Home Buyer's Guide - closer look at...
Building a new home can mean different things. Contracting for a new home in a large development isn't very different from buying an existing house - except that you'll have to wait until it is built to close. On the other hand, building a custom home on your own lot can be quite different. This type of project is considerably more involved - and potentially more rewarding.
Understanding What Is Involved
Building a home can be an extremely rewarding experience - allowing you to create a custom-designed living space. But building can also be a stressful and difficult undertaking, so it's important to understand the entire process - and what part you must play to make it a successful project.
Buying in a Development
The most common way to buy a new house is to purchase one in a development. Depending on the size and stage of the project, you may be able to view anything from floor plans and sketches up to fully-furnished models. Most homes built this way are semi-custom - you are usually offered a selection of plans from which to choose. While this method of building offers limited customization, it is also the simplest and easiest.
Building on Your Own Lot
Buying a lot and building your own fully custom home is the pinnacle of the building experience. It is also the most complex and difficult way to obtain a new home. You need to buy the lot, hire an architect, arrange construction financing, and find a builder.
Can You Be Your Own Builder?
Many books and articles have been written extolling the benefits of acting as your own builder or contractor. While it is true that most builders use subcontractors to perform most of the work - and hence you can as well - it is important to understand that homebuilding is a complex job. An amateur builder can easily squander any potential savings - or worse, make a real mess out of the project. So before you consider being your own builder, take the time to do some research and learn about the process.
The failure of homebuyers to make timely selections is one of the primary causes of construction delays. Some items (cabinets, for example) have considerable lead times; others are often subject to back-order. When these products fail to arrive on time, the entire construction schedule can be affected - so make all of these choices well in advance.
How Long Does It Take?
This is a difficult question to answer. It depends upon a number of different factors, each exerting a major influence. The most important factors include:
- The size and complexity of the design.
- The quality of the builder's organization.
- The backlog of work (how busy is the builder?).
- The topography of the lot.
- The weather.
- The financing.
- The cooperation of the homeowner (making selections, not making changes, etc.).
Soft costs consist of most of the expenses of building a home except for actual construction expenses. This includes interest, insurance, permits, architecturals, and taxes. Soft costs can constitute a major portion of the total project expense - especially if you are building on your own lot and have insurance and tax bills to pay. Don't forget to budget for these costs.