Deciding where to live is a huge decision, there are countless factors to be taken into consideration. School districts, costs, housing associations, commute time. For this post I am going to specifically talk about building a house vs buying an existing one.
How we ended up Building a House over Buying
We made a few mistakes buying our first house, nothing major but the list of “projects” was so long we decided to sell instead of take them on. As we were looking though existing homes, all I saw was projects. People do crazy stuff to their homes, which is totally fine, until its time to try and sell your decisions to someone else.
After 8 houses in our price range were deemed “too much work” we decided to look into building a house. We found a lot in our desired location at the higher end of our price range. After we met with the builder, we were sold and promptly started planning.
I am going to walk through our experience step by step and give you some tips and questions to ask along the way:
Step 1: Choose a Location
This step is very similar to selecting a pre-existing house. Select your desired area and look for available lots – they should come up using most search tools. When you are building you also get to select your lot (provided there are more than 1 available). Lot size or location can cost more.
Step 2: Select a Builder and Model
Most new developments have a pool of a few builders that own lots. Walk through their models and keep in mind that you may have to drive to another development to walk through multiple options. Run your builder through the below set of questions before making a decision.
Questions for your builder at this step:
Are you able to work on the house yourself and get credit?
We were cut a check at closing because of all the work we did ourselves! We did all the tile floors, landscaping and wood floors in our house. This is the time to track down friends and family and put their special skills to work.
Laying sod is crazy easy (green side up), case of beer and a few pizzas saved us a lot of money in labor!
What are the “standard” finishes, flooring, etc?
Model homes often have upgrades, ask what costs extra when you are walking through and take notes. Our notes actually saved us later when our building tried to charge for something that was included.
What are the timelines?
Planning move out/move in dates is difficult, get a timeline in writing.
How do they do Financing?
Builders may finance the construction themselves or you will have to get a construction loan. I don’t want to get to far into this section, if you have questions reach out to me in an email or comment.
Very strict energy rules went into effect in Minnesota, our energy bill is shockingly low. Check out the laws in your state and make adjustments to insulation levels, appliances, light bulbs, etc, to keep costs down.
Allowances for Appliances?
It is common for builders use allowances in the purchase price, if you go over them it adds to the cost.
Can you supply your own materials?
Comes in play when you are selecting appliances, lighting or any work you are doing yourself.
Step 3: Selections and Upgrades
This is the most exciting and potentially costly step. Most builders give you a base price that includes an allowance for appliances and lighting fixtures. They will give you a list of places they work with and encourage you to use their suppliers. Compare their costs to big box stores or Amazon.
A lot of the questions from the previous step come into play here. When you meet with your builder or representative, be upfront about your budget for each area of the house. Always ask for the price before making a selection, the last thing you want to do is fall in love with something before knowing the price.
Few things we learned in this step:
- You can upgrade your upgrade: We decided to install granite counter tops (I know, I know), we don’t have that much counter space so the price was reasonable. When we went to the granite place to select our slab, we quickly found out that the price we were quoted was for the very basic patterns. There were only a few to select from in our range, and we ended up spending way more on a slab we liked.
- Showroom Lighting is Insane: Our lighting allowance would have covered 1/3 of our fixtures if we bought them all at the showroom. We made a trip to Menards/Ikea and bought all of our exterior, closet, laundry, and hallway lights for 1/3 the cheapest showroom price.
Step 4: Watch and Monitor
Thankfully our house was on the way home from the park and ride we use to get to work. We stopped out every few days and checked on the progress. It was very interesting to watch the building process unfold. We also got to do our own mini-quality assurance as the building went up.
You should be provided with a construction schedule, watch it closely and hold your builder accountable. If your builder is behind schedule, you might need to find a place to live.
- Basement Bathroom – We had a bathroom “roughed in” the basement. When we decided to finish the basement all the plumbing is complete. No concrete saws!
- Sprinkler System – We had the plumbing inside the house done to prepare for a sprinkler system. Saved us $4oo-600 when we decide to put one in.
- Tech Tubing – Figure out where your TVs are going to go and have them install tech tubing. It was really cheap to do before the walls go up. If you are not familiar with tech tubing, it allows you to run all of your TV cords inside the wall out of sight.
- Laundry – Put it close to the bedrooms, save yourself a flight of stairs.
- Light Switches/Cable Jacks – Plan where you want TVs and light switches.
Check if this list is included in your purchase price:
- Window Treatment
- Garage Door Openers
- Mirrors (yes I know of someone who had to buy bathroom mirrors after construction was completed)
Benefits of Building a House
- Brand new appliances
- Energy Efficiency
- Less Projects
- Custom Design
Building a house made a lot of sense for us, if you can build within your budget I would strongly consider it as an option. The up front stress of going through the process melted away as soon as we moved in. Please let me know if you have any more questions – I tried to cover everything but there is a lot to consider. I have been through this process a few times (once with my parents) and am a pro!
Some products that can help you:
Acorns: Acorns is an automation app that collects and invests your spare change when you make a purchase. I connected Acorns to my checking account and my credit card. If you are interested in trying it, you can use my referral code here (both of us will get $5 in our account)
Personal Capital: Personal Capital has a ton of great Free features, you can track your spending, net worth and even analyze your portfolio. It has top notch security and I am able to connect all of my accounts. Saves a ton of time! (I may be compensated if you use this link)