How To Develop Your
Home Construction Cost Estimate
Construction Cost Estimate (sometimes called a "take
off") is the heart of your financial plan. It is what your cost
control is based upon. If you buy their plans, some plans services will provide a cost estimate. Home Plans, one of the biggest, will customize it to your area for only $29.99 (Homeplans.com)
If you're doing custom plans, here's how to get your home construction cost estimate done.
You did a rough cost estimate when you put
your budget together. Now it's time to get some real life numbers
that you can use to guide your home building project.
Believe it or not, some people don't bother
with precise cost estimates. You could just go to the bank with
your plans and say, "How
much will you lend me to build this house?", and hope you come
out all right.
Maybe you have plenty of cash and don't even
need a construction loan. You could just take your plans to a
supplier and say, "Send out what I need," right? Wrong!
Here is a better way!
In order to maximize your savings (or profits), you must be in control. In order
to be in control, you must have a pretty good idea of what this
house is going to cost - before you start building it.
FACTORS AFFECTING YOUR COSTS
You have probably heard people talk about costs
per square foot, and maybe you're thinking there is some magic
formula you can apply to come up with what your home will cost.
Unfortunately, that's not the case.
Every home is unique. In developing
your home construction cost estimate, you will discover that
what your home will cost to build will depend on several things:
1. The design and specifications - the kind, amount, and quality
of the things to be included in your home.
2. The prices you are able to negotiate
for the labor and materials
to be used in the construction.
3. How long it takes to build the home (this affects the interest
you will have to pay on the construction loan).
4. How successful you are in ordering the correct amounts of
materials and in controlling waste and theft.
COST VS WORTH
Your banker may be able to give you some
idea of what the home will be worth . This has
very little relationship to its cost!
You and builder Brown are building identical
homes. The home will require 14 rolls of wallpaper in the
dining room. Builder Brown pays the retail price of $10
Total cost is 10 x 14 = $140. After a
little shopping, you find the same paper on sale at a discount
house for $3 a roll. Total cost is 3 x 14 = $42.
on this one item is 70% less than builder Brown's!
The lesson here is clear. If you are a
careful shopper and are willing to haggle a little and look
for bargains, you can significantly lower the cost of
your home. The worth of the home will not be affected.
One way to get a mental picture on all of the construction
costs involved in building your home is to group them as follows:
If the home is being built for sale, you'll want to include
The most time consuming task in developing your home construction
cost estimate is to tie down the the hard costs. These home building
costs involve some figuring in
order to determine the quantities of materials needed. Fortunately,
almost all of this work can be done for you by other people - suppliers
If you buy your plans from a plan service,
they will often provide a detailed List
of Materials along
with the plans. This could save you some real time and effort.
In any event, we have included all the information you're likely
to need to get a detailed cost estimate together on your own.
worry if you don't know a joist from a rafter! We'll show
you where to find people who do - people who will be happy to
assist you at
And of course there is a good selection
of construction cost estimate software available for those of
you who want total control! Construction estimating software
is usually the domain of professional home builders. But we
know how some of you are! ;-)
GETTING STARTED ON YOUR HOME CONSTRUCTION COST ESTIMATE
So how do we go about putting all this together? In order to know what
your home should cost, you simply
need to price all of the different elements and add them together. This is not as complicated as
it may sound. There are a lot of people who will be happy to help
you - like suppliers and subcontractors.
You already know your lot costs. You talked about your financing
costs when you met with your lender to get prequalified for the
Assuming you're not building a for-sale
home, that leaves the "hard" and "soft" costs
to tie down. And since some of the subs furnish their own materials,
we think is a good idea to start the process with your labor costs.
• The first
is to find your subcontractors. Here's
• Once you've found them. Here's
some guidelines on getting their
• Once you have your subcontactors' prices in hand, it's time to get your suppliers' quotes. Click here to get started with suppliers.
• And last (but not least) you'll need
a way to record it all in an organized way. Here is how to use our Cost Estimate Forms.
Once you've gotten your quote together, it'll
be time to do some more planning! It's time to plan your Construction
Schedule. Click here to learn how to do just
For additional insight on developing your Cost Estimate,
see Lesson Eleven of our online course
Successful Home Contracting.
Return to the Home Building
Answers' Home Page
from The Cost Estimate