Once you decide to build a custom luxury home, the adrenaline, emotions, and excitement may drive you to the nearest builder or architect’s office to start designing your dream home. STOP! You may have heard the quote, “Suppose one of you wants to build a tower. Won’t you first sit down and estimate the costs?” So too, it’s important to understand financing and costs before jumping into the design of a home. Far too often, a client will begin the design concepts with a $1M budget that is much closer to a $2.5M budget by the time the designs are complete. Establishing a budget for your custom home is a critical component of the home building process and should be done as early on, in the process, as possible. This is one of the reasons we believe that your architect and builder should be introduced and collaborate early in the process.
There are many items your builder will help ensure you include, but a few are the costs for the Lot, site preparation, permitting, construction, detailed specifications, landscaping and more. Once these numbers are finalized, we recommend adding a 5-8% surplus for ‘wiggle room’– the areas where you want or need to spend a little more, as construction progresses. This may include upgrading a particular feature of the home, or to cover unexpected expenses that arise, such as when additional engineering is required, after soil analysis. Either way, by including a cushion, you’ll be sure you have the cash or financing to cover additional expenses associated with the build.
If you are working with an architect, it’s important to be sure the builder is part of the budget and design process to ensure the home meets your expectations while maintaining a budget that is aligned with your finances. Architects will often recommend 2-3 comparable builders you can interview and the budget estimates should be based on detailed specifications.
Your builder and architect should be doing everything possible to maximize your budget and overall investment – creating efficiencies and value engineering where necessary while providing the luxuries and creature comforts you desire. Sometimes a homeowner will “hold back” let’s say $50,000. Halfway through the project, the homeowner informs the builder that they’ve decided to add another $50,000 to add on another room, add a pool feature, or other elements. This may cost significant time and money since the design process may need to be revisited and the construction schedule will have to be revised.
The bottom line is that you should trust and have a good relationship with your builder and architect and be transparent about your budget. As the construction progresses, you’re both on the same page and trying to utilize those funds wisely, for the things you really desire. Ultimately, the building process should be a partnership with the end goal of providing you a home that you enjoy and is financially affordable for you.
As mentioned earlier, builder and architect collaboration is paramount to establishing a budget (and maintaining a budget) for your custom home building project. We discuss this concept in detail in Chapter 19 of our FREE ebook: “Designing & Building Your Custom Dream Home: How to Create an Experience You’ll Love to Remember.” Ready to get started? Contact Mueller Homes today, and let’s talk!
