Building your own home – Planning for success

 

Plan For Success!

Buying land and building your own home is the quintessential American Dream! Since our country was first settled, building your own home has been one of the most coveted goals of many Americans. However, this dream, as basic as it sounds is much more difficult than most people realize. Here is an outline of things to consider when pursuing the dream of building your own home.
 

 

Plan, Plan, Plan

In my career I seen many people go down this path and come up empty handed or worse losing money in the process. The goal here is not to discourage but to help you understand the process. Knowledge and planning will give you the highest chance of fulfilling your dream of building your own home.
 

 

Step 1 – Do You Have to Sell Your Current Home to Qualify?

The first question you must ask yourself is, do I have to sell my home to qualify? Big question! This will tell you if you’ll be able to move straight into your new home when it’s ready? Or… if you must sell your existing home and move into a temporary rental until your home is built.

Knowing what your current home is worth and what you will eventually net from the sale of your existing home is extremely important. How much cash/equity can you realistically pull from your current home to put into your new home will be the basis for establishing your down payment and budget. Knowing what your home is worth is an important first step but knowing what your approximate net gain from the sale will be is even more critical.

Tip:  Don’t make assumptions on what you might be left with after the sale of your current home!
 

 

Step 2 – Secure Financing

Just like buying a resale home, you’ll need to get pre-approved for a lot or construction loan purchase. This is critical to establish your budget. The last thing you want to do is to find a great property and get your family excited about it and not be able to close. Or you buy a great property and discover you can’t build the home you want within your budget. The last thing you want is to be stuck owning a lot you can’t build your home on – Ouch!
 

 

Step 3 – Know the Costs of What You Want to Build

The process of discovering the costs of what you want in a home is very important. You may have basic knowledge BUT now is the time to do your full research. Helpful resources to check out...
 

• Go Online and visit Home Plan websites
• Visit Model Homes in the New Communities in your area
• Go to Home Shows
• Visit Home / Building Supply Stores
• Meet and talk with different builders

It’s wise to know your numbers of how much your home will ultimately cost before you hunt for land. For instance, if your total budget for a house and land is $450,000, and determining your house is going to cost $350,000 to build, you’ll need to find a homesite under $100,000!  With inflation, material, and labor shortages you need to be sure to build in extra (unexpected) costs along with longer build times into your home budget.  Remember time can be a cost too.  

Unfortunately, many people do this buying process backwards. They will put a homesite under contract and then discover what they want to build puts them way over budget and they must back out of their purchase of the homesite. Or worse default on the contract and lose their earnest money deposit. Additionally, some folks get so far into the process they will have spent money on home plans, survey’s, soil reports and more and unable to re-coup those costs.

Tip:  Planning to build a house can be time consuming and expensive.  But in the beginning if you put in the work your efforts will pay off!
 
 
 

Step 4 – Make A Checklist

Determine the basic requirements for what you will need in your home. You can take this as far as you want. But at least make sure the big items are covered.
 

• How big do you want your home? Square footage required?
• How many bedrooms and baths?
• Do you want an attached / detached / side or front-loaded garage?
• Do you want a swimming pool?
• How big of a yard do you want?
• What type of siding do you want?
• What type of foundation do you want?
• Etc.

 
 

Step 5 – Should You Have a Home Designed or Hire a Builder?

Having a home designed

You might want to take this as far as having a home designed in advance by either a builder or a home designer/architect. However, this can be relatively expensive. It’s good advice to discover a basic range of the cost per square foot for homes like you want in your area. Once you have this number, you can use that as a reliable gauge.

Tip: Keep in mind if you visit new home sites where “production” home builders are building. High volume builders due to their economy of scale can build homes for less money than you will be able to. They receive bulk discounts from their suppliers and contractors that you won’t be able to get. With the biggest advantage being the cost of the land, they build on.


Meet With a Builder

A less expensive alternative than having your home designed in advance, is to meet with a couple of builders. They should be able to give you an idea of what the home you envision will cost. They may not be able to give you and exact cost but should be able to share with you a cost per square foot range. Typically, this figure will not include costs for site preparation, tap fees, well and septic, clearing, fill dirt, permits and many other variables that may be required for the eventual site you choose for your home.

Tip:  You may have to pay for an estimate or hire the builder before they will put long hours into your plan or estimate.
 

 

Conclusion

Keep in mind as your wish list grows so will the price. And you may end up very surprised at the cost of a home with all your “have to have” items. Understand it is very common for people to make compromises due to cost considerations. If you discover you can’t build what you want, it’s better to find out early in the process rather than after you have closed on and own a homesite.

Once you’ve completed your initial research and discussions with prospective builders, now you’ll have a better idea of how much you can spend on your homesite. You can now go shopping for land with confidence. You know roughly how much your dream home will cost and know how much you can reasonably spend on a lot!
 


This helpful and informative post outlining Building Your Own Home: Planning for Success has been provided to CharlestonNewHomesGuide.com by Bill Byrd of Keller Williams – Byrd Property Group located in Charleston SC.  As a real estate professional for 35+ years, Bill has refined this process.  What you will discover is that it is simple, it works, it is not stressful and can be a whole lot of fun. Images and article content though slightly edited originally posted on Byrd Property Group’s blog.  More About Bill


 

Thank you for reading and sharing our articles from The Greater Charleston New Homes Guide. Our business is to know Charleston, SC's new home construction, home builders, neighborhoods, and homes so we may assist you as you take your new construction home journey. Please take the time to explore our site. The Greater Charleston New Homes Guide is considered the best and most reliable ‘local’ resource to new home construction, builders, neighborhoods, and homes throughout the Lowcountry since 2004.

8.21

 

 

---

Categories: Tools