You should not have had to pay the builder to develop a proposal. Did you also buy the plan through him? Typically, people buy the plans from an architect or residential designer themselves and then invite builders to submit proposals (bid on the project).

Custom homes at $90-100 per sf is low in any market. $150 per sf and (way) up is more like it.

I don't think I would trust this guy, if I were you. I'm not liking what I'm hearing about him so far.

Get some other bids. You may also want to see if you can shave square footage off your home to bring it more in line with your budget. It's amazing what you can save clipping a few feet off all around can do, without compromizing on what you need or want in a home. Look at your plans with a crtical eye. Sometimes much square footage is wasted with too many doorways, bathrooms, and halls.

It sounds as though you basically must like your floorplan. Most likely you can modify it and come out with a better home in the end.

Do some homework. If you need a house designer, see if they are on the same page as you. If you are savvy with a computer, you may be able to purchase software and do it youself. A good designer should be able to revise your plan for a reasonable cost, but they can hard to find.

Take your time, and resolve not to be ripped off. Become fully informed on materials costs and the building process itself. It takes a great deal of legwork, but if you do it you'll be much better off in the long run.

LOL...Make no mistake, these are absolutely textbook builder tactics. OK, so the problem is that if you DO get the price down, you will be walloped with Change Orders when faced with the unsavory results of the cost-cutting. The contract will likely have low "allowances" for items spaced throughout the construction period. At each of these, your builder will reveal that they were low and you will owe him money. It will happen. When you SEE the carpet/tile/hardwood he picked out, you'll ask for better quality. No problem! Up-charge. And so on and so on until you are at the bank getting a line of credit to pay for them. Ironically, all of this would happen anyway if you went with his higher price. When you sign the contract, HE is in charge. You will need to ride the roller coaster if you want the house. Make no mistake. Until he has gone through the tired old tactics and juiced all the money he originally intended to obtain for you it will be over, you will be handed the keys and will be so happy to move in that you will forget most of this. Same old same old. It's how the game is played.

" Told him up front that I couldn't afford more than ~$400K total for around 2,500-3,000 sq ft and he said no problem; his standard house (which I toured with him and liked his craftsmanship) costs $90-$100 sq ft in this market."

I agree with a previous poster who said that $90-100 sf in any market is extremely low for any new house and that most new house costs should begin at about $150 per sf and up no matter where you live.

But that does not mean the house you toured as the builder's 'standard house' could not be built for $90-100. It probably could. But you did not choose the builder's standard house plan. You chose to build a custom house plan, and one you asked the builder to modify further, so naturally it won't cost the same as his standard basic model.

"About three months ago I selected a set of plans (3,100 sq ft), which he agreed were suitable, and paid him to purchase the plans, work on the minor modifications necessary to cost out/build, and provide me with the final proposal. I have been waiting (and waiting) since then and it arrives now at $460,000 for the house alone. He says that the plan from the architect was not detailed enough initially and had so many high-cost features that it costed out this high. He says we can cut back on many items, but even a severe re-budgeting will only save about $50K; there is no way to build this house for less."

A 3100 sf house built for $460,000 still only works out to $148.38 per sf. Cutting out the glitz brings it down to $410,000 or $132.25 per sf.

Both prices are extremely reasonable in any market and shows a willingness by the builder to try to make concessions to get you the house you want within your budget.

"I am, of course, dumbfounded as to how this could have happened and distraught over the prospect of starting all over with a new plan with him (which will be uncomfortable since I don't understand how he didn't recognize these features in the beginning) or start all over again with a new builder."

This does not show a lapse of ability or character on the part of the builder, it shows a lack of experience, understanding, and over-expectation on your part as to how the building and design process works.

YOU chose a custom plan on-line that was not part of the builder's normal repertoire and asked him to modify it to your specifications.

Unfortunatley the house plan you chose isn't within your budget. That's not the builder's problem. It's yours.

They simply did what you asked of them and gave you a price based on your specifications.

It is just the facts.

And it is normal.

No price for a new house can be known until the final draft of the plans has been received and the plan can be priced based on the actual design and the current price of materials.

It is a very common occurance for owners to scrap their plans a time or two until they get their feet on the ground and come down to earth to see the difference between what they can imagine in their dreams and what those dreams cost when they get transposed into building reality.

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Bottom line: You can start over with another builder, but that likley won't solve your problem.

You need to get a lot more realistic in your design expecations and understand that your budget is going to allow you far less than you think.

No matter who designs and builds your house.

Lick.

Thanks for all the feedback; this is very helpful and much appreciated.

Lick, I agree with your major points: it wasn't the standard plan and I am inexperienced with the process and was unrealistic in my expectations. Both are undergoing major revision :) I don't question the builder's character. My frustration/irritation stems from the fact that he never once said "This house is very different from my standard (although did not look that way to me) and will cost a lot more to build than your upper limit". I basically asked if this house was in my range before I paid for the plans/revisions and now I am out a bunch of money for plans for a house I can't afford to build. An expensive lesson as I would have happily kept looking for a more realistic plan if he would have said so up front.

Let me ask another naive question: Has the cost to build a new house not also dropped in this housing slump? I was assuming home builders, subs, and suppliers were all having to adjust their prices to reflect market conditions. I am not out to take undue advantage of their situation, but the market conditions forced me to lower my price when I sold my house.

Thanks!

It dropped here, but is now climbing back up. Construction and material costs are regional, so others may have a different perspective. It would help if you could state what market you are in.

BTW, was the land included in that price?

There is so much to learn in this process of building a home!!! What sticks out, to me, in your post is; if the builder did look at your plans he should have known instantly that it would cost more than your budget. Some of the things to look for in house plans that lead to big $$; complicated roof line(lots of angles), houses with lots of corners, the more you stray from a "box" shape the more expensive it becomes; ranch style is more expensive, built-ins add up cost, "scattered plumbing", these are just a few that come to mind. To ease my mind I would get a bid from someone else too. Before Dh and I settled on a plan(we purchased one off the internet ourselves) we "threw out" several before choosing the "right" one. Usually, we chose one that was too much sq. ft. and ended up with one about 300 sq. ft. smaller. Don't proceed with this guy unless you are totally confident he has YOUR best interest in this project!!

Good Luck!

" I basically asked if this house was in my range before I paid for the plans/revisions and now I am out a bunch of money for plans for a house I can't afford to build. An expensive lesson as I would have happily kept looking for a more realistic plan if he would have said so up front."

This happens even when owners hire their own architects or designers.

They tell the architect to design a house that fits their budget, then the house comes back $100,000 more than the owner can afford.

Even stock plans you buy on line usually have an "estimated" cost to build, and often the estimated cost isn't even close to actual cost.

No one knows how much the plan is going to cost until the plan is fully completed, then sent out for bid and based on the cost of materials at that point in time.

A builder or designer may take a rough look at a 'canned plan' that needs to be revised and guess that it will be close to one's price range on first glance, but no builder is going to take yours or anyone's rough plan and spend the scores of hours it takes to get an accurate final price to build it until and unless these plans are written in stone.

Otherwise, it's just wasted time on the builder's part.

I'm sorry you lost some money on your plans, but your builder also lost a lot of time/money estimating your project, and I am sure he is just as disappointed as you that it costs as much as it does to build it. I'm sure he could use the work.

"Let me ask another naive question: Has the cost to build a new house not also dropped in this housing slump? I was assuming home builders, subs, and suppliers were all having to adjust their prices to reflect market conditions. I am not out to take undue advantage of their situation, but the market conditions forced me to lower my price when I sold my house."

Prices for new construction haven't gone down.

In fact, costs have gone up.

And cost to build has nothing to do with selling price.

It still takes the same amount of time and materials to build a house, regardless of demand or the availability of mortgage money.

The selling price of that house in an entirely non-related thing, and can very often be much less than the cost to build it.

That happened to me a few years ago when I built my last spec house for $260,000 and I could not even get a bid of
$220,000 when the market collapsed.

I wasn't about to take that kind of loss on it so I moved into it.

Then sold my prior house at a loss of about $20,000 instead.

Even though my insurance appraiser wrote the replacement value policy for my spec house at $270,000, I could not get a mortgage appraiser to value it at more than $220,000...and I ended up paying Primary Mortgage Insurance on it.

Selling price is also why many are finding it difficult to get mortgage financing for new construction, because the cost to build is more than the appraised selling cost of many houses right now, and no lender is going to give a mortgage on a house that is going to appraise at less than the value of that mortgage....and few borrowers have the equity or cash-in-hand to make up that difference between building cost, apprasied value/selling cost, and mortgage maximum.

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So sorry, but your 'assumptions' are quite wrong at this point on a lot of different levels.

Good Luck.

Your adventure has just begun... ;)

creek side - I'm in the E WV/W MD market area and no, this did not include the land.

manhattan42 - thanks for your knowledgeable insight, but I have to admit I'm confused by your statement that "cost to build has nothing to do with selling price". I understand that it takes the same amount of time and materials to build a given house, but I would have thought the COST of time and materials would have decreased. How can builders/subs/suppliers stay in business if build > selling and the only new construction can be financed by cash deals b/c no lender will lend? I thought new residential permits/starts were still way down. Seems like something would have to give there.

Thanks for helping me understand the complexities of this grand adventure :)

"I understand that it takes the same amount of time and materials to build a given house, but I would have thought the COST of time and materials would have decreased. How can builders/subs/suppliers stay in business if build > selling and the only new construction can be financed by cash deals b/c no lender will lend? I thought new residential permits/starts were still way down. Seems like something would have to give there."

Many builders are not staying in business for the very reasons that:

-The cost of materials and labor has not gone down...
-The cost to build can easily exceed the appraised value of the house...
-Borrowers cannot get financed even after they sign a building contract for a house within their budget because lenders aren't lending.

Just because there are fewer homes that owners want to build does not mean builders can build them for less.

They can't.

It still costs the same or more the produce materials, ship them and install them.

It only means that those builders (and other subs and suppliers) with deep enough pockets and reserves who can wait out the Recession will be around when the Recession ends and those who don't will simply leave the business...(and they have been leaving the business in droves.)

Lumber yards are folding up left and right. Material suppliers and manufacturers have been closing their doors.

But for those still around, building a house for less than what a builder needs in labor and materials is simply not an option...and why the cost of building a house has not gone down.

There are ways to get the cost to build down. One way is to cut the square footage. The other is to pick a simple house plan. If you are handy in some areas, you can do some of your own work. Most people are capable of doing their own painting, for example. You can shave at least five grand off the house just doing that.

There is no such thing as a generic cost per square foot building cost. It can vary hugely. It depends on the complexity of the house design. A rectangular or square home footprint, with minimal halls, baths, etc. translate to lower cost per square foot. Bump outs and articulated rooflines cost a whole lot more per square foot to implement. Lofts with stairs and railings, trim, extra flooring, wall space, etc. cost more per square foot. The windows you choose factor in.

You need to find a design you like, with minimal convoluted details, and get some bids from reputable people. This does not mean you need to give up quality in materials or nice details. On the contrary a smaller footprint can mean being able to actually afford nice cabinetry, flooring and countertops.

I have much experience building homes and working with house designers and architects. Do your homework and be extremely careful about whom you select to work with. You have to safeguard your own money, because no one else is as interested in watching out for it as you are.

I've been in some huge homes that were not made of the best quality materials or workmanship, with very little furniture in it. The owners built to impress, the builder went WAY over their budget, and they couldn't afford furniture to put in it.....let alone ever hope to go on vacation or out to dinner again. Then something breaks.....

Make up your mind to stay within your budget. If someone you hire can't do that, fire them! You certainly have enough budget to build a nice house. In addition, your current plans may not be all "waste". You may be able to derive a plan of your own, that is reasonable in cost to build, derived from it.

The other piece of advice I have is to have a good real estate attorney check over any contract you are contemplating, before signing it. You can easily end up with no rights to your home during the build process. Retain the option of purchasing your own products that go into the home. You can price shop that way. The builder I had for my last house wanted to charge double, yes, double, the cost of doorknobs and bifold doors (the same ones Lowes or Home Depot had....same brand). The same exact toilets that I could purchase at Home Depot for $200 were $500 through the builder's contact.

Good luck. Take your time, do your homework, and you'll end up with a wonderful home.

Thanks, everyone, I appreciate the input and feedback.
Looks like the next step is to scale down size and complexity.

Sandy - how detailed a plan do I need to shop for bids? Can I use an online plan with my specs or is that not enough detail? Should I budget now for an architect to revise my current plan to reduce size/complexity? Can an architect draw a plan for a specific budget or can only the builder give you the actual number? I don't want to end up spending additional dollars for a plan that again I can't afford to build.

Plans and specifications need to be as detailed as they can possibly be, so that when they do go out for bids, all bidders are bidding on the same thing.

Otherwise, you will get back bids that make no sense.

Architects draw plans and typically do not bid them or price them.

Common problem with architecht drawn plans, and we see it here all the time, is that the client tells the architect in advance what the price range is, then the architect's plan comes back $100,000 over budget.

That is not entirely the architect's fault, however, because architects do not build homes, and therefore generally have little grasp on what the actual costs of their designs will be.

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Only thing I'd like to add further is to make sure you are pre-approved through a lender for a certain amount before even going further.

It could save you time and money when you do get a final plan, do get bids that meet your budget, but cannot get financing because the house will not appraise at the cost to build it...and can't get a mortgage.

You need to spend time looking at plans and reading up on design and building--before you spend money on an architect or designer. It is important that you understand the process and the players, or you will find yourself at the mercy of everyone out there.

You should have a complete set of plans and specs to get decent bids. You will have to pay for those plans. Our plans were accompanied by 35 pages of specifications, an unusually high number. What isn't covered in the specs will be made up by the builder, which can be a risky way to do it.

In addition to the plans, your jurisdiction or situation may require engineering, which is another cost. Engineering can run from a few hundreds to many thousands. It depends on the situation.

As Sandy pointed out, certain things drive the price of a home higher. This is an area that you really need to understand. Every corner increases the expense. Every curved wall, every gable, every turn of a staircase, every square foot of roof, every square foot of foundation, all of it drives the price. Steeper roofs, all the rage in a lot of current designs, cost considerably more than less steep roofs. We actually had our roofer than us for building a "normal" house. His words, not mine.

Doors and windows cost more than plain walls. Quality doors and windows cost a lot more. Arches cost money, angles other than 90 degrees cost money. Wood trim instead of MDF costs money. Quality materials cost more than junk from the box stores.

Kitchens and bathrooms are big expense items. They cost more per square foot than other parts of the house. Quality cabinets are very expensive. So are counter tops. The more you have of these items in your plan, the more it costs to build.

HVAC (heating ventilating and air conditioning) systems are big ticket items. A poorly designed and sited house can require a larger and more expensive system than a house that is designed and oriented to make the most of its solar exposure, rather than fighting it all the time. You also get to pay for poor solar planning in higher energy bills for as long as you own the house.

We built a passive solar home, a house designed to get much of its heat from the sun, but the basic principles can be applied to any home. Take a look at the site linked below for information, not the plans in particular. The basic solar information presented and linked there can save you a bundle in the long run.

Study everything. Question everyone. Assume nothing. Always protect yourself. Building a custom home is a major undertaking. Good luck.

Here is a link that might be useful: SunPLans

If your max $$ is $400,000, then your budget should be no more than $350,000....

The plans need to be very detailed. We had drawn up the final blueprints for our last home before obtaining bids. You will need plans that are at the blueprint stage because every building detail is on them. However, if you have a fairly detailed floorplan, with knowledge of type of construction you are going with (type of roof, etc.) you may be able to get a ballpark figure. However, it will only be a ballpark.

I, myself, have not had any luck with architects. I know there must be some good ones out there, but I haven't found any. They are very expensive to boot. My husband and I lost $2,000 recently with an architect and have nothing to show for it. We also wasted over two months time.

We are building a simple Florida vernacular "cracker" style home, log styled, with a full wrap porch. We want to keep the square footage somewhere between 1400 and 1700 square feet. Depends on how I design a sewing studio. (We are past thinking bigger is better, and that simple is luxurious). We could actually get by with smaller, but I like to stockpile food by canning, etc. and need storage for that.

Anyway, who better to design this house than an architect that studied these homes with a grant from a university, and wrote a book, right? Hah! His son, also an architect, gave us the most convoluted, bumped out, expensive to build concepts I ever saw. This was after a folder of pictures, detailed notes, etc., on my part. In other words, we were very clear. We lost $2,000. At least it wasn't $30,000, as we pulled the plug.

We are now drawing up the plans ourselves, with software. Fortunately, my husband is an engineer, so we have an advantage there. I will still have a house designer we met recently give things a quick lookover to see if I've optimized everything. we can then submit the prints ourselves to a structural engineer for stamping.

My point in all this rambling is, be very careful before hiring someone. Do as much book reading, research, etc. as you can. Visualize how you move through your house, and what has annoyed you with past homes. Price out what certain materials cost at building supply places. Know what various types of roofing and siding cost per square foot. Price out what windows you like. Both Home Depot and Lowes give new construction discounts on materials. Some places will price match. You can save a ton of money. And you will also be aware of whether a builder is trying to gouge you or not. The builder we had on our last home said a 60 foot metal hangar door would be $40,000 (materials only). I guess he thought we fell off of a turnip truck and told him so. My husband and I bought the metal from Home Depot (same stuff) for $5,000.

Creek side gave you some good advice. I would like to add another piece of advice. Build below what you can afford. Well below. You won't regret it, and it will still be beautiful. Beauty is in the quality of materials, and the small details, not the size.

When we sold our house last fall we became mortgage free. We plan on staying that way by building a reasonable home, and doing much of the work ourselves. I can't put into words how free we now feel. We paid for our land with cash, and bought the cheapest little single wide mobile home we could find and plopped it on our land. We hope to break ground on our house within the next couple of months, afterwhich we'll sell the single wide, have it removed, and use the money from that to bury the powerlines so I don't have to cut some beautiful oak trees down.

Everyone can develop some home building skills. We've met a great local crane operator for installation of the roof trusses, and a couple of talented guys to help dry the house in. The building industry is in a slump, and there's some great talent out there available for hire. It actually is quite possible to build a $400,000 house for $200,000, and it will be more of a home because you put yourself in it.

That said, I'm not trying to tell you that you have to build this house yourself. many people can't, or do not want to do that. You may also need to obtain some kind of loan depending on your circumstances. Just get the smallest loan you can, for the shortest anmount of time possible, because you won't actually own your house until it's paid for. Until then it can be taken away from you.

When you are looking over and designing your house plan, think about whether you really will use a media room,several bathrooms, both an eat in kitchen and dining room, living room and family room. Most of these extra rooms go unused most of the time. Consider heating and cooling costs. Not just now, but 10 years from now. I only see them escalating. Design the house to take advantage of solar gain and prevailing winds.

It's very easy to become enchanted with some very large and expensive home designs. Don't get sucked in. We've been there, done that, and would never go back to it. Middle age his great. I'm old enough to look back, yet young enough to still take advantage of what I have learned over the years!

Take a deep breath, slow down, and do some homework. You won't regret it.

sandy808,

Excellent advice!! Dh and I knew we had a budget to stick to and an architect was not in it! Our builder was trustworthy and we could email him house plans we were considering from the internet and he could estimate the cost to build. We ended up going over our budget mostly due to some nasty excavation expenses. There are so many "hidden" expenses, "nycefarm" is right on about what to budget.

Yes, sometimes there are some hidden costs, and excavating in certain types of soil can reveal them. Clay soils in particular can reveal nasty surprises. We have some areas of clay in the soil here in northern Florida, so we are going with concrete piers for our foundation. We know of too many people that were putting in stem wall foundations, and that ended up spending thousands more because of what they ran into. We don't have freezing issues here so we certainly don't need a stemwall foundation.

I feel it's much more comfortable to build or purchase a home way under budget, which leaves money in the bank for the "surprises", and then a much needed vacation, or the dream windows for the house. What scares me is the economic times we are in, and they may get worse. What can be afforded easily today may turn into something not so easily afforded down the road.

Think how nice it feels when you grab a coat you haven't worn for a while and discover a forgotten $20 bill in the pocket. Sure better than finding out the $20 you knew you had in that pocket is now missing because it fell out somewhere.

Sandy

Thanks, all, for good advice. Of course, I love it that manhattan42 tells me nothing has changed and it will cost what it costs to build no matter the economy or housing prices and Sandy says I can build a $400K house for $200K. I know who I'm hoping is right, lol!

Thanks for linking me to your story, spf5209. (I am cross-posting this under my thread, see link below.) Wow, what a shame that that you and the builder could not have had a meeting of the minds earlier in this process rather than later. I do think there is something to what some posters said about builders who are trying to get the most dollars possible out of a project (not badmouthing them, just stating a fact).

I do think when you tell them what you want and the maximum amount you can pay for it, they immediately think that it is worth their while to come back to you with a great (and expensive) version of what you said you wanted and bet their money that it will be more important to you to have your dream home at any cost than to get the project done at the price you THOUGHT you could get it for. This bet works out in their favor enough of the time that it is worth it to them to pitch it this way as often as they can. If they have to back down on it, no harm, no foul to them. Some clients with deep pockets will just say to hell with it and pay for their dream. Then there are the rest of us who end up having the scale down the dream, lol.

Let me tell you a funny story. These past few years that I have been studying floorplans and getting educated on the building process, I have choice plans that I have separated into three categories that you might call LIVING IN THE POOR HOUSE, HOLDING IT TOGETHER, and I'M IN THE MONEY. LOL! In category 1 are plans around 1,800-2,200 sq ft and these are the plans I turn to when I read stories like yours (lol) or when I have gotten bad financial news and think I will be a pauper the rest of my life! Then there are the second set of plans that are around 2,300-2,500 sq ft and these are the ones I turn to when I am feeling more optimistic about my financial status and feeling that things are going pretty well and I will be able to hold my own financially. The third set of plans is around 2,700-2,900 sq ft and these are the plans I look at when I am in the best of moods and feeling certain that my career will take off and the money is sure to roll in because of all those great investments I made! I might go through all these moods in a single week or even a single day, lol.

I guess some might say I have small dreams if my choices top out at around 2,900 sq ft, but I do not have grandiose dreams of living in a mini-mansion. All I want is an efficient, welcoming house with features that are not for show, but features that enhance my life and can accomodate a few extra family and friends when needed without feeling we are sitting in each other's laps.

Best of luck to you, and thank you for directing me to read your tale of caution.

We all have so much to learn! I am delighted to be learning with and from all of you.

Here is a link that might be useful: My thread (about splicing 3 Don Gardner plans)

I am building a house in Lake Tahoe for $135 / square foot. I started with a stock plan and hired someone to dump it into CAD and we simplified enormousely. We have two areas that add architectural interest from the road, but basically its a box on a box. Building costs here are down $100 per square foot. This is the year to build here as lumber is just starting to go up and the subs are killing each other on bids. We looked at internet plans, but it became clear to us that there were many features in most stock plans that just jack up the price. The builder should have seen that the day he saw the plan.

My house is being engineered for 250 pound snow loads during a magnatude 6 earthquake with 100 MPH winds. I am very close to the lumber mill, so that helps somewhat, but I just cant imagine that you can't get a house built under $130 in most places.

Now keep in mind that when I say you can build a house for a lot less, this means that you, the owner, would be doing a considerable amount of the work yourself.

Sandy