Can I Price My Custom Home by the Square Foot?
Jan 30, 2024 | Custom Home Cost, Building a Custom Home in Grand Rapids, Building an Energy Efficient Home in Grand Rapids, ICF Custom Homes, Energy Saving Homes, Insulated Concrete Forms, Budget, Designing a Custom Home in Grand Rapids
I need to start by qualifying these comments. The problems below are mostly unique to custom home building. Semi-custom and Production Home Builders, or “spec” builders are structured differently, and can often achieve higher accuracy with square foot pricing—especially when it is one of their prints.
Custom Home Pricing by Square Foot
You might be trying to get a grip on pricing as a way of differentiating between custom builders, or to determine if you can afford to build the home of your dreams. So, for better or worse, square foot pricing is what the industry usually uses to estimate costs early in the sales process.
What you need to know is that 10 different builders, tax assessors, and real estate agents will calculate square feet pricing 10 different ways.
When a custom home builder or website quotes $300 per square foot, how do you figure out what that means for your home? Knowing the difference makes all the difference, so take the time to read, ask, and understand!
Often builders will use square foot to refer to the amount of living space, measured from the outside of the walls. Using this method, a 30 x 50 two story home is 3,000 square feet. But what about the basement? If the basement is finished, only then will they call the home 4,500 square feet! Some in the industry meaure to the inside of the walls. On a typical 3-level ICF home, this can easily be a 500 square foot difference!
You may have perceived another problem here: does the basement cost nothing if it is unfinished? The above calculation method doesn’t account for it. Furthermore, that 1,500 square foot unfinished basement adds tons of convenience, though the method used above doesn’t capture that at all!
This is a significant reason you should not call builders to ask them for their square foot price as a means of comparing costs. Builders who don’t have a good handle on their numbers will eagerly toss a number out there, but what does it really mean? Custom home builders that are intimately familiar with their costs will cringe, sometimes launching into a longish explanation.
We suggest you start by explaining the layout and sizes of each level, garage, decks, screen porches, etc.; then asking for a ballpark cost range. This will inevitably be far more accurate than what you will calculate on your own.
Why Accuracy and Detail Matter
And why is it important to be more accurate at this point? Consider this scenario: You have preliminary plans to build a home with no basement, three levels above grade, a 4 stall garage, and living space above the garage. You call 5 builders, who give a range of prices between $275 and $350 per square foot. You plan on $325, then calculate your numbers. The print says the main level square footage is 1,688, and you can see the second level is the same size. So you add 1,688 + 1,688 = 3,376 * $325 = $1,100,000 budget. Happy it fit within your budget, you authorize the architect to complete the drawings.
But after spending thousands of dollars with a custom home builder you trust, you learn that the estimated cost to build is $1,900,000. This is simply beyond anything you could possibly afford; and even if you could, you wouldn’t want to. What happened?
Frankly, you failed to factor in the third level built into the roof (1,100 sq.ft.), the 700 square foot bonus room above the garage, nor did you account for the cost of the large garage.
By now you are many months and many thousands into the process, and much is lost. Starting over seems like crawling up a mountain.
The long and short of it is this: Don’t try to calculate the cost of your new home based on a square foot number then purchase a blueprint for a custom home design that checks all the boxes. Instead, start with the experienced custom home builder! Give all the details of every single square foot of the home to your builder, and ask for a cost range.
Help Me Price My Home
Creating a new custom ICF home in West Michigan is a major investment; but one that pays dividends over the years by providing the comfort, stability, and quality of life you desire for your family. Still, you want to be confident you are making the most of your investment. Finding an ICF contractor can be tricky; and the good ones don't work in every market. R Value proudly serves West Michigan as the area's premier ICF contractor. We prioritize quality over speed, adding incredible efficiency to ensure your new custom home in Michigan is built within your budget and according to your vision. Give us a call today to schedule your initial consultation - 616-299-3654!