In this article we're going to discuss how to calculate how much your new home is going to cost you before you begin the building process. After you've completed the plans for your new home that you've laid out complete with swimming pool, tennis court and all one hundred and twenty-five rooms, it's time to figure out what this financial nightmare is going to cost you. This process is critical if you're going to apply for the necessary funds to get your home into the ground. Believe it or not, you are going to need between five and twenty sets of plans and cost estimates. These will be used for bidding, approvals, financing and construction. You should attach a very comprehensive set of specifications to each set. Each plan should be dated and numbered so that there is no confusion about which are the most recent ones. Estimating the cost of your new home contains many variables. As a matter of fact, it contains so many variables and unknowns that it is not an exact science. It is quite common to over or under estimate the cost of the home by several thousand dollars. Part of the reason this process is so difficult is that the builder must visualize a three dimensional home from a two dimensional blueprint. It can literally take hours to come up with estimates for the new home. The costs of your new home are basically broken down into four categories. 1. Fixed Costs - Fixed costs include things like land, building fees and the fees paid for the services of the architect. 2. Bids - These are the costs associated with bids from the contractors, subcontractors and suppliers for parts of the project based on the plans that you've written and the specifications. These costs will only change if the actual construction varies from the original plans. This can include bids for things like plumbing, roofing, and the forming of the foundation of the home. 3. Estimates - These costs include the builders estimates for things such as carpentry, lumber, concrete, site excavation and trash removal. These estimates are based entirely on the builders experience with how much material will be needed to complete the job. 4. Allowances - This includes costs for such items as cabinets, flooring, light fixtures and landscaping. The builder will give the buyer a cost breakdown of these items and then from that breakdown the buyer will determine which of these items he can do without and which ones he must have. The buyer also has the option of getting items that are maybe of lesser quality to lower the cost. The builder's fee will typically be a percentage of the total estimated cost. The final fee of course will be a percentage of the actual cost unless the builder agrees to abide by the initial estimate. Usually in the contract drawn up between the two parties this will be stated so that there is no confusion. Yes, estimating costs for a new home is not easy and rarely comes in at the number projected. New home builders need to be aware of this or the final price tag may come as a big shock to them. |
