I want to start out by saying when building a home there is not just one right way. Building a home is unique, it is what will fit your personality best, your spouse, your family, your situation. What is best for my family may not be the best fit for you, and that’s ok. I am hoping though that this post can give you insight into what each building option can look like. Somewhat of a Pro vs. Con list because I am a list person through and through. There is also SO MUCH information on this topic, and for this post I wanted to give you an overview insight of each one. So let’s jump right into the breakdown.
Builder Grade Homes
A builder grade home is when you approach a builder, such as, Symphony Homes, Ivory Homes, etc. to build your home. They provide the contractor and floorplan, and you choose your finishes.
Financially (the easiest)
*You don’t have to pay until the house is completed
*You don’t have to sell your current house until a few weeks prior to your move in date
Timeline (it’s the quickest)
*Typically a builder grade home can be built within 4-6 months
*Why it can be built so quickly is because the sub contractors have already built your same house so many times that they know it like the back of their hand and can build it very quickly. It is routine for them.
*Picking materials is a very quick process. They have a showroom provided that you can go and pick out your counters, flooring, cabinets, etc.
*When it comes to your materials you do have limited options.
*If you decide to upgrade anything in your home that doesn’t come “standard” you get charged quite a bit
*You have a certain timeline of when decisions have to be made, if any decisions need to be changed after the fact you will be charged for it.
*In most times you will be in a neighborhood where the entire neighborhood is built by the same builder, usually making it so your exact floorplan and home style can be find several times throughout the neighborhood.
A custom home you still will hire a contractor/builder, but you have the flexibility in choosing your own floorplan as well as an unlimited options on your finishes.
Financially (more difficult)
*First, you have to secure a lot before you can move forward with anything. A lot of times that entails you having a lot loan, which will then have separate closing costs etc. from your construction loan, or mortgage loan. (Yes, I know tons of loans. There is a lot we can chat about there as well, so could come in a future post.)
*Often times you need 20% down of whatever the value is your building. This includes the lot, so if you have money down on your lot that will help you out.
*If you don’t have the savings to provide the 20% down, you would most likely need to sell your house to get that possible equity. Then putting you in the situation to have to rent while you build.
*This ranges depending on the size of your house, the complexity of design, and numerous other factors. But, one thing you CAN plan on is that it most likely will take longer than a Builder Grade home. Whenever you throwing a new design at a contractor or subs and they are doing work out of their normal floorplans there will be learning curve, possible delays, etc. (Average timeline is 9-12 months)
*You have the opportunity to really hand pick your finishes and are not limited to what the builder offers.
*You get to shop. So you find deals, or discounts to save money.
*You can build your house in a way that REALLY reflects who you are and your style
*The function of the floorplan would be a perfect fit for how your family functions
Owner Build is a custom home where you yourself act as the general contractor. Sometimes this involves you doing some of the trades. But it doesn’t require you to do so. That is a BIG DEAL you guys! If you don’t have the ability to do the work yourself you don’t have too. But being a contractor gives you tons of power in building your home.
Financially (more difficult)
*This section is going to be the same as building a custom home. The only difference can be that a bank may not allow you to be the contractor on the project. They don’t like to do Owner Build when you don’t have previous experience as a contractor- there is a lot of money riding on the project for a bank. This is the biggest hurdle.
OVERCOMING THE HURDLE:
You can find a family friend or someone that has experience that will sign on, or really put themselves on the line that the project will be finished, and it’s “on them” if it doesn’t. Or you can also find an actual general contractor and pay him to sign on. In our situation, we did a combination of both and found a family friend that is a contractor that felt comfortable to sign on with us. We also decided to pay him to take us to 4-way. Which means, he is in charge of having the hole dug, foundation, framing, plumbing, electrical, HVAC and roofing. By doing that it saves a lot of headache with insuring that we pass certain inspections.
*Man, do we have to talk about this one? How long have we been in this process?! Haha. We purchased our lot January 2018 and didn’t start building until March of 2019. There was a huge gap because that’s how long it took to draw up our plans with a draftsman, get the plans engineered and then get everything situated with the bank. If you have your plans completed and approved before purchasing a lot you could move forward quicker than we did. With that being said PREPARE YOURSELF for the bank process to take a really long time. There is a lot of hoops to jump through when going this route. Erick and I had an extra hurdle that you may or may not have, which is that we are both self-employed making it REALLY hard to get approved for bank loans.
*Same points as custom home (see above)
*You have to have some previous knowledge or experience in knowing how construction and building goes.
*You have to have a lot of patience with your timeline.
*No one cares about your house as much as you do, so when you are hiring out subs, etc. you really have to be able to show up at the project and really oversee everything. Be super detailed oriented. BE PRESENT.
*Even though you may hire a contractor YOU are still the boss, you are paying him. You still have to oversee his work and make sure things are going according to plan.
*OPPORTUNITY TO SAVING MONEY
**Always get 3 bids from each trade you so know if you are getting a fair bid. You can then negotiate somewhat to try and get prices down.
**Sweat equity. Labor fees are ridiculously high when building a house. If you can do the labor yourself you can save $1,000’s of dollars.
**Shop. Shop subs, shop sales and deals. You have the flexibility, so take advantage of it.
**Contractors usually charges 10% of what the value is of the house. Let’s do some quick math- if your house is $300,000 you are paying a contractor $30,000 to build your house. What?! That blows my mind, and also makes me very happy that we can save that money.
*With the money you save you can either use that money and put it back into the house and really upgrade your materials or just pocket what you are saving.
Did I overwhelm you?! I hope not, I hope this ended up being super helpful. If it was make sure to share this post with someone building a home, or save it to your Pinterest board. If you have any questions please feel free to throw them in the comments. I would love to chat more about it with you.