Actual Costs of Building a Home (Austin, Howe: sales, how much, home builder)

[Breezerboat]

I have always wondered how much it actually costs to build a house. I know location makes the big difference on cost, but what if locatioin didn't matter and the lot you build on didn't cost anything. How much does it actually cost a home builder like Newmark, Standard Pacific, KB to build a home. I guess what I am asking is, what is the percentage of mark up of the actual home with no other costs involved?

[Moonlady]

We built a house with a mom and pop builder who charged by the sq ft. All they did was build the house. We bought and cleared the lot, got permits, put in the septic tank and did all our own landscaping. Of course they subcontracted the foundation, electric, plumbing, sheetrock and paint. It's hard to break it down. Add in a big company and now you have sales and marketing, advertising, office help, supervisors, inspectors, landscapers, etc. And all of those have to be paid and monitored.

My husband also built a spec house with a friend and expected to reap about 15% profit but it sure didn't turn out that way. Lots of hidden costs.

If you're asking because you think you could DIY cheaper, you can , but it's a lot of hard work. You could also look at some of the publicly traded companies (Centex comes to mind) to see what kind of financials they are reporting. You'd also have to wonder what happens when builders have a surplus of homes in a downturn like now, that's got to affect their overall profits too.

[10scoachrick]

Originally Posted by Breezerboat

I have always wondered how much it actually costs to build a house. I know location makes the big difference on cost, but what if locatioin didn't matter and the lot you build on didn't cost anything. How much does it actually cost a home builder like Newmark, Standard Pacific, KB to build a home. I guess what I am asking is, what is the percentage of mark up of the actual home with no other costs involved?

You will probably get some 'per square foot' -type cost estimates but I find those more frustrating than helpful...they don't usually reflect the size of individual rooms, etc. unless someone is quoting from a stock plan. That can be useful IF that is the plan you are interested in. I can tell you that on our street in ATL, one person bought her lot and had builder 'X' build her house. A few doors down, same builder bought a lot and built a somewhat larger house that is approx. $400K MORE than the one down the street. I would guesstimate $60k more house with $300+ in mark-up(IF it sells at the asking price). It WOULD be nice to get some actual figures for a certain house(without ridiculous markups for 'upgrades'). Good luck with that. Mayhaps the Austin area builders will be forthcoming. We actually considered tearing down our ATL house and rebuilding on same site(until we changed plans to include a move to AUS).

Of course, you will have infrastructure issues($) in terms of running new utilities, etc on to a bare lot. BIL built a place on his land in Lomita--maybe I can get some numbers from him just for comparison.

[Austin97]

Originally Posted by Breezerboat

I have always wondered how much it actually costs to build a house. I know location makes the big difference on cost, but what if locatioin didn't matter and the lot you build on didn't cost anything. How much does it actually cost a home builder like Newmark, Standard Pacific, KB to build a home. I guess what I am asking is, what is the percentage of mark up of the actual home with no other costs involved?

Site prep is highly variable as are finish outs. However all that aside, as best I can tell "dry in" meaning you have exterior walls and a roof so it is dry inside is around $30/sq ft. I think it is probably another $50 sq ft for low/middle of the road materials. So I would say $80/sq ft for a typical newmark house, maybe even as low as 70/sq ft.

$200/sq ft will get you a really nice house with a great finish out. I think you can go as low as $60 sq/ft. You can tell somewhat by looking at newly built houses on very cheap lots.

[Breezerboat]

We are actually missing what I am asking. I recently had a home build in a neighborhood. I paid a little under 200K, I was wondering how much profit the builder made on me after they paid all their bills. 20%?, 10%?, 40%?

[austin-steve]

Originally Posted by Breezerboat

I have always wondered how much it actually costs to build a house. I know location makes the big difference on cost, but what if locatioin didn't matter and the lot you build on didn't cost anything. How much does it actually cost a home builder like Newmark, Standard Pacific, KB to build a home. I guess what I am asking is, what is the percentage of mark up of the actual home with no other costs involved?

Volume Builders typically only make 2% or 3% per home, when all is said and done. A custom builder will try to make 10% to 20%.

The cost of building becomes a lot less per square foot once you cross the 3200 sqft size line. Each incremental sqft after that is cheaper, all things (finishout) being equal.

Why do you care how much your builder made?

Steve

[Moonlady]

Originally Posted by austin-steve

Why do you care how much your builder made?

Steve

I was wondering the same thing. Unless you plan to DIY, what's the point in knowing the profit margin? The laws of economics dictate what the market will bear.

[atlanta hope]

Steve, what's the cheapest sq ft we could get away with in building a new house in Granada Oaks? We're thinking we'd like to build but haven't had time to do much research and see if it's a viable option for us.

[Chris2000]

Well i could see the merit in knowing what a builder has put into a new home that you might be looking to buy. I mean knowledge is power in negotiating. Knowing that they built your $300,000 dollar home for $75,000 Sure gives you a great bargining position
My Pulte inspector has kinda become a friend of mine...And he said that Pulte spends about 25% of what they charge to finish a house completely. Labor included.
And he says that is acctually more then most builders spend.
So the truth is if you had the time and the knowledge to do most of the work yourself you could build a home yourself a NICE home for next to nothing. heheh but you better free up your schedule
Ive kinda thought one day i might go for it.
Chris2000

[Austin97]

Originally Posted by Breezerboat

We are actually missing what I am asking. I recently had a home build in a neighborhood. I paid a little under 200K, I was wondering how much profit the builder made on me after they paid all their bills. 20%?, 10%?, 40%?

Thats a much easier question. Those companies are public, just look up their 10K from prior years and you can see what their gross margins and profit margins are.

Apparently newmark had to sell out so it no longer exists as a separate company. But you still may be able to find the info.

According to one article about lennar:

<<Lennar generated roughly a quarter of its $225 million in earnings from land sales to other builders. Moreover, with gross margins of 37% -- well above the 22.9% gross margin Lennar generates from its home sales -- such sales also help keep overall margins up.>>

So lennar is making about 22.9% gross margin on their houses. Out of that comes sales, general and administrative costs that knock their profit down to probably the 4% level.