Top 10 Mistakes to Avoid When Building a New Home
Top 10 Mistakes to Avoid When Building a New Home
Building a new home is an exciting adventure. Some people dream about it for years, and once they begin, they find that building a home is one of the most rewarding projects they’ve taken on. When they’re finished, they have their dream home, customized exactly to their lifestyle and design preferences.
Building a new home comes with challenges, too, though. As experienced home builders, we know that mistakes can be difficult, time consuming and costly – and how to avoid them.
Because there are so many unknowns when you’re learning how to build a new home, we often hear questions about every part of the process. Many homeowners wonder about practical questions, like how long it takes and how expensive it is. Others approach us with questions about how to design a home, how to build a green home or whether adding a unique feature is really possible. Still others want to know whether they really need to hire a contractor, if they can do part of the construction themselves or whether it’s possible to build in a particular location.
With more than 20 years of building experience, we’ve worked on many custom homes — and we’ve helped many first-time builders through the process of building their own home.
What to Consider When Building a House and Mistakes to Avoid
Drawing on our 20 years of experience, we’ve put together this list of the top home-building tips to keep in mind when you’re ready to break ground on your new house:
1. Select Your Lot Carefully
You may already own your land. If so, the building process will be more straightforward. If you’re buying land with the intent to build a home, however, there are a few things you can do to make the building process go more smoothly.
First, don’t settle. Many people settle on a lot because it’s the only one left in a particular subdivision, but the site you choose will play a major role in your home. It’s worth making sure you like size, shape and view of your lot.
You should also consider the surrounding infrastructure. What is the local traffic like? Can you get to amenities like grocery stores easily? What type of offices and health care services are nearby?
Many people also consider the quality of the school system when they buy a house. Even if you don’t have children, consider researching the local schools. A good school system can improve the resale value of your home.
If you plan to build your home, it’s also important to be aware of the land costs associated with the home-building process. Grading a lot, building a driveway and connecting sewer, water and gas lines are all essential. If the lot is in a subdivision, it may already have been evaluated for utility hookups. If not, make sure it will be feasible to connect these essential services.
Visit our website to find out more about building on your own lot and lot-specific building costs.
2. Learn to Read a Bid
Construction bids can be a foreign language.
Many people look at the total bid price and select the lowest bidder. However, they might find that their home ultimately costs more to build than the bid — and more than they anticipated. They could also find that the quality of their home isn’t what they expected.
Learning how to read and compare bids will help you decide which contractor is the best fit for you. First, you’ll want to find out what method the contractor is using to create their bid. Most contractors use one of three methods: square foot pricing, assembly pricing or unit pricing.
Square foot pricing is the least reliable since it simply assigns an average price to each square foot of the space — it doesn’t necessarily take into account specific costs of materials for the area. Assembly pricing is more accurate and detailed, being based on how much each component costs to build instead of just using the average. Unit pricing is the most accurate, but it’s also the most time consuming to prepare. It’s based on the cost of all of the supplies needed.
You should also ask how the builder accounts for unexpected expenses during the building process. Many contractors “pad” their bids. This padding provides a buffer for unexpected delays, materials that need to be recut and other issues that can come up during the construction process.
A builder who doesn’t include this buffer often offers the lowest bid. However, if a contractor doesn’t include this buffer in their bid, it’s easy to go over the original bid’s construction cost. Homeowners may find that a higher bid on paper is actually better than a lower bid without a buffer.
A buffer is critical because there are a number of unexpected issues that can show up during the construction process. For example, the cost of supplies or shipping may be higher than anticipated. Materials can be damaged by weather, and regional building trends can affect the cost of labor.
You can ask your builder about whether they account for these issues and how they do so. Although it’s possible that none of these problems will arise, staying aware of the possibility will help you determine your costs more accurately. You’ll also have a better sense of what your mortgage could cost and how long the building process will actually take.
3. Choosing a Contractor vs. Being Your Own Contractor
Many first-time home builders consider being their own contractor when they build a house. Building your home this way can save money, but it’s not always a wise choice.
Contractors and owner-builders need several essential skills. Decide whether you're comfortable:
- Reviewing building plans for potential problems.
- Estimating the cost of materials and labor.
- Obtaining building permits.
- Hiring and scheduling employees and subcontractors.
- Ordering materials and scheduling deliveries.
Although many people tout DIY contracting as a way to save money, a contractor can be a more financially prudent choice. A good contractor should be able to help you get your dream home built on schedule and within budget. Because of their experience selecting building materials, identifying problems and working with subcontractors, you may find that hiring a contractor actually saves you money.
If you’re building a home in South Carolina, contact us to find out more about our custom building and real estate services. We have extensive experience managing the home-building process from start to finish, and we also have an in-house real estate agency to help you through the process of financing a design-build home.
4. Keep Your Mortgage Costs in Check
When you build a custom home, it’s easy to end up with a bigger mortgage than you’d bargained for. Changes in the middle of construction, unexpected delays and upgraded materials can all change the price of your home.
Remember that your mortgage will last for 15 to 30 years, so it’s worth making sure it’s a manageable payment. There are many things you can do to keep your mortgage in check — and you’ll still be able to build your dream home!
To start, have a good sense of materials and the design you’re looking for up front. If there are particular materials or building designs you love, say so early. Your contractor can help you price them out so you can decide whether they’re worth the investment.
Consider the total size of your home as well. Do you need a 4,000 or 5,000 square foot home, or can a well-designed 2,500 square foot home serve you just as well? The average cost of building a home is $150 per square foot. If you have too much space, some of your mortgage will go toward paying for underutilized rooms.
It’s also important to remember that you can shop around for mortgages for custom-built homes just like you can for buying a pre-built home. We work with an in-house broker to find the best mortgages for your situation. You’ll be able to compare:
- Closing costs
- Interest rates
- Whether you’ll need to pay private mortgage insurance
5. Avoid Making Big Purchases While Building a Home
While you’re building a home, avoid big purchases like buying a new car. And though it’s tempting, wait until after the mortgage paperwork is signed before buying new furniture, too.
The reason is because these big purchases often change your debt-to-income ratio, which can impact your mortgage eligibility. The debt-to-income ratio is the percentage of your gross income that’s needed to pay for your non-housing expenses. It’s used by lenders to determine whether you’re eligible for a mortgage, and how much they’ll lend you.
A high debt-to-income ratio can signal that a homeowner will have a hard time making mortgage payments. Almost all lenders want to see a debt-to-income ratio of less than 43 percent. The lower your ratio, the more likely you are to get a mortgage with a low interest rate.
If you know you’ll need to make a big purchase, try to do so before starting the home-building process. Alternatively, delay it until after you’ve signed your mortgage paperwork.
6. Think About Your Space Needs Before Deciding on a Floor Plan
By far, one of the most common design mistakes we see is short-term space planning. If you’re designing a custom home, you’re likely to live in it for a while. That means the spaces you need now may change over the next few years. Consider how long you’ll stay in this home and what types of spaces you’ll need during that time.
When you’re looking at your space requirements, make sure to include bedrooms, closets, storage areas and living spaces. Asking yourself the following questions may help you accurately gauge how much space you’re going to want:
- How many bedrooms do you need?
- Where do you spend most of your time at home?
- Do you cook regularly, or are you rarely in the kitchen?
- Do you work at home? Do you need a home office?
- How often do you entertain?
- Do you have family or friends who visit regularly?
- Do you need space for a guest room?
- Do you have or plan to have children and need bedrooms for them?
- Do you have older children who will be moving out?
- If you’re building a play room or game room, what will it be used for in a few years?
- Do you have hobbies and activities that need extensive storage?
7. Make Changes During the Design Phase, Not the Construction Phase
It’s common to make a few changes to a custom floor plan. You may find that you want to change the materials you use for flooring or cabinetry. You might also realize that you want to make larger changes like adding a room or changing the layout.
However, remember that changes during the construction process are more expensive than changes during the design phase — and that cost isn’t just financial. There may also be delays in acquiring the supplies needed, and your timeline might be slowed down by these delays. Additionally, the extra construction may add to the total cost — and to your monthly mortgage payment.
You’ll reduce the number and size of changes you make by considering your needs early in the process. If you know what you need early, your architect and building designer can help you to incorporate these features into your initial design.
You can also cut back on changes by taking the time to view similar homes. Many people love the look of a home on paper, but they have trouble visualizing what that home will look like once built. If you’re considering using an existing floor plan, we can help you find other homes that use this floor plan. You’ll be able to get a better sense of what the finished house will look like.
8. Prioritize Which Amenities Are Important
We often see people who build a home and scrimp on amenities to save money. On the other extreme, some homeowners overspend on top-of-the-line upgrades across the board. Neither extreme is ideal.
Remember that even a “standard” floor plan can include lots of amenities, so be sure to look at what options are included. For instance, our standard floor plans include energy-efficient features like low emissivity windows.
We recommend that you prioritize which features and amenities are most important to you. If you’re interested in upgrades, focus on these areas. These are the areas you’ll use the most, and you’ll appreciate the extras.
For instance, many homeowners find that upgrading their lighting and windows is a good investment. Good lighting can change a home’s atmosphere and make everyday tasks easier.
Other homeowners focus on upgrades in the kitchen. Since many families spend a lot of their time in the kitchen, upgrading kitchen appliances and cabinetry can be a good investment as well.
There are also others who prioritize energy-efficient upgrades to their heating, plumbing and water fixtures. These upgrades often pay off in lower utility bills. If you’re interested in building a home with energy-efficient upgrades, you can find out more about our process for building energy-efficient homes.
At the same time, it’s easy to go overboard with upgrades. That’s especially true when you’re building a new home. If an area isn’t on your list of priorities and won’t help your home resale value, it’s okay not to upgrade.
9. Consider Your Home’s Resale Value
When you’re building a home, it’s easy to make it unique. In fact, it’s encouraged!
It is possible to be too unique, though. If a home showcases too many unusual features, it can be hard to sell. Even worse, you could get tired of these one-of-a-kind designs and struggle to remodel them. Whether you plan to sell your house in a few years or live in it for a long time, it’s worth taking a little extra time to consider your home’s staying power.
Be aware that very unique homes have a limited pool of potential buyers. If you’re building a home shaped like a space ship or a Victorian reconstruction, keep in mind that selling your home may be challenging. Many of these houses require unconventional marketing strategies, and owners need to be prepared for a long wait before they sell.
You should also consider whether these unique features will still appeal to you in five or ten years. If you’ve considered your space needs and how they might change, you might already have an answer.
Think about whether you’ll like the design, too! Will this look dated in a few years? Can you change decoration or repaint easily if you decide to? Will removing the feature take extensive work?
If you’re considering a unique design, and you think you’ll get tired of it — or it will lower your resale value — see if you can find other ways to include the features you want.
10. Choose a Good Builder
Choosing a builder is one of the biggest challenges when you’re building a home. Your builder will help to shape the design of your house. They’re responsible for making sure construction is done on time and up to standards.
Many homeowners get several bids before they begin the construction process. Be sure to research the potential builders ahead of time to make sure your bids are coming from reliable, reputable companies.
Some questions to ask potential builders include:
- How long has the builder been in business?
- Has the builder worked on similar types of homes before?
- Can they provide referrals from previous customers?
- Does the builder have a financing plan available?
- Can you add options to an existing floor plan?
- How much can you customize an existing building plan?
- Can the builder work with you to create a custom floor plan?
- Does the builder include a home warranty?
- Can the builder leave some rooms — like a basement or garage — unfinished?
- Is landscaping included in the cost of building?
All of these answers can help you to find the right builder for your home.
If you’re interested in building a home here in South Carolina, SK Builders can help. Contact us to learn more about how to get started. You can also view existing floor plans and find out more about building on your own lot.