Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Thanks for posting this and sharing your experiences. I'll probably be heading down the same custom build road as you in about a year so it was interesting to read.
It bears repeating...
Most new construction contracts do not include an appraisal contingency.
If you go to contract on an overpriced house, you should plan to bring additional money to the table, or be ready to walk away from your deposit.
Correct me if I am wrong. Wouldn't the price per square foot go up on a smaller home, especially of the first floor is larger than the second floor? There are costs that would be the same no matter the square footage and then there would be other costs associated with square footage, quality, and room types.
Correct me if I am wrong. Wouldn't the price per square foot go up on a smaller home, especially of the first floor is larger than the second floor? There are costs that would be the same no matter the square footage and then there would be other costs associated with square footage, quality, and room types.
There are costs, yes.
Permitting, water/sewer or septic costs, based on bedroom count.
The original OP made a good notation... "(minus land)"
With the value of the land in the equation, the smaller house, with lower SF will have to cover the cost of land.
4,000 SF house on an $80,000 lot?
Land is $20/SF in the final calc.
2,000 SF house on an $80,000 lot?
Land is $40/SF in the final calc.
Also... houses aren't appraised by the square foot. Yes, square footage is part of the picture, but there are many other factors that go into an appraisal.
I would not being sitting around with a calculator, dickering over 100 sq ft and worrying about an appraisal. I'd be looking at my house and its finish level (type of siding, number of garages, interior finish work), the number of beds/baths, the cost of a house like mine in relation to the rest of the homes in the neighborhood (or nearby) and be making my decisions on that.
Also, if your house backs to a highway and the houses that sold recently all back to wooded land that cannot be developed, you may take a hit.
It's way more complex than price per square foot.
__________________
When in doubt, check it out: FAQ
Also... houses aren't appraised by the square foot. Yes, square footage is part of the picture, but there are many other factors that go into an appraisal.
I would not being sitting around with a calculator, dickering over 100 sq ft and worrying about an appraisal. I'd be looking at my house, the number of beds/baths, the cost of a house like mine in relation to the rest of the homes in the neighborhood (or nearby) and be making my decisions on that.
Also, if your house backs to a highway and the houses that sold recently all back to wooded land that cannot be developed, you may take a hit.
It's way more complex than price per square foot.
This is particularly true with custom builds, or even tract homes that have allowed a great deal of customization.
OTOH...
I live in a Rembrandt. Since it was the model in the hood, KHov built a lot of them. Mine is one of 6 on a street of 13 houses.
20 years ago, before any were added onto or otherwise upgraded, $$/SF could have been a truer measure for a Rembrandt, and even for other models with similar base features. We would have made smaller adjustments than we would today for differences.
Now we have screen porches, added bedrooms, landscaping, fences, levels of maintenance, etc, etc.
One needs to have their act together to set a price.
Still, it will be a much tighter range than in a custom neighborhood, but the adjustments will need to be observed
Correct me if I am wrong. Wouldn't the price per square foot go up on a smaller home, especially of the first floor is larger than the second floor?
While the majority of my experience is industrial not residential, cost per square foot always goings up as the amount of SF decreases. Construction costs are broken down into two categories, Directs and Indirects. Directs are the material and labor costs (in simple terms) to install concrete, framing, electrical, etc. Those go up and down as a function of SF, but they still get cheaper with quantities. The cost per SF to install one sheet (32 SF) of drywall is going to be more expensive than 200 sheets (per SF).
Indirect costs cover things like site supervision, permitting, insurance, project management cost, overhead and profit, etc. While indirects will vary, they don't vary linearly with the SF of a house. For instance, a PM is going to be spend so many hours on your house, whether it is 2,500 or 4,500 SF. If you spread that PMs time across a 4,500 SF house, the PM cost per SF, will be much less than PM cost per square foot on a 2,500 SF house.
Hence also the reasons builders like to build larger houses. If they are charging a fixed $150 / SF for a house, there will be much more profit on adding another 250 SF, than on the first 250 SF. Indirects won't likely increase with that additional 250 SF.
Don't forget that a lot depends on the entirety of lot prep and whether or not you have city sewer/water. Also the location of the existing Electricity utilities. Clearing and grading is expensive work.
We built on a vacant for right around $125/sqft not including the land. That was semi-custom with all hardwood floors, high-end cabinets and finishes, etc... What WE consider to be a VERY well finished house.
While the majority of my experience is industrial not residential, cost per square foot always goings up as the amount of SF decreases. Construction costs are broken down into two categories, Directs and Indirects. Directs are the material and labor costs (in simple terms) to install concrete, framing, electrical, etc. Those go up and down as a function of SF, but they still get cheaper with quantities. The cost per SF to install one sheet (32 SF) of drywall is going to be more expensive than 200 sheets (per SF).
Indirect costs cover things like site supervision, permitting, insurance, project management cost, overhead and profit, etc. While indirects will vary, they don't vary linearly with the SF of a house. For instance, a PM is going to be spend so many hours on your house, whether it is 2,500 or 4,500 SF. If you spread that PMs time across a 4,500 SF house, the PM cost per SF, will be much less than PM cost per square foot on a 2,500 SF house.
Hence also the reasons builders like to build larger houses. If they are charging a fixed $150 / SF for a house, there will be much more profit on adding another 250 SF, than on the first 250 SF. Indirects won't likely increase with that additional 250 SF.
I'm at $155/sq ft with my custom build going up right now.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
