How to save money when building a house

When you buy a home, you know the area, number of bedrooms and bathrooms, and finishes in advance, and you agree to pay a set price. When building a home, your bottom line can be a moving target, and you may not know what your total cost will be until the project is completed.

A room full of furniture and a large window: the framed interior of a house

© Dan Reynolds Photography / Getty Images
The framed interior of a house

However, with a little advance planning, you can keep construction costs under control. Here are the best ways to save money building a home.


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5 ways to save when building a house

1. Get more than one offer – and negotiate

A smart way to save money on building a home is to look for vendors including the builder, architect, designers, and your lender.

“The lender is a big lender – new homes are much riskier for the bank,” said Bruce “Bo” Bochicchio, real estate agent and broker for Bruce Bo Homes in Atlanta. “If you could get a contractor to build the house first and just buy it from the contractor, you could save money.”

This method might be preferable to your own construction loan, which has a higher interest rate than a normal mortgage, Bochicchio notes.

Some home builders have a preferred or affiliate lender who may give you a break from closing costs and other fees. When this is presented to you, it is best to still shop around and compare the builder’s lender to others to ensure you are getting the best deal.

“Do the numbers and find out the bottom line, including the annual rate instead of the interest rate,” recommends Bochicchio. Bankrate’s loan comparison calculator can help.

When looking for a contractor, consider the quality of their work in addition to the cost. Sometimes when a contractor agrees to do the job at a cheaper price, the corners are trimmed to make up the difference. These seemingly minor abbreviations could cost you in the long run.

“There are a large number of loose ends [when building a home]. Here a quality farmer with a good reputation could be much more valuable than the costs themselves, “says Bochicchio.

2. Look at the site and the style

Building a home from scratch can save you money by being strategic with every decision, including the location and style of the home.

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For example, if you are considering buying land to build your home on, you may get more acreage. However, if there is no infrastructure such as utility and water pipes, you will have to pay for the installation. On the flip side, you could be spending more on a developed lot that already has water, sewer, gas, and power lines in place, but you don’t have to worry about adding them later.

If you’re not sure where to break new ground, you can compare the cost of built and vacant properties and see where you can save.

How your home is set up can also save you money. While an open floor plan sounds like it’s cheaper to build (fewer walls!), It isn’t always the case.

“Since there are fewer walls, the span is longer, so the beam that holds the floor and ceiling is much more expensive,” says Bochicchio.

Likewise, a two story house can be cheaper than a ranch style house of the same area because it requires much less roof and foundation.

3. DIY where you can

There may be areas of the project that you can edit yourself, which can keep costs down. If you are confident that you are making all the decisions about the home, from countertops to fixtures to flooring, you may be able to forego hiring an interior designer. The downside is that a designer can help select finishes that can add resale value. and may be able to leverage vendor relationships for better deals on materials.

Also, consider other projects that you can do without the help of a professional. Do you have an eye for landscaping? Can you get a crew of friends to help you paint the interior? In order not to pay more than necessary, it is best to stick to things you are good at and leave the rest to the experts.

4. Ask yourself: What can I do without it?

When your new home comes together, you may be able to downgrade first or forego some components to save money upfront.

“You could get a cheap carpet for the time being because it only lasts four or five years anyway,” suggests Bochicchio. “As long as you have your drainage mature and under control, you can add cosmetic landscaping later.”

If there are a few things that you want to go without, there is a need to coordinate with your builder to make sure that anything you want to leave out doesn’t jeopardize the final inspection of the house and your ability to get a certificate of use. Some small fixtures that are unlikely to affect inspection include cabinet handles and towel rails that are easy to install yourself and are likely to provide savings over your manufacturer’s costs.

5. Avoid surfaces that do not add significant value

Just like in fashion, home decor trends change quickly. In general, decorative items don’t hold up as well as structural elements, so it’s best to spend your money where it matters. Bochicchio recommends spending more on components that would be expensive or impossible to add in the future.

For example, consider building a basement (even if you don’t finish it first) against a deck – you can always add a deck later. It may also be a better investment to upgrade the roofs and siding that protect your home than the floors or lights, which could go out of style in a few years.

If you’re not sure what to add or cut, ask your real estate agent about the best uses for your money. Your agent can give you some insight into what upgrades are likely to add value to your home and what is not worth doing in the long run.

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