If you're building a custom home, it's a major project that's going to take some time. If you're not careful, you could find yourself faced with ballooning costs.

Of the 871,000 single-family homes built in the U.S. in 2018, 87% took 4 months or more to complete. And 36% took more than 6 months.

Let's look at some ways to keep your custom home construction costs in check — and help you have a positive home-building experience.

Planning is Critical When Building a Home

You can avoid most mistakes that cause costs to soar when building a house with proper planning. Watching your new home go up is the exciting part but don't overlook the steps that get you to that stage.

One Step at a Time: Start with Planning.

Clients typically focus on getting the construction phase started and can sometimes overlook the importance of the pre-construction phase. In reality, the phase prior to shovel-in-the-ground is the absolute most critical when it comes to controlling costs and planning a home you will love.

If the pre-construction and planning phases are not well thought out, this can often be the real cause of cost overruns during construction. Most custom home building clients believe the contractor controls the cost of construction. However, the reality is that the design controls the cost.

While it is true each contractor has their own cost structure, in theory the subcontractor costs for each should be in a tight range of variance, assuming apples-to-apples bids are provided. It is often when a plan and the specifics of the design are not well developed during pre-construction that costs can vary widely among contractor bids, and change once construction begins.

Consider the Resale Value of Your Custom-Built Home

Selling your new home is probably the last thing on your mind when you're building. But, even if you plan on living there for the rest of your life, you should still consider the resale value and how easy it will be to sell.

Changes happen in life and you may find yourself in a position of having to sell. The more unique your home is, the harder it will be to find a buyer when the time comes.

One of the most common requests potential homeowners bring up when discussing options for a new custom home is to build a home that is as "maintenance free" as possible. In reality, the more exotic and costly the materials selection, the more maintenance required.

We often see that the initial desire for less maintenance goes out the window when our clients are presented with finish options by our vendors and suppliers. These opposing forces often create a budget issue and sometimes a perceived installation or warranty issue. We aim to guide our clients to make the most reasonable decisions that will not only fit their desired outcome, but will also keep the maintenance associated to a minimum, which, in turn contributes to their ability to maintain an adequate resale value.

Reality Check for Keeping Long-term Home Value

Most often, when clients pick what they want out of a magazine or off a website, this requires some deep conversation. Quite often, the photographs depict an out of the normal, high-end finish product or assembly, which usually comes at a premium cost (for materials and installation), with above average maintenance requirements. Specialty items found in glossy photographs might also be less appealing to the masses; while appealing to the masses is one of the keys to holding higher-than-average home resale value.

Building to suit the neighborhood is also key to getting the most out of resale value. Building too far to either extreme can have a negative impact on resale value. Our recommendation is to consider the general theme and style of the neighborhood when considering the features of your custom-built home.

Consider Your Future Needs

If you're building a custom home for you and your spouse, will the two of you always be the only ones living in it? If you might have children or could end up having elderly parents moving in with you, make sure your home has space to grow into.

While no one has a crystal ball, clients can usually — with a reasonable amount of confidence — make a good guess as to what the future might hold for their housing needs. This is an important consideration that will assist in minimizing future costs associated with renovations and/or future upsizing or downsizing.

Building a custom home is a great way for a family or individual to ensure they design and build a home that they can live in for the time required and to ensure the home has all the features they desire for present time. To make that happen, it’s critical that the clients share as much information as possible with the design team and the contractor so important future needs are considered in the design of the home.

Bear in mind that you'll have to maintain whatever home you build as well — building too big can be as bad as too small. Maintenance costs and the amount of work involved increase with the size of your home. While it might be easy to keep up with now, consider how you will manage that work in the future.

Location, Location, Location

The decision to build a custom home is a huge commitment, and one of the most critical parts of the process is site selection. Not only will site selection play a part in convenience to your every day routine, but it will also play a part in the overall cost to build.

Your lot choice and the location of your home are important factors in planning. Don't settle for a lot you're not completely happy with — it is worth waiting to find one that meets all your needs. And, just as with the house itself, you will want to consider the resale value for that location.

A number of things to consider include insurance, fill requirements, and availability of utilities. These items can make a big difference to your bottom line.

Often builders enter the picture after the site is already procured by the owner, so the owner may not realize the potential cost ramifications until after the purchase. It can pay to consult with a contractor before making your site selection and purchasing your lot. Depending on location, we usually can provide rule of thumb costs that the potential owner can utilize to make their decision.

Should You Be Your Own Contractor?

The short answer is NO!

When you're building a house on a budget, you may be tempted to think you can reduce the costs by taking on the job of general contractor yourself. The trade-off for the money you save will be the time you spend. And, without a doubt, it's a time-consuming job, especially if you're not familiar with the construction business.

Before you decide to be your own general contractor, ask yourself these questions:

Can you identify problems when reading surveys and architectural plans?
Will you be able to estimate costs accurately?
Do you know how to get the necessary building permits?
Do you have time to hire and schedule subcontractors?
Do you have the time and know-how to select and order materials and schedule deliveries?

If you're not comfortable with any of these things, you could end up spending more than what you save by not hiring an experienced contractor in the first place. Not to mention the risks involved with being your own contractor.

What a contractor does for you and what to expect

Contractors have to meet certain criteria to get a license and they must carry insurance against various problems. If you're handling those things yourself, you could find yourself subject to lawsuits, liens, and other things that could skyrocket your building costs.

There are many things a contractor does on their clients behalf; some are more visible to the client than others. Those services also depend on how the contractor is selected by the client.

Generally, the contractor you select needs to:

Act as the coordinator and liaison between the subcontractors performing the work and the owner, lender, design team.
Provide supervision to ensure the work is completed in accordance to the plans, which requires technical construction knowledge.
Ensure timely delivery of project-related correspondence and documents to keep the flow of information moving across all stakeholders.
Make sure that subcontractors are paid timely and maintain proper insurance coverage throughout the project.

Contracting requires many hours of direct supervision and time at the building site, which is something that most cannot handle on their own, given the time commitment required. Consider construction management as any other service you might procure; particularly for a project as complex as building a custom home. Let us be your guide through this difficult process.

Choosing the Right Builder

Hiring the right people is key to keeping your costs under control when building a home. Make sure you hire licensed contractors who carry the proper insurance coverage. Ask for references and check out some of their past projects.

You can see some of Coastal Craftsmen's past work in our website portfolio, along with more information about our custom home building and major renovations services.

Get in touch with us today and find out how we can help you build the home of your dreams.

How to Avoid Surprise Costs When Building Your Own Home