while others will give you an itemized list of the products and their costs. As you're the one building a house, you get to decide if you're going to stick to the allowances in the contract or go, and pay the added costs.
You should work with your builder to make sure the allowances are realistic. They have experience with relative costs based on the size of a house, rooms and the price of the house. While there are certain percentages allocated to different home features, no two houses are the same (read our series on Controlling Remodeling Costs).
If you're building a smaller footprint to leave more money for more, and higher quality finishes, make sure your builder understands this when they assign values to each allowance category. If you're an avid cook and baker, and plan to equip your kitchen with high end appliances, let your contractor know this too.
Building a House Requires a Strategy
Life is a series of decisions and building or remodeling piles a whole heap of decisions on you in a relatively short period of time. It will overwhelm you at times so try to work through decisions on a schedule that meets the builder's timeline for ordering and installing different features. When we were behind schedule, I remember running to the lighting store to pick up fixtures and light bulbs before the building inspector arrived … and it wasn't fun. By the time I got back home, the building inspector had left because we just weren't ready and he was right – we didn't move in for another six weeks.
With my 4-story addition, I got so tired making decisions that I bought a bathroom model off the showroom floor for the children's bathroom. You simply don't realize that one bathroom can involve twenty or more decisions, and I'd already picked everything out for the kitchen, the entertainment center and 2 other bathrooms.
And the most important thing is to put your decisions down on paper, so you can see what you can afford, and where/when you want to save money before it's been spent. For example, you don't have to put the same expensive carpeting throughout your home. You want to spend more on high traffic areas so they'll look nice for many years, and you can get matching carpeting for bedrooms that costs less.
Here are the product choices and/or allowances you'll have that cover the entire house:
- Flooring throughout the house, including the stairs.
- Finish carpentry including trim around doors and windows, baseboard and built-ins like a fireplace.
- Lighting which can include recessed lights as well as light fixtures including the front entry and dining room. Depending on where you live, you'll also have ceiling fans to consider in this allowance.
- Exterior finishes including roofing, siding and trim like corner boards, shutters, etc.
Builder Allowances for Specific Rooms
It's a good idea to have a budget for the kitchen, and individual budgets for each bathroom. That way you can decide where to spend more money in each room (easier to keep track of), while saving on other items in the same room. The kitchen and bathrooms are the most expensive rooms when building a house, so you would be wise to shop for these items before you finalize your overall budget.
- Kitchen and bathroom cabinets, hardware, countertops and appliances.
- Plumbing fixtures including bathtubs/showers, toilets, sinks, faucets and don't forget the hardware.
- Special features like tile surrounds and backsplash.
Common Problems When Building a House
Your first goal when building a house is to find a contractor that fits your personality, someone you can trust (check out Finding and Hiring the Right Contractor). But problems happen so here are some to watch out for:
- Allowances are sometimes lower than they should be, to lower the estimate in a competitive situation. That's why you want to compare not just the bottom line, but also the allowances.
- As you start shopping for products, you will fall in love with lots you can't afford. That's where keeping track of your budget and what's already been spent, will help you stay on budget. You should also know that you might have to pay added costs out of pocket, if the higher costs don't raise the appraised value of the home.
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