At the current time, the market for builders shifted two years ago from from spec homes, to the consumer with extra cash in hand, who doesn’t rely on mortgages alone for their funds. Last month custom building was up 11% . While this is not a huge number, this new custom build client can often afford to outspend a typical buyer, and seeks to construct a custom home despite a plethora of less expensive real estate on the market.
By choosing a custom home, they are allowed more control over its design, and desirous that their house reflects their needs personal style, not a builders or the previous owners.
For even the best intending clients with money make costly mistakes early on in the building process. The purpose of this article is to help people get the steps in order, and to weigh all considerations upfront. Which helps keep you laser focused when going through the process.
I recently sat down to speak to Jim Pesavento from Concord Builders and Rich Cannavino of Cannavino Construction, two builders in the Western Suburbs of Chicago that are still building frequently. If you are considering building a custom home, Jim & Rich recommend bearing the following tips in mind:
Step #1. Know Your Likes/Dislikes, AND Consider Your Budget, the School District, and Taxes
The more you have mapped out ahead of time, the better you will be long term in your investment. Slow down. Consider all the pros and cons of an area BEFORE you begin building a house. Make a point to consider the style of home you’re interested in, overall cost, space plan/layout, taxes, and the school district. You want a top school district.
Each style of home has its own advantages and disadvantages. Knowing the existing styles will help you plan out what you’re looking for and help you in locating the appropriate lot size.
This will also help you plan out what building materials will be used in the construction and the approximate square footage of your house; all factors that go towards determining the cost of a home. The present approximate cost for building ranges from about $100 per square foot for a standard strictly spec home, upwards to 175-250 per square foot for a more refined home.
If you already know the style of home you want, get pictures that you like of that style (check a plans magazine, a book, or the internet) and show them to a custom home builder. They can usually help determine the costs associated with that style and its details. The area’s school district and taxes will also factor into the cost of constructing in an area, as well as the overall cost of living in an area.
Find out all this information BEFORE you begin construction, and you’ll be able to make the most out of your area and your house.
Step #2. Find a Lot That Meets Your Ideal Municipality and Building Codes
If you don’t do this, you can potentially spend thousands of dollars drawing up a plan with an architect that is acceptable for the architect’s area, but unacceptable for your lot’s municipality.
The lot’s municipality determines much of what you can build, how wide you can build on your lot, how much square footage, how high your roofline can be, and the use of the lot. It also has to do with strictness of various codes. You need to determine this before you get started on constructing a set of plans.
Custom home builders are usually very aware of lot’s particulars, as they require empty lots to construct homes. Talk to a builder before buying any property. They can help determine the potential dangers of a property, such as if it’s on low ground and could suffer flood damage or have an environmental issue that you won’t find out about until after you buy it (if its in an area with a certain soil, you will need to treat for termites and have extra precautions not to have bad soil under the house, etc). Builders and engineers are good at spotting the pros and cons of each lot choice.
Most custom home builders have great reference lists for reasonably priced architects, as well as a list of realtor’s they’ve worked with and could recommend.
Step #3. Interview the Builder BEFORE Hiring an Architect
Builders have far more insight on value engineering a house than an architect does. And while architects can design something on paper all day long, they don’t have the same understanding of the cost difference style types and different features (Ex. Cost different between an arched window and a square window). This helps consumers determine cost and establish the appropriate budget for their custom home before you take steps to hire a designer, reducing any risk of revision down during construction, and ultimately saving them money.
Builders can also provide additional insight into potential plans and features, and offering advice on how to properly execute an idea (This feature will generate lots of noise, so make sure you insulate that room properly for temperature AND sound). Architects are less likely to be aware of things like this. Fortunately, most builders can refer you to architects they recommend based off their prior working experience.
Step #4. Hire an Architect That Works on a Flat Fee by the phase, NOT by the Hour
Work with an architect who will tell you exactly what the scope will be for the cost, per phase, and what the fee will be for any revisions. Usually, an architect will give you an hourly fee for revisions, or will give you another flat fee for work on several different revisions. Be sure to get a set of plans that will be permit ready (see #2) for builders to work off of.
By getting a flat fee, consumers won’t have to worry about paying an architect hourly to create something they don’t want and can’t afford. Talk to different builders first, and start constructing an architect referral list from there. Make sure these architects work by flat fees, so there are no out-of-control costs for a set of plans. Be bold and ask or tell them that this is how you prefer to work.
Step #5. Only Work with a Builder Who Can Quickly Provide a cost ballpark of upgrades
Work with a builder who can give you a ball park on everything and don’t work with a builder who does cost plus for small changes in the field! Work with a builder that will show you his profit upfront as a flat fee. As how much change orders will cost. Extra costs because you want something added or changed should not always require much effort from the builder or a extra 10-20% markup. That is what cost plus is.
Make sure to have an idea of the style and square footage you’d like, and provide the builder with a copy of the plans to bid off on.
Find a builder with experience: one that doesn’t constantly “get back to you” with answers to upgrade cost questions. This means that either the builder has a lack of experience with various costs or that the builder is going back to inquire with his subs and then adding onto the costs , totaling it so he can be accurate in his numbers. An experienced builder knows what the approximate costs are already if you want a steam shower or body spa plumbing vs regular shower plumbing. Especially if he has good relations and has worked with the same subs for years.
Cost Plus is what typically cost the client the ability to design their homes to their wishes later or decorate. You need to keep your building costs down. Not by being cheap on finishes and quality, but by having transparent costs while building. You will not achieve this if you work with builder who quotes you cheap prices upfront, only to nickel and dime you on every single change throughout the length of building the house. Nor will you be happy in the end with what you have ended up paying.
Step #6. Hire Local
Local builders, architects, and engineers tend to have tight networks and strong working relationships. This helps the overall building process go smoothly. In the event where problems do arise, having this relationship helps to expedite the resolution of any issues.
Also, hiring local help always has a trickle-down effect, helping to boost the local economy.
Step #7. Interior Features are a MAJOR Cost Component to Building a House
There will always be labor costs in building, and materials/brands (interiors) that determine the costs. While builders’ budgets are pin-point accurate on installation, their interior budgets vary. Get a second opinion and double check the builder’s “list” of allowances with your designer.
It’s important to note that in the current market, a consumer often pays for upgrades in plumbing fixtures, cabinetry, tile, and carpeting , out of pocket. Because the comparable’s in most neighborhoods will not appraise out as high as their house would with all the upgrades. The house has to appraise out or anything over that appraisal will have to be paid in cash at closing. This is a major extra consideration in addition to typical building costs that consumers have to bear in mind when assembling their dream home. It’s normal for a higher end house to go to closing with 75-200+K in cash . The sky is the limit and of course, depends on the clients and their likes and needs. And that expense doesn’t matter to people with money….. they don’t fret over neighborhood “comparables” if they know they will be living in the house for the next 15-20 years. They want to enjoy their home, and want a special experience of living in that house with the upgraded features that creative designers & quality builders can bring to the equation.
Thank you to both Jim and Rich for their tips!
There are times when you have a teeny tiny master bath to deal with –and nothing can be done about moving the mechanicals or plumbing—you are stuck ! I have a client like this in a townhouse in Dearborn Park, here in Chicago. So we met to discuss with Monica and her husband Kurt to determine a game plan on how to make it work. There are better ways of making the space seems larger than it is…..and by using higher end materials in some aspects, you can still bring desire for the townhouse without going overboard. Here were my suggestions and here is an example of a small bathroom maximized for space with new products from Toto:
- Pocket Doors Essential in Small Bathrooms: Find a way to get in a pocket door; when you have a tiny bathroom, a regular door is just in the way– not to mention annoying, especially when two people are trying to fit into a cramped space!
- Use Fewer Contrasting Materials in tile: Instead of using various mismatched sized tiles of the same stone and try to keep the bathroom monochrome and light in color so it looks larger and less cut up. To save money on tile use an attractive limestone, buy in larger sizes, and then have a stone company cut the pieces for you so you can have different sizes in different places. Its more precise to have a stone fabricator cut up than your tile guy who will charge more in labor.
- Walk in Shower or tub? My client wanted to get rid of the tub and just have a walk-in shower—this helps because then they can do a half pane of tempered glass across the front and not have to run across-which save money and not having a high step-in tub and instead having a walk-in shower makes the space seems larger as well.
- Floating vanity: When you have a tiny bath but really need storage in your vanity, then float the vanity so the room again feels a little larger. Having space under the floating vanity makes the room seem deeper. Although you have to run the tile and finish the baseboard under the vanity, it’s nice-looking and worth the extra expense.
- Lighting: You want to make sure you have enough lighting so there are no dark corners in the bathroom—at least two 4-inch cans in the shower and one can over the faucet, as well as ample sconce lighting with wall lights on both sides of the vanity walls, either on the side walls or two on the back wall.
- Details: A custom medicine cabinet that offers more storage and has built-in tube lights (like this one from Kramer Design Studio) would work really well.
- A great toilet that’s streamlined & clean: Take much consideration to your toilet and try to get something that looks small and compact and not bulky. Also comfort height is a must.
- Velux Skylight : This client had one small sun light that didn’t allow for any ventilation and didn’t have controls. I suggested the Velux skylight that is double the size in length because more natural sunlight makes the space feel more open , even if it’s not and with Velux you can get in fresh air ventilation at a control of a button. Nice.
- Accessories: Hooks go in the back of the shower for towels so they are not out in the open and are where you need them when you get done with your shower.
- Hidden Toiletries: Niches are great in the back of the shower for shampoo and toiletries so that they are hidden. Plan around your towel hooks .
Candice Mathers of CMR INTERIORS, LLC.
1. Don’t rush into the process without a plan! If you have NO plan, then definitely hire a designer to help you wing all details that will be demanded from your contractors daily.
However if you want to custom build, and have the luxury of time, pass a plan around for a year before breaking ground letting many eyes critique and make suggestions. Search & bid out all your dream finishes, sinks, fixtures, and price it all for all baths and kitchen details so you can make sure you are within budget.
2. Remember this: Perimeter comes first, then the interior design. Perimeter is your envelope which are the main characters in your “story”.
Example: doors, trim, kitchen cabinetry, its layout and feature, baths, stair design, floor choices, hardware and knobs, any moving or extra window or sunlights, millwork that is built in, A/V and low voltage wiring, etc–all and should flow and work together in harmony for a consistent statement. Then be prepared to spend an extra 75$-100 a square foot typically for interior design once the perimeter is finished.
3. Always have extra funds, because you ALWAYS spend more upgrading, especially when working with a spec builder on a custom home. Have a fairly large contingency budget for any extra unexpected costs that come up with renovating, or upgrades of at least 50-150K–for larger homes. For smaller homes, 30-70K. The truth is when you build custom, most contractors price their goods based on cheap materials from the local depot and if you don’t want those items you are going to pay for a change order. And if you don’t plan well and dislike all of the builder’s choices —all those change orders per room will easily add up to be thousands and thousands of dollars. It’s common because the client doesn’t like what is normal and wants something they see in all the design magazines. Those items are far more expensive than standard spec house goods from the local depot. Furthermore, there are price increases on nearly every product every year at the Merchandise Mart showrooms, for carpeting companies, for kitchen and bath cabinetry and plumbing fixtures, and other high end showrooms many other companies.
4. Hire a designer with project management experience, before hiring the contractor. Why? Because your contractor will need a specific and detailed set of plans to bid the job correctly and so will subcontractors if you want to do contracting on your own!
5. Good Designers have quality subs and contractors. The client doesn’t have to take their suggestions but things tend to run more smoothly when true professionals work together. These large projects require major coordination, and effective communication for a fantastic result.
6. Less Space is MORE. More character or architecture vs vast dry wall and extra rooms that are costly to decorate is always my advice. When you custom build you pay more than your neighbor who simply took and ugly house and made it look better in taxes. Many people don’t realize they pay a premium in taxes for insisting on having a new house. New homes are taxed at a higher rate and property taxes are ridiculous in the suburbs and city of Chicago. They certainly never go down.
All these factors should be weighed when building. I say renovate over building custom and build smaller. These ridiculously sized homes are over with. They are super high in utilities, property taxes, and design costs. It’s better to have a smarter layout, then a larger one. If you must build your dream home, ask yourself if you really need a living room and formal dining room? Why not just have the house be more kitchen centric, with a large kitchen, eating area and huge family room, and skip the formal dining room and living rooms that rarely are used anyway. This is the new trend in home building. Have a large unfinished basement when you finish that is not taxed, and work with an architect to get something a little smaller, cozier, but with all the storage you could ever need.
7. Bidding: It’s not who is the cheapest of the 3 bids. Learn the right way to work with contractors: “How to hire, manage and fire your contractor” by Carmen Amabile . It will give you more confidence to deal with your builder and make sure you hire the right one too. Very important.
8. Make sure you are clear on your builders/contractors policies on change orders, how emergencies will be handled, who the emergency contact is, have all phone numbers, and have a clear understanding of who will be on the job site daily, who is responsible on their part, and understand the chain of command on the job site. Again, READ the book listed above please. You will find it very helpful.
9. Don’t buy the lot until you know you can secure the financing. In this new market, its not so easy to secure financing for building. Make sure you do this in the right order. Don’t take financing for granted anymore.
10. Dream big for your custom home or renovation but also be smart about it. It takes diligence on your part to do all the legwork in order to do it right. Your designer/architect/contractor are all separate pieces of the pie, and can work together, but they still need accurate budgets, definite plans, so be focused like a laser –and get your end of the work done upfront– so you know what to delegate to others so that they can be a successful partner for you.
Why Hire an Interior Designer with Project Management Experience?
I often get frantic calls from clients who are knee deep into a project , but have no idea what to do or how to fix a bad situation. These are clients who thought they didn’t need a designer, and suddenly begin to see the value that a designer could have added to their complicated project AFTER they are along in the process, are frustrated, and are not getting the results they dreamed of.
In terms of custom home building I find that the client often hires a builder based off of a spec house they walked though, yet they wanted that spec house builder to do their house “better” and more “custom”. Yet they don’t know specifically what that means for them. They may know what styles they like, but to put that into a plan that flows nicely and works room to room is time consuming and not in their professional work realm. And they don’t understand that trying to make a spec builder into a design-build type of builder is NOT for the inexperienced because it’s comparing apples to oranges. The two different types of professionals each have completely different methods of working on a project, and different philosophies on building. I will explain the difference in a later article between the two different types of builders because I think its a very important distinction.
When the client has a full time job of their own, and can’t spend it taking care of their project, and also will not spend money hiring a professional, he or she often finds that the house is not turning out to be the house of their dreams, but rather an extra job that they feel unqualified to make decisions for. Sadly, the client starts to bemoan how hard it is to build, when in fact building & renovating is exciting and fun for the most part– especially when you have qualified assistance in all the decisions it takes to bring the project to fruition with the look the client dreamed of.
If you have an interior designer who has great management experience with similar projects that they took under their wing, with great photos and references, then you will have the necessary component for fielding MOST daily questions from the contractor and subcontractors, and will have a qualified pro who can deal with job site headaches– which are very much part of building and renovation–no matter how fabulous the designer or builder is. But it’s the details that make spaces great and without the right designer and project manager to hold those contractors and subs responsible for the details, many of the details are not implemented at all, or incorrectly.
We designers work on behalf of the client, and their interests. Yes, we definitely help the spec builder and design build firm in getting our clients to make timely decisions, and to also make experienced decisions. But we are specifically focused on the client and making sure they understand the questions, concerns of their builder and contractors, understand what something will look like, and in order to facilitate decisions we draw up specifications for the client to review and the subcontractors so they know how we want tile laid out, what the grout color is, provide millwork drawings and specifications on finishes, provide trim profile mock ups and samples so that the client can better understand what they will be seeing and provide consultation and opinion on hundreds if not thousands of decisions for homes. So its worth the investment to have someone by your side who works directly for you, to make sure that your dreams are turned into reality and all the work, that this entails.