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    Discover the Top 6 Factors That Influence the Cost of Custom Home Construction

    When envisioning a new home, most homeowners focus on the budget of the final product rather than the intricate factors that influence the cost and viability of constructing a house. Building a custom home involves many variables that must seamlessly come together to create a space that not only meets your dreams but also complies with codes and regulations.

    In this article, we will delve into the top six factors that significantly impact the cost of constructing a custom home.

    1. Cost Per Square Foot - The Misleading Metric

    The notion of cost per square foot seems straightforward but can be deceiving. Cost per square foot is an easy way to quantify the cost of a project after it’s built. But, before a new house is designed and constructed, it’s very difficult to accurately estimate the price per square foot. Think of it like asking the cost of a white car without specifying the make, model, or features.

    Custom designs and builds inherently come with custom pricing. Some builders may initially entice clients with an average cost with a low per-square-foot price, only to see the actual cost surge to 2-3 times the initial estimate.

    2. Design - Home Size & Shape

    Designing a custom home involves meticulous planning for footings, foundation, roof, and both exterior and interior design elements. Larger homes incur higher design costs, often calculated as a percentage of the construction cost when working with architects.

    Design-build firms, like Better Builders, may offer fixed-price designs with set revisions, accounting for changes in client preferences. The type of home, the complexity of its shape and floor plan, the number of levels, and the overall square footage also impact design costs.

    3. Location & Cost of Land or Lot

    When working with your real estate agent, keep in mind the chosen plot of land significantly influences home building costs (beyond the sale price of the land), with challenging or unique lots often being more costly to build on.

    It is common to overlook the location's impact on overall costs. High living costs in areas like Seattle translate to increased costs of land, construction, related labor, and materials.

    4. Materials Costs - From Scratch Luxury

    Starting from scratch requires more materials, and custom home enthusiasts often opt for luxury interior and exterior finishes, which means above-average prices.

    These include high-quality upgrades in building materials like tile showers, custom cabinetry, marble countertops, and hardwood floors, contributing to an upscale aesthetic. High-end interior finishes also often require specialty labor, which leads to higher installation costs.

    5. Labor - The Hidden Investment

    Building a custom home necessitates more time and, subsequently, more labor. Labor is one of the main areas that will impact your project cost and can come with an extensive price range depending on the skill and experience level of your design-build contractor. Effective project management from your general contractor on a new build becomes crucial to coordinate the diverse trades involved, preventing wasteful spending on poorly managed material orders. Skilled labor in various trades, like electricians, HVAC, plumbers, and roofers, is essential for successful new home construction.

    6. Utilities - The Unseen Essentials

    Connecting a custom home to utilities involves connection fees and labor costs, often overlooked in the planning phase. Unlike remodeling situations, where existing connections are utilized, starting from scratch means hooking up to major systems like water, sewer, storm drains, electricity, and gas. Researching and budgeting for these connections is vital to avoid unexpected additional costs.

    Average Costs are for Average Homes, Not Custom.

    Estimating the cost of building a custom home is a complex process that unfolds during the design phase. Partnering with a high-quality design-build firm provides valuable guidance in upfront decision-making, allowing you to determine the total cost of realizing your dream home.

    For further insights into the custom home building process, download our eBook, “How to Find the Perfect Custom Home Builder: A Guide to Creating Your Dream Home.


    Pete Baughman

    About Pete Baughman

    Home renovation and custom home building have been a part of my life since birth. My great-grandfather, grandfather, and father were all Carpenters. It was only natural for me to be drawn to it as well. I worked as a Carpenter and Project lead helping him create and produce many extraordinary projects. My experiences have varied from Carpenter, Lead Carpenter, Project Manager, Production Manager, Project Developer, and Sales Manager. I started with Better Builders in 2011 and, in 2019, became an owner.