The harsh reality of custom home building is that you won't know the final cost to build until after your home is already built. There's no need to despair though! We've come up with an easy to follow method of gradually narrowing down the price range with a series of steps. There are a few ways to do it. You can use one of these steps to create a general estimate, but you will probably want to leverage a combination of or even all of these steps to come up with the clearest possible picture of what your home will cost to build in 2023.
Step 1: Use a Simple Cost-to-Build Calculator
Your first step should be to use a simple cost-to-build calculator. The use of a simple calculator can help to give you a rough estimate as to the cost of your build- with emphasis on the word “rough". They will typically only include the property’s location and square footage, which is fine for quick, back-of-the-napkin math, but should not be used as a serious method of determining what a home build will cost.
You’ll typically use a simple cost-to-build calculator to get a rough estimate (+/-20%) of the potential costs of a project to narrow down your options. Later, you can leverage some of the other items on our list to get a more exact number.
You can find our simple cost calculator below (and on the each webpage for each home plan). Simply enter the square footage and your location to get a number:
Step 2: Research Recent New Construction Sales Data on MLS
When real estate agents, mortgage lenders, appraisers, and other real estate professionals need to determine the value of a home, they perform a comparative (comp) analysis to determine what nearby comparable homes are worth. We recommend applying this same principle to new construction builds to get a better sense of cost in your market.
To do this:
Final Sales Price - what the finished house sold for
Raw Land Price - scroll down to the Price History to find this. (If it's not listed then you may have to look it up on your local assessor's website. )
Step 3: Secure Bids From General Contractors
After completing the first three steps, it is time to secure a bid from a general contractor. Because of the old-school nature of contracting, there are many different approaches to bidding which can result in significant variability in the bids you receive. Moreover, some contractors will simply be more busy than others and busier contractors will always quote higher rates in response to demand. For this reason it's important to talk with multiple contractors. If a GC says that they won't bid a project without securing a down payment then go elsewhere. They're trying to hinder your ability to shop around.
You can find a general contractor through word of mouth, online reviews, as well as by asking other real estate professionals if they’ve worked with someone they like-and more importantly, someone that can get the job done on time and on budget.