Building a house, is this normal ?

[TX_hunter]

The price to build is insane and WAY higher than you're able to buy an existing house for (at least in my area). I know several people that got quotes approaching $300 sq/ft to build, of course this is on top of what you already paid for the land. I bought a house a year ago and it was $178/sq ft all in (which included the land). There was no way I could make building make sense with those numbers.

 

[Coopsdaddy]

You’re missing my point. 900 is a fantastic living space for two retired people but it has horrible re-sale value and equity and is the most expensive per foot that you can do.

Your water, septic, power, road, dirt work and landscaping costs are some of the most expensive line items in a new build and they are all the exact same price whether you build a 20 sq ft out house or a 10,000 sq ft McMansion.

A lot of builders forget to mention those costs in there per sq ft price.

If you’re going to go through the head ache of building going bigger (to a point) isn’t a whole lot more expensive per ft. I always try and nudge people towards a 3 bed 2 bath because it’s not much more to build than 2 bed and 2 bath but the equity is much higher. I made that mistake myself once and it cost me 100k in equity in what would of been an additional 10k cost at most to just add another bedroom

Just trying to help everyone out and get the most out of what a head ache a new build can be

I get that and you are right in that context.

 

[svivian]

Just adding this since I havent seen it mentioned... but for all the "be your own GC" comments you better either have industry experience or paying for it all in cash. Youre not going to just walk into a bank and get a construction loan with no experience. Alot of banks wont, even if you do have experience.

 

[Bachto]

No comment on the negotiations, but I feel compelled to jump in and say this because nobody else has.

You are 100% going to regret building a 2/2/2 in the future. It’s not big enough. Even if you’re certain you’ll never have kids, it’s too small to comfortably host family and friends. Finances aside, you want to go bigger.

Also as a RE professional 2/2's have the worst resale. a 3 bedroom would be better.

 

[akcabin]

Myself beautiful wife n me are finishing up a new build. 28x40 ranch. 2 bed 2 bath. Our retirement home. Took almost 2 years to get moved in and still a few things to finish. Material costs including equipment rentals for land clearing, site prep,septic, water lines and electrical. Well drilled. New appliances. Basically everything you need to have a house. Probably close to 175 grand. We bought the land 30 years ago for 6 grand.
I drew up the plan and bought all the materials. Did a bit of custom. Living in AK I added extra insulation. R 80 in the lid. Walls all have extra 2" of pinkboard ridgid foam insulation on the inside of the walls. Did a design that is used in Scandinavian countries. Anyhows the extra insulation, we installed. Rockwool fire n sound in the walls with the pinkboard and blown in cellulose in the lid. Since we were the labor extra costs amoratized itself in a couple years. We use diesel fuel.
Designing ourselves was, is great. I've worked in the trades for many years and went to college for RHVAC for 2 years so great to put my education to work. As a design technique and for better air quality we did a 5/12 pitch for the outside roof and inside cieling through out the house. Really like the wall profiles.
We continue to peck away. I had to have a knee replaced and now lower back fused along the way so not as fast as I used to be. But as good once as I've ever was. Actually I kinda believe that the quality of work was done by a guy that has good skills and has learned that I have all the time I need. To go play with the grandkids. Need to get a good snogo ride out to the cabin done. Whole family on snogos. Then send the kids n grandkids home n snuggle up with my beautiful wife for a week or so.
Guess my point is. If you want it, go get it. Figure it out. It's not complicated, well maybe a bit. But you'll get it. And you'll get what you want. How much is your time worth. And mostly. You want what you want. Not someone else's ideas.
Tips. Beautiful wife laid out where all the plug ins are. And bought all the materials on line. Saves a lot for same quality brands. Things like this. And if you rent equipment, always pressure wash it when you're done and bring the folks at the rental place a box of cold beers. You'll get the best equipment.
I also traded guns for drywall work. Snogo for installing the in floor heating system. Slab finish crew was 12 hundred bucks and some moose burgers on the grill, cold booze n stuff. Bartering. I won the guns at outdoors banquets for 10 dollar tickets.
Mostly ! Let your beautiful wife do the inside stuff n don't make suggestions. You just build the stuff

 

[IdahoBeav]

Builder 3 - verbal bid was $350,000, we started the loan process. This builder is supposed to provide a contract and a list of materials.

All of a sudden, his verbal bid jumped to $520,000!!
WTF?! There is no way I'm signing up for a half million-dollar 2-bedroom house. I thought $350 was too much and was on the fence with that.

A verbal bid is rarely a good idea, but if you're going to do it, it should be way high. This way when you run the actual numbers and provide a contract, it comes in lower, and the client perceives that you worked to cut costs.

 

[Acharenios]

Man, builders can be all over the place - always get a written contract with materials before you trust a number, otherwise it’s just a guessing game.

 

[Jstumbaugh]

Just adding this since I havent seen it mentioned... but for all the "be your own GC" comments you better either have industry experience or paying for it all in cash. Youre not going to just walk into a bank and get a construction loan with no experience. Alot of banks wont, even if you do have experience.

Construction loans in my area of NY basically require a construction company to be the GC. I made the cut in 2016 thank god. Saved a ton of money by being GC, concrete mason, plumber, HVAC, electrician, hardwood floor, tile, siding, roofer...Basically paid for excavation, framing, spray foam and sheetrock/taping.

 

[Duckhunterbrad]

I am a banker in a rural area and get asked by potential home builders if they can either build their own house or GC it. Even the most competent people can drag out a new home build way longer than necessary, and that is why banks have stopped allowing people to GC of build their own homes. The first bank I ever worked at allowed people to do the mentioned above and all but one of the loans I did was at minimum 6 months past due up to 2 years! The precedent is set that the average person can simply not handle even GC'ing their own home build. Out area is hovering at $185sqft for the average build.

 

[KurtR]

2014 I built the basement using icf and had 1300 sqft redi built home brought in from 200 miles away. Three stall garage was framed by local guys and i did the siding and finished the inside and finished the basement. Three bedrooms and 2 baths all in when done 180k. Thats with the well and septic and 2 acres of land. Now its double that if i did it all the same way its wild.

 

[tony]

Quick answers/questions

House is 2100 SF
What is GM? Is that general manager / general contractor?

Its just me and her. We each have 1 child, both grown and gone.

Both in the medical field, she travels to make good money. Which is one reason I've questioned this build. She will hardly be there.

Property is on a ridge, its flat on the build site, the driveway best I calculated using my truck is a 12% climb.
Future plans are some sort of pole barn, we have a definite need for a small tractor for land maintenance.

The 350.000 was actually 400,000 per the builder for cost over run.

I am 57 and finally trying to retire for the last time soon. I really don't want to be strapped to this kind of money. $500 k and I am out of the plan.

I guess the thing I don't understand is how do you go from $350 to 520 overnight??

We have found similar houses with property for around the same cost. We can do a little work, say "updates"

 

[Rich M]

Quick answers/questions

House is 2100 SF
What is GM? Is that general manager / general contractor?

Its just me and her. We each have 1 child, both grown and gone.

Both in the medical field, she travels to make good money. Which is one reason I've questioned this build. She will hardly be there.

Property is on a ridge, its flat on the build site, the driveway best I calculated using my truck is a 12% climb.
Future plans are some sort of pole barn, we have a definite need for a small tractor for land maintenance.

The 350.000 was actually 400,000 per the builder for cost over run.

I am 57 and finally trying to retire for the last time soon. I really don't want to be strapped to this kind of money. $500 k and I am out of the plan.

I guess the thing I don't understand is how do you go from $350 to 520 overnight??

We have found similar houses with property for around the same cost. We can do a little work, say "updates"

It is always cheaper to buy an existing place - even if just for the electric, well, and septic.

You put too much faith on the verbal estimate the guy pulled out of thin air. Those rarely pan out when the guy sits down and starts adding up materials and profit margins.

 

[BLJ]

I’d go real small.
Like premade building small. And pay cash.

Get 2 of them. One to live in and one guest house.

And I’d skip the basement.
As mentioned concrete is outrageous and stairs suck when you’re old.
If you need more room, build it ground level.

 

[JohnB]

Is 500k covering running power, septic/sewer/water(drilling a well?) what sounds to be a long driveway or are those a quote for just the building and not including hookups?

 

[IdahoBeav]

The last custom build price/sqft I heard from a builder was $300/sqft, and that was some years ago. At $520k, you're at less than $250/sqft. I think you might be getting a pretty good deal.

 

[wildwilderness]

Now you can understand why the 'tiny home' movement and manufactured homes are once again gaining ground.

This is the answer! Put a 3 bedroom manufactured home there for half the cost.

 

[bozeman]

Manufactured homes are nowhere near as 'scorned' as they once were, cost and acceptance have made tremendous change to how people view these.

 

[Mtndawger]

Is it common practice for builders to fluctuate or change prices like this? The loan officer said there was no way this would appraise enough even for $350. It's like the twilight zone here. If you know it's not going to appraise for what we are potentially asking for, why even have use go through this?

Unfortunately I think the answer is yes.

The best advice for this type of situation is to take more control over your end of it. You can do that by providing risk assurance and proper specifications to present to builders. Don’t ask the prospective builder(s) to produce the design for starters. Enlist a proper designer or architect to produce a bid worthy set of plans so there is concrete agreement on what exactly is going to get built. This includes decisions on finishes, equipment, fixtures and appliances. Pay a separate person to consult on these if necessary. Only then put it out to bid. Do not allow middling contractors to make those choices / decisions for you. Do not use lowest price to drive it either.

Your judgements about cost relative to size are likely way out of alignment with the market in your area. Hearsay from random people is not a strong basis for your project’s cost basis.

 

[fngTony]

I hate to say it, but this is an example of why I would prefer a corporate company to do business with. They have operating procedures. They know the parameters they’re not going to promise anything with without getting the details and running it through their entire team. Sounds to me like you’re dealing with people that should be doing bids to remodel a basement not build a house.

As far as the taxes go, It could be possible that your county has a lot size automatically taxes you for agriculture or something along those lines. Just for clarification is that amount you gave us just for property taxes or the entire escrow amount on top of the actual loan payment?

 

[JGross1]

Quick answers/questions

House is 2100 SF
What is GM? Is that general manager / general contractor?

Its just me and her. We each have 1 child, both grown and gone.

Both in the medical field, she travels to make good money. Which is one reason I've questioned this build. She will hardly be there.

Property is on a ridge, its flat on the build site, the driveway best I calculated using my truck is a 12% climb.
Future plans are some sort of pole barn, we have a definite need for a small tractor for land maintenance.

The 350.000 was actually 400,000 per the builder for cost over run.

I am 57 and finally trying to retire for the last time soon. I really don't want to be strapped to this kind of money. $500 k and I am out of the plan.

I guess the thing I don't understand is how do you go from $350 to 520 overnight??

We have found similar houses with property for around the same cost. We can do a little work, say "updates"

Getting the vibe you are not pumped about this for multiple reasons. Cannot say I blame you. Have you had that conversation with her? What is her take? Is she totally gung-ho on doing this? Beings you are not married that also adds an extra level of complexity to this.