walsh construction

New Home Cost Overruns
Planning for the actual cost of a home build.
Building a new home can result in substantial price overruns if you do not plan properly.
   
The day has finally arrived. You have dreamed of that new home smell, that drifting aroma of new carpet, fresh cut timber and freshly laid sod. You have had the vision of the home in your mind possibly for years, being refined and re-refined until it was perfect. Now that dream is becoming a reality. You are about to begin planning, first with a lender and then with a builder to make the finished product take shape.

However many people are unaware of the little extras that are unaccounted for in the original purchase price of the new home. I often suggest to those considering building a new home, too budget 20% to 30% more than the quoted price to build the home. Even the most decisive individual will inevitably run into some sort of unforeseen issue.

Everybody has varying tastes and styles and the original quote from the builder you have chosen covers his basic build. It area of the home has a budget; you can eliminate many of the potential surprises by checking the prices for the finish that you want. In this way you can alter the budget to be more closely tailored to your desired finished product. If for instance you want a large ornamental soaker tub in your bathroom that costs $8,000, then the builder’s basic bathtub budget of $1500 is too small. A revision to the budget prior to actually breaking ground can save you the financial headaches associated with vast overages in your budget.

Talk with your financial institution about financing a new build, and inquire about the maximum amount of money you are capable of leveraging in order to build a new home. Next sit down with the builder you have selected and discuss the budget you have received from your financial institution. By doing this you can ensure that you will minimize the overages of the new build. Have the home tailored to an affordable level, decide on the areas that can initially be compromised on and then upgraded latter. Items like flooring, cabinetry, basement finish, and garages can often be tackled after the home has already been built.

By doing some preplanning with your builder, and financial institutions you can eliminate some of the cost overruns associated with building a new home. This in no way means that preplanning will eliminate all of the cost overruns. If you are indecisive during the build process you will get hit with a multitude of additional fees and increasing costs. Changing bathroom and kitchen fixtures can often increase the price. Cabinetry and flooring are often changed after the initial decision is made. What individuals building the home do not realize is that they are not only paying for the upgraded product, but often are also paying a restocking fee because they have changed there mind after the original product was already ordered.
By being decisive, upfront with your builder about the budget and you plan appropriately you can minimize the cost overruns on a new home build. Talk to both your bank and builder about budgets. Adjust the budgets prior to construction to account more closely for the actual cost of the finish that you want in your home. Most of all enjoy the process of turning your dream into a reality.