Are you Calling around and asking builders this question?
” What do you charge per square foot to build a house?”
Cost per square foot … as a homebuyer in the planning stages, it’s a tempting calculation to ask your homebuilder for. After all, you just want a number, right? So, you can say “I did my homework and called around” this was the best price builder for our dream home!
Yes, on paper, you get a nice simple single, digestible figure. Now it will be easy to look up a dream house plan and know instantly if it’s in your budget😊 or is it?
Too bad it’s not that simple and easy. (It never is.)
Let’s be clear: cost per square foot is a terrible means of accurately measuring the costs associated with building a new home.
And any misunderstanding you might have about how it’s calculated and used can lead to some expensive decision making.
Of course, cost per square foot does have its place, but we need to have an honest discussion about why it is in fact a terrible predictor of cost.
So, Let’s talk about cost per sq foot
‘True cost per square foot’ cannot be properly calculated until your builder has identified absolutely every cost associated with your build, including plans, building materials, labor cost, subcontractor bids, lot cost and lot prep, interior finishes, appliances, fireplaces, cabinets, Tops etc. (You get the picture).
For this reason, ‘true cost per square foot’ usually won’t be available until after the official estimate is drafted.
So, once your estimate is complete, what goes into calculating your final cost per square foot?
Calculating cost per sq foot
It would be extremely hard (and probably even more confusing) to cover all the ways builders figure cost per square foot.
At Rayburn Construction and Design, LLC, we follow the industry standard for calculating square foot price:
Total Cost of the Home / Livable Square Feet* of the Home
*Livable square feet does not include porches, garages, driveways, or unfinished space (like attics,) in the home, but the cost of these items are definitely included in total cost to build.
Just to reiterate, without every critical piece of information, cost per square foot stops being useful altogether; especially when you consider builders can have different ways of looking at these costs.
How Can Cost Per Square Foot Be So Misleading?
If you’re trying to use cost per square foot as a means of comparing estimates between builders, you might be comparing apples to oranges.
You might think you’re getting a better deal, but you’re actually not.
Clarity is crucial when deciphering cost per square foot.
We can build a 2,000 square foot home with a 100 square foot porch and a standard 2-car garage with a crawl space foundation. Or, we can build a 2,000 square foot home with 800 square foot of porch and a 3- car garage with a full walkout basement. And even though they’re both 2,000 square footage homes, the second one’s cost will obviously be much higher on a square foot basis.
This also applies to finishes: (our shoe box example)
Below you have 2-identicle shoe boxes- same size(Sq footage), same shape and even the same color.
Now let’s look inside.
Now, it’s obvious that box #2 is worth considerably more.
You see, it’s the same when building. You will determine a lot of what the actual cost to build is by what you decide you want inside your home for finishes, and the outside finishes as well like, (stone, Stucco, Siding, Accents, Shutters etc.) among many other factors that you do not see in or out of the home , but greatly play a big part like, Well water, Sewer or Septic, Gas and Electric, Cable etc... you get the point.
Ask your builder how they calculate the cost per square foot before using that information to make any decisions. Remember, cost per square foot is only useful when you know everything included in the builder’s cost. Be sure to consider all the costs associated with how you want your house finished, not just built.
So When is The Cost Per Square Foot useful? you might ask
When is it useful? Almost never is.
Granted, we understand predicting cost is important to anyone in the planning stages of building a new home, so metrics like cost per square foot are tempting to sometimes lean on.
But it is an unreliable crutch.
Namely because, in the home building industry, there is no official standard for what constitutes a ‘square foot’.
Instead, we suggest that if you absolutely must use cost per square foot in your decision-making process, then ONLY use it as a loose gauge for ballparking final cost.
And if you’d like to use cost per square foot estimates to compare homebuilders, you need to be certain you have an exact apples-to-apples comparison between the two builders. All windows and doors are not alike just because they all have glass😊 and All builders are not alike because they all use a hammer😊
You don’t want to make big financial decisions by comparing ‘apples-to-oranges’ or using inconsistent information.
The fact is, not all homebuilders use Cost Per Square foot internally. It’s a number generated for your benefit, not ours.
You do need to clarify how your home builder calculates the cost per square foot. Once you have that, you’ll still want to have an in-depth conversation about the construction cost.
Every home builder is a little different, but we always sit down with our customers and detail the costs associated with their project or build – upfront. We give a firm price that won’t change unless they want it to.
We hope that helps your understanding a little better and sheds a little light on the Price per square foot quoting methods when looking for a builder.
Please Give us a Call, we love what we do and enjoy listening and having real conversations with potential new build clients about their next dream project:)