Your budget drives everything involved in a custom home project, so naturally it makes sense to wonder how much a custom home will actually cost you. Purchasing a custom home is not like buying a new car at the dealership; in fact, it can be like having a newborn child due to many interweaving parts that impact your lifestyle.
The budget may be dictated by the bank or your personal comfort level. The fair market value of the custom home can impact your budget as well. Be prepared to discuss your budget constraints frankly with your designer and builder early on so that the guidelines for the rest of the process can be established.
Before we discuss new home construction cost, I want you to picture a custom home builder as if he were an automobile manufacturer who builds everything from a bottom line Ford to a top of the line BMW. A true custom homebuilder should have the ability to build this range of size and quality.
Would you ask a “custom” automobile manufacturer how much they charge per pound for a car? Probably not. The question would be nearly impossible to answer. The actual price for the car (price per pound) depends on what is included in the car and its relative quality. The same is true for a home.
For those of you who want a quick range, our custom homes have ranged in price from $400,000 to $3,000,000.
Now let’s talk about some of the elements of a budget that you need to consider:
- Land
The land is the largest line item in any construction budget. It usually ends up somewhere between 1/4 and 1/2 of the overall price of the home. The biggest mistake that home buyers can make is to go out and purchase the lot before considering other elements of the budget. If they purchase a cheap lot with high land development costs or an expensive lot, there might not be room left over in the budget to build the home that they had envisioned.I would recommend that you take your builder out with you to walk the lot in order to evaluate how the land development costs in relationship to your budget. - Land Development
Whereas land is the most costly line item in the construction budget, it doesn’t help that land development is the least understood element in the budget. Here is an easy way to understand land development:Imagine placing a hook on top of the home and picking it up from the lot – all the work that remains on the site with the home removed is “land development.” This includes everything from excavation to removing trees to landscaping. On an average 1-2 acre lot in Northern Virginia, this can easily run between $60,000 to $150,000.As you can see, this land development cost can take a huge chunk out of your budget next to the cost of your lot. - Home Plans
Architectural plans can be obtained in many different ways. You can hire an architect to draft up the plan or you can work with a builder to modify an existing plan. A design builder can also incorporate optimum value design to help you come up a cost efficient plan that protects your pocketbooks.Make sure that you are dealing with a reputable design team that doesn’t violate any copyright laws. If a copyright is violated, the penalties can be very detrimental to the success of your project. The home design process shouldn’t begin until a budget review process has been completed. - The Shiny Stuff (Specifications)
A lot of the technical selection items such as what kind of lumber to use and how the drywall will be glued should be left up to the builder to decide for you. Most home buyers aren’t knowledgeable enough about these types of selections nor do they want to be anyways. The shiny stuff is typically the fun part of the selection process. This includes the light fixtures, plumbing, countertops, etc.There are two stages when deciding on specifications-the budget and final stages. We’ve all heard about budget overruns in the finishing process. There is a high probability that you will not be able to choose every knob and light bulb and not have to go back two or three times throughout the process to change the finishings. Be sure to work with your designer/builder to block out areas to go over the finishings one by one. - Financing
This is the last part of the budget process, but should definitely by thought of first. Custom home financing in Northern Virginia should be handled with care. A lot of everyday banks may not be aware of a special type of financing that allows you to acquire the building lot, build the home and provide for permanent financing until the home is complete.Check with your banker first and factor this into your costs ahead of time.
I hope this post was helpful to you as we delved into all of the elements of a custom home budget. Once you understand the various elements of this budget, you will be empowered to plan ahead with the proper foresight.
