Tips to Save Big When Building a House
No one wants to pay more than necessary when building a home. But only the experts know how to save money on construction, right? Not necessarily. Here are tips that may help keep your building budget within reason, without compromising on the home you want.
Buy a large lot with a friend or family member that can be split into two smaller lot
Some of the most appealing properties may be much larger than what you want or can afford, yet the seller may not be willing to break up a large parcel. So if you can share the cost with someone else (preferably someone you don’t mind having as a neighbor), you may be able to pick up a great building site for a reasonable price.
Consider a so-called problem lot — a hillside, narrow, or in-fill property
Generally, these types of lots are not as desirable as others, so they don’t sell as quickly and often go for a much lower price. With the right plan and a capable contractor, however, a potentially difficult lot might be perfect for your new home.
Choose a canal or bay lot instead of ocean or lakefront property if you must have a waterfront site
These choices are usually less expensive but still water accessible. Plus, they provide great protection against inclement weather.
Buy low-maintenance building materials — vinyl siding and metal roofing, for example
Even if they are somewhat more expensive at installation, they will pay for themselves in the long run as you won’t have to repair, replace, or repaint.
Collect salvaged materials from demolition sites
Old barn wood, used bricks, and distinctive wood doors add inexpensive character to a home without exorbitant cost. Many times you can have the materials at no cost, as long as you’re willing to haul them away. Just be sure to check first with the owner of the building being demolished.
Splurge only on those things you truly cannot live without
However, don’t skimp on structural components or doors and windows — for the safety and security of your home, you’ll want to purchase the best you can afford in these areas.
Don’t overbuild for the neighborhood
A home that is better and bigger than any other in its area will not command a fair price at resale. Instead, the assessment will be colored by the lower-priced homes around it.
Monitor construction allowances as the home is being built to ensure you’re getting what you asked for (and are paying for)
This includes decorative details as well as structural elements. If you and your builder agreed, for instance, that a particular brand of insulation would be installed, don’t accept a lesser brand — at least not without a cost adjustment.
Use only a certified general contractor
The experience of a well-qualified contractor is invaluable to the home-building process. In addition, seasoned professionals have established relationships with suppliers and subcontractors — something you cannot possibly hope to get without years of experience in the business.
Try to avoid site preparation charges — hauling in-fill dirt, grading, clearing trees, blasting rock
These processes are expensive and add time to the building schedule right off the bat. Choose the best site you can afford and then pick a plan that fits that site or can be modified to better suit the site.
Avoid change orders — the changes in materials or blueprints that invariably occur in the midst of the building process
Not only do change orders cost more money, they add considerable time and frustration to the building process. Decide exactly what you want before ground is broken — and then stick to it.
Keep the depth of your home at 32 feet or less
Any more than that and roof trusses may need to be specially designed, which can add significant dollars to the overall building cost. If you have sufficient land and want a larger house, consider adding width or additional stories.
If you really want ceramic tile or hardwood flooring but feel you can’t afford it right now, consider vinyl flooring.
Vinyl makes a good underlayment, and the tile or wood can be installed right on top of it at a later date.
Choose a stock plan over custom-drawn plans
The savings in total cost are great and you can probably customize the stock plan to get exactly what you want.
Do you really need a three-car garage?
If you only have two vehicles and you’re counting on the extra bay for storage space, consider other areas of the home that will work just as well — attic space, space under a stairwell, or spare bedroom. Or put up a garden shed, which is cheaper than building a huge garage.
Get a credit card with 0% APR
Building your dream home may not be cheap, but you’ll save oodles of money if you take advantage of a credit card with 0% APR. These cards offer 0% APR – as in zero interest – for anywhere from 12 -21 months, which means you can charge some of your home-related expenses without paying interest for a year or longer. No matter how you cut it, that’s a pretty sweet deal!
Visit many homes
You think you know what you want your dream home to be, but do you really? If you can find a newly developed area, they may have some model homes that can give you tons of ideas.
Make sure to hire the right builder
Finding the right builder can be one of the biggest and most important decisions that you make when building. A good builder will be able to build you a well-built home on agreed to budget, without too many overages or problems. A bad builder can mean that they underestimate costs, aren’t good at working with subcontractors and are focused on several other jobs at the same time -which can cost you money. Be sure to meet with a few builders and get references. Luckily for us my wife’s parents are builders and are good at what they do.
Communicate with your builder
Make sure to keep an open line of communication with your builder and make sure that he knows what your priorities are when it comes to your build. Let them know what’s important, and seek their input when you’re trying to find ways to save. They have done this many times before (hopefully!) and will be able to clue you in to ways to save on your build. Our builder was able to find us a myriad of ways to save. For example, we saved a few hundred by choosing one style of trim over a more expensive version, and the difference was not one that most people would notice.
Find a good banker
You’re banker is the instrumental piece that can save you tons of money in the beginning as well as thousands of dollars of interest over the lifetime of your mortgage.
Take advantage of your builder’s discount
When you’re shopping around for materials or items for your house, don’t forget to check and see if you can buy items using your builder’s discount. Often your builder can get items at a wholesale or discounted price. For example, in our situation with the appliances, by buying with our builder’s discount we could still have saved almost $800-900, instead of the $1000 we saved. We just happened to have found a better deal on our own with stacked discounts.
Take advantage of family and friend connections
If you have family or friends that work in the building trades like we do, it can save you a ton of money. For example, my in-laws are building our house. That is saving us thousands upon thousands of dollars. My brother in law has a home media company. He’s cutting us a deal on a home security system and installation costs. Another friend who works at a large home improvement store bought us some materials using his discount. Another family friend of my wife’s has done some work on the house at a reduced rate as well.
Figure out what’s important to you early on
It’s important to sit down with your significant other before you begin the process and figure out what’s important to each of you when it comes to building the house. Do you both want granite counters, a travertine back-splash and expensive handscraped wood floors? Or are you willing to compromise in some areas, but not in others? Setting out clear expectations for what you’re each looking to do through the home build is important to making sure the costs don’t skyrocket later on. Otherwise you can end up both adding big expenses to the bottom line later on.
Do your research before you build
Go around to model homes in your area and figure out what you like, and what you want in your new house. Also figure out ways you can save and things you can cut out of your build without much pain or regret. When we were thinking about building we went to a lot of open houses to get ideas of what we wanted – and what we didn’t want.
Set alerts to find the right lot to build on
Finding the right lot to build on, and at the right price, can be a tough proposition. For us it meant searching for a couple of years, setting alerts to be sent to us every time a new lot was listed on the MLS services. Since we had access to our builder’s MLS service we were able to be notified immediately of when new lots were listed in a certain area. You can do something similar through a lot of real estate websites, getting an email when new listings pop up that fit your criteria. To really save you may need to wait a while, and be ready to pounce when good foreclosure or bank owned properties come up.
Make sure to figure out cost of living in your proposed build location
When trying to find a place to build, a way to see savings in the long run is to buy a home in an area with a lower cost of living. Take into the cost of the home, property taxes, the costs of everyday necessities and more. The area we bought a lot in ended up being a slightly higher property tax city than our previous home, but the schools are rated much higher and the other costs are very comparable.
Shop around to find the right mortgage rate or construction loan
This is another important part of the process, finding the right home loan at a good rate. When building a home, depending on the builder you may or may not need to get a construction loan to finance the building of the home. Some bigger builders may finance the building of the home on their own. If they don’t, be prepared to shop around at several local banks to find the best deal. If you don’t need a construction loan in your build you can have a bit more flexibility when it comes to finding a low mortgage rate by shopping around online for the best rate with the lowest costs.
Shop around for appliances, fixtures and construction supplies
Make sure to shop around when buying big ticket items for your house like appliances. For us we spent almost $5000 on appliances for our new home, but saved almost $1000 by buying items on sale, using coupon codes, and via the store’s rewards program. Shop around, do your research and get as much of a deal as you can.
Find what you need, before you need it
One thing that we’ve found is that it pays to shop around and find all the materials before you need them. If you don’t, you can end up in a situation where you need to buy something to be installed that week, but you can’t find it at a reasonable cost right away, you can only order it for delivery in 2-3 weeks. In order to get it right away to install it you have to pay a premium cost. Plan ahead and buy things in advance to avoid that.
Buy things at a discounter
For some items that we found at high end fixture stores, we were able to find similar or comparable items at a discounter for much less. For example, we found some light fixtures that we loved at a high end lighting store, but when we shopped at a local Menards store, we found similar lights for a fraction of the cost. Don’t fall in love with an exact item when you can sometimes find a similar item for less through a discount store.
Buy closeouts, seconds or remnants
Sometimes stores that carry building materials will have returned items, closeouts and and remnants available that you can buy at a fraction of the cost. For example, we were looking for a certain type of flooring for our home, but when buying it new the floors were beyond our budget. We ended up finding almost the exact floor on closeout – and within our budget – at another home store because they were no longer carrying that brand and had a limited quantity – but enough for our house.
Do some of the work yourself
If you’re handy you can sometimes pitch in and do some of the work in the house yourself to save money (if your builder will allow it). For us that means we’ll be installing some of the easy to install fixtures ourselves to save some money on installation costs. Others may feel comfortable doing tile or flooring install. The amount you can save is only limited by your ability and whether your builder will allow you to do some of the work.
Find out if you qualify for home improvement or energy efficiency tax credits or rebates
One way we’ve saved money was by finding out if any of the appliances we purchased, or building materials were eligible for tax credits. After doing our research a couple of the appliances were eligible for rebates, as well as our new thermostat.
Keep the big picture in mind, don’t focus too hard on small things
One thing that’s easy to do when you’re building is to start getting too bogged down in small details that don’t really matter that much, inflating their importance and turning them into big expenditures. For example, if you don’t like the look and feel of a certain feature of the house, you could spend a bunch of time, energy and money to get it just right -and in the long run spend more than you should. We did this on our fireplace mantle. The original piece – which may have been OK – didn’t come out just how we envisioned. So we went back and forth with the carpenters several times to get it just right, and spent a lot of money doing it. The more flexible you can be with things that probably won’t matter to you much down the road, the better.
Consider new furniture that you’ll need in the new house, and buy it ahead of time on sale
When building your new house do your best to shop around ahead of time and find/buy whatever furniture you’ll need in the new house at a discount. Buy it on sale, use coupons and rewards programs and cash back sites if you can.
Make a more affordable move
Another way you can save money is by making your move to your new home more affordable. You can do that by finding free moving boxes and packing materials, using friends and family to help you move, or if you need to pay movers – by shopping around and getting several quotes. Some have even suggested paying local furniture company employees to help you move as a sideline.
Source your own materials
When it comes to items like fixtures, door knobs, and even cabinets, you can often find less expensive options on your own than through your contractor. Most contractors will work with you, if you want to source some of the materials yourself, just make sure you agree before the project gets started. For example, if you’re building or renovating a kitchen, you might be able to find cheaper counter tops at home improvement stores than through your contractor. You can also look for reclaimed materials to use in your project. If there’s a Habitat for Humanity ReStore near you, it’s worth a trip to see what they have. You can often find gently used elements like shelves and fixtures there for a deep discount.
Consider a prefab home
Prefabricated homes have come a long way, baby! Whether you’re thinking about new construction or building an addition to your home, prefab just might be the way to go, if you’re looking to save a buck [source: Garskof]. Modern prefabricated homes can be well-built, energy-efficient, and sometimes downright stunning. Companies like Method Homes or Rocio Romero offer high-end prefabs that look great and can save you money over new construction. Depending on where you live, you might be able to build with reclaimed shipping containers. A large part of construction costs are for framing and enclosing the structure, and shipping containers essentially allow you to skip a lot of those steps. The trick with a shipping container project is to find a contractor who knows how to work with them and making sure your area’s building codes allow you to use them.
Build during off season
We broke ground on our addition in late February, which means we were getting quotes and talking to contractors beginning in mid-December and through early January. One contractor flat out told us that by getting quotes now, he’d be able to get lower prices from his subcontractors, because winter is a slow time for the construction industry. Like many industries, the construction business has busy and slow times each year. You can save between 4 and 5 percent by starting your project when contractors tend to be slow — right after Christmas. On a more seasonal project, like a roof, you can save as much as 10 percent by doing the work in the winter. Not only can you save money, but you’ll get better service from your contractors during the off season. Since contractors are less busy, they have more time to meet with you, answer your questions, and go through those budgets line by line to see where you can save some cash.