Here you are…building a home! Whether you are building it from scratch (buying the land, picking an architect, and builder) or you found a plan in a neighborhood that you love and want to add your ‘personal touches' to – there are expenses attached to building your new home. And everyone's expenses are different.

Here's what happens:

Your builder will give you a price for your home. Typically this is based on what you have said that you love and would like in your home. Or what you saw in a model home or photos you showed your builder. Keep in mind – A LOT of assumptions are included in this quote.

Some builders will give you a line-by-line quote. Meaning that he/she will break out the foundation costs, framing, sheetrock, drywall, painting, roofing, etc. Others will give you a grand total.

But in either case – you will receive ‘allowance $'s'. Builder allowances are NOT fixed costs – they are numbers that the builder adds as a placeholder for you. Typically builder allowances are for:

• Plumbing Fixtures
• Light Fixtures (which can include outlets, dimmers, switch type, etc)
• Tile in bathrooms
• Flooring (hardwoods, carpeting, tile)
• Landscaping
• HVAC systems
• Door hardware
• Closet Systems
• Cabinets
• Appliances

And then they go shopping – and find out that appliances are $18,000 for the ones they love and really want. That the plumbing fixtures are closer to $10k. Not counting the cabinets – which are way above the budget.

The excitement dissipates because the unknown sets in.

You ask ‘How in the heck can I afford to build this house? Everything is more than I thought.'

You wonder if you can get an increase in your loan? Or, how to eliminate/choose less expensive things – even though you didn't think you were being overly extravagant.

I get it. After building 3 houses and totally renovating 2…those number can be scary.

So, this is how I do it…and I promise you, this system will save you so much heartache and anxiety down the line.

Pick out the ones you love and think are within your budget. And get a quote. Let's say that your builders ‘typical' appliance allowance is $10k. You have chosen ones that are $14k. You know, BEFORE you get your final pricing, that you are $4k over your budget. You KNOW!

Do the same thing for ALL of your allowances. Sometimes you might be under the budget…but most times you will be over.

Then add up all of your ‘overages'.

This is the number that you need to add to the bottom line quote from your builder.

Say the quote from your builder is $445,000 to build your house. You KNOW that the overages are $21,000. You now KNOW that it will actually cost $466,000 to build your house (or close to it).

One other caveat here…

Builders do need to be paid. Typically they add a percentage to the total. Using the above example of $445,000…$404,545 is the total to build the house. When you add 10% (the average $ amount of builder fees) and you have $445,000 as the total.

The same thing will happen with your overages. That $21,000 is now $23,100. You can decide if you want to pay for those overages separately and save the $2,100 or add it into the total cost. This depends on your budget and loan and how you are paying for your new home

To Re-cap:

Before you sign the dotted line when building a home make sure that you know the REAL numbers. Most people who build their homes go over the quoted price by AT LEAST 10%…sometimes up to 25%. That is because they did not go shopping before they said yes.

This even applies to other things:

• Do you want shiplap on the walls? If so, where and what style?
• Do you want wallpaper?
• What about built ins?
• Do you want surround sound? Or wi-fi boosters? Security system?

ALL of these will add to your final builder cost. Know before you sign…and you will have an amazing house that did not go far out of budget.

Here are a few other posts you might like:

• Choosing Kitchen Appliances
• How to Choose a Home
• Choosing a Home Builder | Which One is Best
• Choosing a Lot When Building a Home