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10 Things You Need to Know Before Comparing New Homes by Their Cost Per Square Foot
1. Methods used to calculate square footage differ
Some
builders measure a home’s size from the outside of the wall framing.
Other builders measure to the outside of the siding material, so an
all-brick home may be hundreds of square feet bigger than the exact
same home with lap siding! Was the second-story area of a 2-story high
entry foyer included? It’s heated space and can be a beautiful
area in your home, but it isn’t “walkable” square
footage. How about the staircase and its openings—was it counted
once or twice? Such differences in calculating total square footage
can have a dramatic impact on the home’s reported square footage
and thus its cost per square foot!
2. What square footage was included?
Was the basement included? All of it or just the portion
of the basement that’s finished living space? How about attic
spaces? What if the attic has a sloping ceiling and you can only
stand up in a small portion of that attic? Finishing space in a
basement or attic is typically much less expensive than finished footage
on the main floor of a home. The foundation, walls and roof are already
there. So, if the price per square foot of the home was calculated based
on “finished” square footage, that figure is typically
lower for homes with finished basements and/or attic space.
Do you include a home’s 3-season room, porches, deck or patio?
What if those outdoor spaces are covered by the roof? If the garage
is not included in the home’s reported square footage, then a
bigger garage won’t affect the price per square foot because those
square feet don’t count, right? So, why not build a 4-car garage?
Obviously garages and decks aren’t free. Cost per square foot
comparison is meaningless if the square footage of these
3. What’s included
in the price?
Builders usually base their cost
per square foot number on their “standard” materials.
Builder A includes a hardwood flooring, Builder B figures carpet. Builder
C includes full sod and a generous landscaping allowance, Builder D’s
price only includes grass seed in the front and side yards. Was a concrete
driveway included? Don’t laugh! Such factors don’t affect
the size of your home but can raise or lower the cost per square foot.
4. Land costs.
Did the cost per square foot quoted
include the home site? A $25,000 lot represents $12.50 per square foot
for a 2,000 square foot home. But if building that same home on a $60,000
lot, the home site equates to $30 per square foot, $17.50 per square
foot higher! Even the neighborhood can impact your cost per square foot.
If subdivision covenants require a full masonry (brick, stone or stucco)
front elevation, the home will cost more than if it were built with
vinyl siding on the front. And community amenities such as walking trails,
pocket parks, clubhouses, pools, etc., all have a cost which is passed
along to each homebuyer in the form of higher prices for the building
lot.
5. The included materials/products
used differs by builder.
Your price includes granite countertops!
But granite ranges from about $40 per square foot to over $100 per square
foot based on color and thickness. Are the included hardwood floors
3/4” or the cheaper 3/8” thickness? Five-inch wide wood
flooring is considerably more expensive than the same brand/wood
species/finish three-inch wide flooring. Obviously, seeing on a builder’s
specifications sheet that granite countertops and hardwood floors
are included is insufficient for comparing different builders’ cost
per square foot. Quality name-brand windows could easily add $10,000
or more compared to off-brand windows for your home. And even within
name brands, product prices vary widely. Quiet dishwashers—something
you’ll truly appreciate—are a lot more money than their
entry-level counterparts.
6. Quality workmanship
isn’t cheap.
Different electricians, plumbers
and heating contractors’ prices vary, too. Trim carpenters, drywallers,
flooring installers and painters’ work are all evident the day
you move in. Does their work reflect the pride you’ll have in
your new home? The value of caring craftsmen shows up when you have
annoying air leaks around your new windows, doors that close by themselves
or poor water pressure in your master bathroom. In order to get a lower
cost, a builder can opt to hire the low-bid plumber or drywaller on
your home. Or, will you benefit from the builders that enjoy long-standing
relationships with quality sub-contractors, even though it may cost
more? Know also that labor rates vary significantly by regions.
Your brother may have gotten a new home built in Texas for $90 a square
foot, but in the northeast, it’s going to cost more to build an
identical home.
7. Your choices have
a huge impact on your cost per square foot.
Would you believe just your kitchen
selections alone could increase your home’s overall cost by $10-20
per square foot or more? It’s true! Because of expensive cabinetry,
countertops, faucets, tile floors, appliances and plumbing fixtures,
etc., bathrooms and kitchens might be well over $500 per square foot,
compared with perhaps $50 per square foot in a bedroom or family room.
Most builders’ pricing includes “allowances” for common
selections such as flooring and lighting fixtures—but allowances
vary by builder. Also increasing cost without increasing square footage
are: fireplaces, lighting, crown molding and specialty trim, window
treatments, and even paint—many builders charge $100 or more each
time you change paint colors. Then there’s “hidden” products
such as high performance insulation behind the walls and in the attic
that might add $3-$5 per square foot to the price of a home
8. Cost is driven by
design.
Though design has a strong bearing
on a home’s cost, design, functionality and a home’s livability
don’t necessarily correlate to square footage. In fact, good design
can often save you money when, for instance, you can eliminate long
hallways and actually reduce the home’s size.
Outside, sophisticated rooflines and grand entryways cost more
but don’t add to a home’s square footage, so such homes
cost more per square foot. Inside, there’s almost too many variables
to count that impact a home’s cost but don’t affect square
footage. Take ceilings for an example. Many new homes feature 9-foot
high or taller ceilings, tiered or vaulted ceilings and artful
ceiling details. Such ceiling amenities increase the cost per square
foot compared
to homes with standard, 8-foot high flat ceilings.
Every corner
in a home’s foundation costs more, so simple rectangular
foundations reduce a home’s square footage cost compared to
homes with numerous foundation jogs. Carpet typically comes in 12’-wide
rolls, so designing a room 12’-8” wide is more expensive
due to the added labor costs for cutting and seaming the
carpet and increased material waste.
Then there’s the cost of
the home plans. Pre-drawn plans might cost $1,000, about $.50 per square
foot for a 2,000 square foot home.
Custom-drawn plans typically range from $2-$10 or more per
square foot.
9. The type of home
you build impacts cost.
A one-story home with 2,000 square
foot of finished living space has foundation under the entire 2,000
square feet and a roof covering the 2,000 square feet. A 2,000
square foot two-story home with 1,000 square feet on the main floor
and 1,000 square feet upstairs will have a smaller, less expensive foundation
and a smaller, less expensive roof. And, the wider/deeper one-story
home will often require a larger, more expensive building lot.
So even though finished square footage of the two homes is identical,
two-story homes usually cost less per square foot.
10. The total size
of the home.
Some costs are constant regardless
of the size of home—permits, environmental and other government
fees, inspections and utility hook-ups are unaffected by a home’s
size. A smaller home will still have a kitchen sink, dishwasher, range,
refrigerator, and microwave—just like a larger house. Generally,
smaller homes have higher costs per square foot (assuming finish levels
are comparable.)
Check out your builder.
We hear horror stories of builders
who will quote a price based purely on square feet and then
pound the buyer with extras after the job is started. Reputable
builders will
have a long list of references from happy homeowners. Contact
those
references! Similarly, there is great value in a builder’s longevity.
You don’t last in homebuilding without treating customers
right. What’s the cost per square foot of your new home warranty?
Every home builder can give you a detailed and accurate cost per square
foot.
A “production” builder who builds the same portfolio
of plans over and over again, develops entire neighborhoods and
offers limited personalization can most quickly quote you a price
per square
foot. Their fixed standards, limited variables and economies
of scale typically enable them to offer the lowest cost per square
foot.
Semi-custom builders offer a wider variety of home designs, building
sites and finishes for your home. Such builders will typically
modify their home plans to suit your needs, too. They may initially
provide
a price range, such as “$100 to $200 per square foot depending
on what you want” – not very satisfying, but know as you
make decisions, the ultimate price per square foot comes clearer
into focus.
A custom home builder may never build the same home twice. She doesn’t
have historical data for that specific home to look back on as a starting
point. Knowing that custom home buyers often have specific products
and amenities
DO YOU REALLY WANT THE CHEAPEST? Even
if you can get fairly comparable cost per square foot info from multiple
builders—meaning they’re all bidding using the same set
of plans, specifications, home site cost factors, product amenities,
finishes, etc.—are you going to automatically take the lowest
price per square foot? How do you suppose the builder with the lowest
price per square foot was able to do it? Plus, you want your builder
to make a profit on building your home. If she doesn’t, she won’t
be in business to take care of any warranty issues with your home.
So...if you choose to, use preliminary cost per square foot numbers
to determine if you’re “in the ballpark” budget-wise.
Don’t assume they’ll be the basis of your purchase agreement.
Exercise great caution when using cost per square foot in comparing
builders and their homes. Even if you believe you’ve got an “apples
for apples” comparison, the low cost per square foot builder might
just be one of those bad apples!
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