How to Save Money When Building a House
Are you building a house soon? Or are you stuck between building a new home or buying older construction? Well, we’ll fill you in on a little secret to aid your decision making: building a house is not always more expensive than buying! Building a home is full of ups and downs and costly expenses that can add up quickly. However, we want you to have the best home-building experience. So, we have created this comprehensive guide on how you can save money when building a house.
Happy home building!
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- Decide on a Budget
- Know Your Mortgage Rates
- Explore Your Lending Options Early and Shop Around
- Find the Right Home Builder
- Understand What a Base Price Consists Of
- Consider the Aesthetic
- Work with a Favorable Floor Plan
- Re-quote Your Home Insurance
- Look for Non-Package Appliances
- Search Online Wholesalers Instead of Buying Retail (& Look for Coupon Codes)
- Insist on Standard Sizes for Doors and Windows
- Comparison Shop to Get the Best Deal
- Find Materials on Your Own
- Recycle Materials
- Collect Boxes
- Think About Energy Efficiency
- Consider Doing Some Installations Yourself
- Be Open to Continuing Renovations in the Future
- Get a Complete Cost Breakdown Before You Sign
- Bid Out Your Cost
- Leave the Final Touches for Yourself
- Know All Your Tax Credits
- Bonus Tip
1. Decide on a Budget
Before any actions can be taken, determining how much you can afford is the first step you should take when building a home. We highly recommend meeting with a financial advisor and a lender before the purchase of a lot.
Once your budget is determined, it is critical to stick with the budget that you have set. If you are trying to save money, you must be disciplined with your budget and not fall into the temptation of exploring the different possibilities for your future home.
2. Know Your Mortgage Rates
While building a home takes time and construction loans are inevitable, it’s important to be ahead of the curve when it comes to mortgage rates. Doing so will allow you to lock in favorable rates at an advantageous time. Contact a lender you trust for more information.
3. Explore Your Lending Options Early and Shop Around
Obtaining a home loan is a daunting but necessary step even if you are buying an existing home. Beginning this process early can save you lots of time and money. There are many different lenders that all offer different options, such as closing incentives and credits.
Your real estate agent plays an important role in this process as they are very familiar with the best lenders that are available to you. Agents also make this step easier by educating you on the different types of loans, which is helpful if you feel comforted by knowledge.
4. Find the Right Home Builder
Building a home does not need to break the bank, and a good way of ensuring that is finding the right builder. When building a home, you want the builder to be respected, affordable, and reliable in terms of timeline and quality work. You should compare homebuilders in your area and take note of:
- Who can give you the most for your money
- Reasonable upgrades
- Inclusive-based pricing
- Recently completed projects
Finding the right home builder can be an intimidating procedure, but being represented by a real estate agent can take some of that stress away. Robert Garcia, Realtor and Director of Sales and Operations at the Eric Stewart Group recommends that home/lot buyers should go with a real estate agent to the initial meeting with a home builder to discuss all the pros and cons. “Working with a real estate agent is like riding a motorcycle with a helmet or going to the doctor with insurance,” says Robert. It is a good idea to check with your lender to see if there are any available opportunities to work with a builder they do business with often.
Choosing the right realtor for representation can be overwhelming. Here are 10 questions you should ask before hiring a realtor.
5. Understand What a Base Price Consists of
In most cases, a base price is the first number a builder will give you and encompasses:
- The structure of your home, including walls, foundation, roof, etc.)
- The finishes of your house, such as countertops and cabinetry
- The cost of purchasing the lot
- Basic landscaping
Items 3 and 4 may not always be included in the base price of a home, but the responsibility is on you to ask and gain clarity on what is going into the base price.
6. Take the Aesthetic Into Account
There are particular home aesthetics that can offer some cost-saving opportunities, such as industrial homes that intentionally leave aspects unfinished to satisfy aesthetic desires.
7. Work with a Favorable Floor Plan
A clever way to save money while building a home is to opt for an open floor plan. Doing so allows you to avoid expenses for interior walls, doors, hallways, wiring, and plumbing. Open floor plans also invite you to get creative and use the space in different ways.
On a similar note, if you don’t want to take on the responsibility and cost of customizing your floor plan, stock floor plan options are available. This option is good for people who are able to visualize two-dimensional floor plans in three dimensions.
8. Re-quote Your Home Insurance
Insurance companies are confident that you will be a customer of theirs for years on end. They may raise your rates or may have better rates available that you don’t know of because you have been with them for a while. Similar to how phone plans work; oftentimes, grandfathered-in plans are paying more than new customers who take advantage of new deals. While building a house, one highly valuable thing to do is shop around for home insurance.
9. Look for Non-Package Appliances
Package appliances can quickly ramp up the cost of building a house. Oftentimes, these packages will be from brands that your contractor has a relationship with, but that does not mean you are locked in and must choose from the provided options.
Many builders will allow you to purchase appliances separately and from third-party vendors. All that’s left is the cost of installment. Taking this route allows you to save some money when building a home.
10. Search Online Wholesalers Instead of Buying Retail (& Look for Coupon Codes)
There are ample cost-saving opportunities when building a home and they exist online with wholesale retailers. While the items may come to you unfinished, nothing a quick tutorial and run to the hardware store won’t fix.
Additionally, when shopping online, be sure to take advantage of coupon codes. All it takes is a bit of research to find coupons that can save you 10% to 20% off.
11. Insist on Standard Sizes for Doors and Windows
Whether your floor plan is highly customized or takes on a more simple design, uniquely sized or shaped doors and windows can pump up the cost of purchase and installation. Construction supply stores usually carry standard size doors and windows.
12. Comparison Shop to Get the Best Deal
Hard work pays off and the same applies for researching and comparison shopping. Great deals on high-quality, name brand items exist, you just have to diligently look for them. Here are some ideas to consider to get you started on your search:
- Visiting local carpet warehouses for sale-priced goods
- Lighting, plumbing fixture, and appliance shopping on sites such as eBay, Craigslist, and Facebook Marketplace
13. Find Materials on Your Own
It’s unlikely that you will find better deals on basic materials than your builder, but you definitely can save some money on non-bulk items, such as stoves, ovens, HVAC systems, water heaters, radiators, and more. To avoid any hiccups or miscommunication, ask your contractor prior to shopping if providing your own alternatives is OK.
14. Recycle Materials
Scrap material does not equal garbage, but instead could be a way to save money when building a home. Working with a contractor who has an environmentally conscious work ethic and they will light up knowing you want to recycle. You’ll be jumping for joy as well with all the corners you can cut by being a little green.
15. Collect Boxes
Underestimating how many boxes you will need while building a house is a big no no. Start collecting boxes now so that no additional funds need to be spent later. You can ask your friends, local grocery stores, your neighbors, and more.
16. Think About Energy Efficiency
When trying to save money while building a house, consider long-term costs. Spending a little more on materials, but having an energy efficient home, you may save thousands – this option may cost less than if you shortened spending on materials, but had higher energy bills.
17. Consider Doing Some Installations Yourself
You don’t have to be the handiest of people to install some fixtures and appliances around the home, but doing some installations yourself can save you a considerable amount of money when building a house. There may be a learning curve, but the outcome is rewarding. Additionally, know which installations may be out of your playing field, such as electricity or plumbing. Smaller projects like cabinet pulls may be fitting for you.
18. Be Open to Continuing Renovations Down the Line
Good things take time and there is no standard that says you must finish building your home in one go. Start thinking about which renovations and installations must be done now and which can be saved for later. While upgrades are known to increase the value of your home, others do not have the same return when it’s time to sell and be market ready.
19. Get a Complete Cost Breakdown Before You Sign
Once you have decided on all the elements you want in your home, ask for an itemized breakdown of the total cost. While reviewing this cost breakdown, you may come to the conclusion that some elements are not as necessary as once thought. It is okay to change your mind and remove or modify items from your original list to save money.
20. Bid Out Your Cost
Sometimes you may be required to use a certain builder, but you are still allowed to shop around to see if that price is fair. If you aren’t required to use a certain builder, still shop around and compare prices. You may be able to save thousands of dollars by doing this and find a builder that fits your budgetary goals.
21. Leave the Final Touches for Yourself
If you hired a general contractor, you are still able to complete some renovations yourself, like interior painting, staining wood trim, and landscaping. Just inform them early on and wait until the main building job is complete.
22. Know All Your Tax Credits
There are many laws in place that are favorable for homebuyers and homebuilders, such as tax credits for energy efficient homes. Learn more about tax credits for home builders here.
23. Work with Real Estate Experts
Executing a big project is always done best when working with a team of knowledgeable and experienced people, especially when it comes to building a house. Being successful in real estate requires a level of mastery that cannot be overlooked and you should not have to put that responsibility in your own hands.
At the Eric Stewart Group, we help individuals and families build their dream homes with less stress and more cost-savings. To learn more about how we can help you save money when building a house, click here to schedule a time to speak with one of our agents.
We’re looking forward to hearing from you!