I went through the real estate market a bit to see what comps were going for. And, then knowing that info, plus knowing I wanted specific things (ex. geothermal) that the homes around me didn't have, I thought $X was a "fair price". Then, we talked to builders, specified what we wanted and we were in the ballpark. We also specified A LOT in the contract and then made sure where there were allowances, that we did research before signing to make sure they would get us what we wanted, etc.

We are just starting the build, but I've already done tons of selections. I have an "overage" cushion that I planned for in case there was just something I fell in love with, and an "unexpected" budget for things that are unknown until things start moving (ex - we expect to hit rock for excavation, never know how deep you need to go for a well, etc).

For each allowance group I had, I just decided from the beginning which space would take the hit. For example - cabinetry....I decided the kitchen was going to be whatever I wanted, so if I hit my allowance, then the laundry room cabs/counter/tile $ would be on the chopping block if needed. Do I really need granite counters to fold laundry? Probably not....lol! So, when I decided to go with soapstone in the kitchen, I just thought I'll find a granite remnant if I need to for laundry or do a laminate (gasp!) if I have to :) But, my laundry room and a few other spaces are the last room I'm making selections on so I can make sure I have the important spaces how I want them.I'll know where my "overage" and "unexpected" are and can decide if I want to select granite from the stone yard, or just go with whatever for folding clothest!

I don't know if this works for everyone, but I've tried to narrow down the spaces I really use vs. the spaces I think would be nice. Then, if something's got to go, or be added later, I'll know what I can live without. Better to revise the plan, than to increase the budget IMHO.

Andi- Great ideas for materials and building in overage fees. That's something I'll make sure we do in our budget, too. Laminate can be pretty! :)

Andi... Great idea to consider the laundry room. I guess laminate won't be too bad considering that I'll be the only one using it. LOL.

We also have an cushion, around 11%.

lavender.... That sounds like a great strategy. This was my GC's recommendation too. Unfortunately I found it to be really hard to do. I tried, but failed. It was hard to shrink what I wanted. Good luck!

To answer my own questions:

1. Our original figure considered what our final mortgage will be when everything is done. I wanted it to either: (a) we can pay it off in 5yrs, or (b) I can cover our monthly expenses on my income alone (which is much lower than my husband's). If we end up using our entire 11% cushion, we may end up not being able to meet either one.

2. I believe we are already above our initial budget and we'll be using some of our cushion. We already opted for more expensive windows. I can see us going over in the kitchen too.

3. Before signing our contract with the GC, I thought we were good and was hoping we would actually come under budget. Although we may end up going over, I think I'll be fine with it since the ones we already overspent on are things we value. Well, I hope I won't regret saying this. LOL.

4. A part of me is still hopeful that we will not go over budget. I'm trying really hard to find ways/things to cut to make up for the things we're overspending on.

1. We sold our house several years ago, saved the proceeds, moved states, and have been renting ever since. We're comfortable with a mortgage of 1x annual salary, so our budget is approx. the sum of both those totals.

2. Too early to say if we'll go over budget, but we're working from the assumption that every build goes over budget. We gave the GCs we interviewed a budget range rather than a number.

3. Good question. I wish our budget was higher, but staying in a financially sound position is more important. We're spending an amount that I think we could get back if we had to resell it, but I think if we spent much more, we wouldn't (in the current market) get it back in that neighborhood.

4. We've had to give up some things (opted for 8' ceilings in basement and second floor, and gave up a jog in the foundation). So far we've managed to keep the layout and features important to us.

The good news is that your outdoor kitchen can be added later, and laminate countertops can be changed. Better to trade off on that kind of stuff than have to compromise on a layout or level of construction quality you really want.

Good luck!

Oh, I see what you mean....I did a similar thing. I took want I was willing to swallow re: a mortgage payment and the fact that we too are looking to have $0 mortgage in 5 years. I've owned my own business for 6 years so I just assumed 1/2 my salary for a "worst case" scenario, and then my husband's salary (he's a teacher...so that's still less then my worst case...lol!).

I then factored in the cash we had, and a conservative estimate on our real estate properties that we plan to sell. BUT, I also factored in the market, because that is critical as well. Just because you have money, doesn't mean you need to spend it!!!! So, you have to always know, just because you've planned for that 11%, there's nothing saying you can't figure out how to make the house very nice and still hang on to that cash!

On a more detailed note - from what people told me - lighting is where you can get killed on your budget! So, just keep that in mind, too.

We also ended up with 7 bathrooms...ugh! And, plumbing can be brutal as well. So, we are balancing those out. Ours will be wonderful (of course!), and the main powder will be nice. But, I was realistic in that - when the heck do I ever get to take a nice bath? So, we are doing an air bath tub, but I'm not going crazy on it. The mudroom powder and our boys are going to be decent, look nice, but by no means am I going all out for 7 & 11 year old boys who will destroy anything nice in the next few years! So, the tile is not going to be anything insane. I'll decorate with hardware, paint, etc to manage those areas.

Not sure if you decided to go with an interior designer, but they can help with that - just managing the overall budget and knowing when to splurge and when not to. They can be pretty creative to make it look nice but not blow the budget!

Two other often "forgotten" budget items seem to be landscaping and window treatments! As with lighting, cost options run the gamut from box store to custom-deluxe; but cost they certainly do and required they usually are (some neighborhoods are quite specific about landscaping).

It might be worth starting another thread to get an idea of what the usual percentage of the house cost actually went into those columns.

For example, my local area (northern Virginia) has mid-level houses starting at $500K ~ build-cost, not value. Beginning landscaping for 1/2 acre or less is about $25K or 5%. I've seen a master gardener DIY for $2K and professionals that charged $50K for not much. I've also seen gorgeous window treatments from ready-mades and some really awful stuff by designers. As with everything else, you need to have a good idea of your taste and then do some comparison shopping.

We took our initial estimate of costs from our Contractor and decided on a cost + fixed fee with open book. Our allowances were pre-set and most of them we have just met or are beating.

We so far have only gone over our allowances on a few items like doors and windows by 6%, a little extra on electrical, and a bunch on spray foam insulation. We have upped our price for our garage door by 50%, but should see similar savings in other places. We also did some things that we knew would cost more than our contract like better building paper under our stucco, insulation in our detached garage/shop, better finish on our concrete floors. Those are all small things that will put us over our budget however I think they are important.

In the mean time we have beat our cabinet allowance, plumbing allowance, should beat our lighting fixture allowance, and killed our flooring allowance. So while we have spent a little more here and there - we have tried to save it back in other areas. I think in general we will go a little over our contract - but I feel that is OK since at one point early on I thought we would never meet any of our allowances...

Meldy- Thanks for mentioning landscaping! That's a huge part of my budget extras, since I really want a big arbor, with a swing and another smaller arbor, over the dining room window (for climbing roses). Porches, decks and patios can also be an added expense, but they give the home so much character and much needed outdoor entertainment spaces :)

I agree...landscaping is definitely a good one you can get wrapped up in as well.

I have some friends that built and had the builder/GC do minimum landscaping, and then they hired the landscaping company directly to cut some of that extra $ out. We haven't decided yet, but since my husband is the one with the green thumb, we didn't really budget a lot for it with the builder.

What I also didn't budget for in "landscaping" that I didn't know was in our "grand plan" were batting cages. No joke. Apparently DH has "big plans" for this. I learned about that when we were walking the lot with our builder and he was going through the process, blah blah blah, and DH pipes in "hey, what do you think about pouring a 12x60ish conrete pad over in this corner?" Having no idea wth he was talking about, I said "why would we put a long concrete patio over there". My builder looks at me and says "um, I think he has batting cages in mind for your boys" My boys LOVE baseball and play year round...so the landscaping budget is blown....LOL!

7 bathrooms...just give me a minute...

some of the places I recommend to my clients
to cut prices are things that can be changed out
later or added.
like crown moldings & countertops.
stained concrete vs expensive carpets, hardwood
etc.

light fixtures can be bought on sale hd & lowes
have good sales. even lighting companies have end of
stock sales.

windows for another example are almost always covered
so asking if it really necessary to have wood clad windows
when a lower cost window would suffice. just keep in mind that solar heat gain coefficients and u-factors need to be .30 or less.

investing in structural, a good insulation package
and an efficient correctly sized and installed hvac
system with mastic seal, building the house tight
will reduce utility costs. as these prices will only
increase, it can often be the difference between
being able to afford the utility bill and the mortgage.

best of luck

All I can say is Have a Spec Sheet of what you want and how you want it installed. Meaning, If you want the bathroom tile to go from floor to ceiling in the shower make that know up front. We got a ballpark price from 4 builders. Spoke with them all in general of the major things we wanted. All came in around 350,000 to 400,000. Get to things in writing with a spec sheet. We are up to $500,000.00 to 550,000.00; even though, we told them these were the things when we sat down and spoke with them.
Their comment of the difference: They didn't "realize" we were talking that type of tile or that much coverage of tile. Or they didn't know we wanted brick all the way around the bottom of the house. They didn't realize we wanted brick on the porch. Or decorative detail on the outside trim. and the list goes on. So...Go Now, find every type of flooring, tile, cabinets, windows, doors, faucets, etc. before you even go to the builders. Have DETAILED Spec Sheet in hand...then go to the builder with your plans. It was a shock to us to think builders could be off by that much!

Our experience is similar to jean61 and we are beyond frustrated. This was our first time at building a custom home and it has been frustrating and exhausting. For example, he recommended to raise our ceiling one half foot. Turns out, that is extremely costly and it didn't even cross my mind and he never pointed out that we would be way over our estimates until after we got the draws. This happened several different times. Our GC came well recommended, too, from several people.

1. How did you decide how much to spend? We figured out what we wanted our final mortgage to be and used that as our guide to estimate. obviously, we are now way over that.

2. Did you go over budget? If you're still on the process of building, do you think you will go over budget? We will be 22% over our original budget. Most of it was concrete, excavation, brick, framing, etc. We are within budget on things we chose such as appliances and fixtures.

3. How did you feel about your budget? our builder developed the budget and then never used it again even with my constant reminders of "is this within the budget"?He built us a beautiful house but it is about $100K more than our plan going into it.

4. Did you try to stay within your budget? Did you give up anything? We gave up a lot. Sad to say.

If I did it again, I would add at least 10-15% to their estimates as a cushion or go with a flat fee build. We did cost plus 10%.

We are just about to start and have a "custom" home that is actually a modification of something the builder already had spec'd out.

So, we just said "everything that's in that house, and we'll upgrade x, y, and z." From there they set a number and we really don't expect to exceed that unless 1) unforeseen excavating expenses, or 2) further upgrading choices on our part.

We believe the key was to eliminate as many allowances as possible. Our builder knew what lights, doors, windows, flooring, etc. that we wanted up front.

I'm curious about the height of the ceilings. What was the difference in cost for the higher ceilings? As we consider building a house, budget is a huge concern - as I'm sure it is for everyone. Is there significant savings in having a certain ceiling height?

I can't remember the exact cost but I want to say that my builder charged about $5K-6K to go from 9ft to 10ft ceilings. That included the additional costs you'll incur for doors, windows, trim, etc.

Thanks, that's helpful. I read that part of the cost analysis in addition to the amount of materials is the labor cost in cutting or adjusting for non-standard sizes. For example if studs are 8 feet and the drywall is 8 feet then you just put them up as they come. If it's 9 feet, you have to cut a 1 foot piece, tack it on and then plaster the joint. I'm thinking that 10 feet is a standard size but 9 feet isn't. More labor for 9 feet to cut the studs and drywall?

abdrury, we had a similar situration, but I would say unless your windows, doors, floor etc. are in writting don't get to comfortable.

We also use the floor plans of a house that was just built by our builder. We, like you, state what we want to upgrade and everything else should have been based on the other house.

Long story short, you will not believe the number of times I have hear...oh that's an upgrade if you want the same door as the other house... or I didnt put that in the bid/quote.

I should have know better, so my advice is if you want the door to be the same make sure they put the type and any upgrades in writting. That being said we have managed to stay within 5% of budget and have paid out of pocket to keep our morgate lower then out construction loan.

Mel, that sounds about right. They specifically listed the types of doors and windows, and used the same flooring allowance from the example house-- so we feel relatively comfortable about it. Goodness, we had three different meetings just to go over the detail sheet that outlined those things you mentioned.

Another helpful thing was that they have a showroom of fixtures and we were told that anything in that showroom is within our allowances for knobs, lights, faucets.

But, the big thing that sold us was all the past customers that stated they came in at or under budget on the allowance areas. So for anyone reading this I recommend researching past builds to see how they actually turned out!

We are building ourselves, and so far, have not set a budget. We are paying in cash as we go, so there are no deadlines and we can only spend what we have in pocket. It could possibly take 2-3 years to build, or it might take 5-6. That being said, yes I have an estimated price for what it will cost for the shell of the house basement/foundation, exterior walls, floors/ceilings, and roof)and the main utilities. We won't be building any of the interior walls until the outside is completely done. However, it's nearly impossible to budget for interiors when you have no idea of when your house may be complete. I can only imagine that the cost of everything in 5 years will be significantly higher than now. So we're trying to do the most expensive things sooner rather than later. We have been saving lumber from other construction jobs, and any trees that have needed removed or were knocked down in storms have been cut for framing or for flooring. We already have enough flooring for at least 4 large rooms. It should come in at approx. $1.10 after the cost of having it cut, tongue and grooved and kiln dried. I'm not sure what the added cost of a few layers of poly will add, but not much I'm sure. We are incredibly cheap, or is it frugal? I've been shopping Craigslist, clearance isles, and garage sales for anything that I think I might be able to use. I've even got all of our friends and family stockpiling lumber scraps and building materials that are leftover. With all that being said, I don't even have a great floor plan, and I'm sure in the end, it will cost far more than I ever thought we would spend.