Construction costs vary tremendously based on location, water and sewer requirements, style of house, size of lot, municipality fees, topographical conditions, interior and exterior selections, etc…
In order to get an accurate estimate for your project, Blue Ridge Custom Homes, LLC will need to meet with you and ask some questions about the many conditions that affect building costs. Costs can vary widely depending on factors like lot conditions, shape and style of home, level of finish, energy efficiency options, etc. Having said that, here are some general guidelines:
Cost per square foot
Generally, when we speak of cost per square foot, we are talking about finished square footage. However, it is important to consider that unfinished square footage is not free. Average price per square foot described here will allow for a deck, reasonable front porch, a garage, etc. If we use more custom finishes like natural stone flooring and siding, synthetic decking, pavers, larger garages, lots of outdoor living space, screened in porches, etc. additional costs will occur. And, obviously if the unfinished footage is large compared to finished footage, this causes the overall cost per finished foot to be higher.
Generally, turnkey costs will start at around $70 a square foot for a starter home in ideal conditions. An average level of finish will be more like $90-100. At $110-120 we are building a custom finish. At $150 a square foot, we have used many high end finishes and products (items like theaters, specialty flooring, custom appliances, custom outdoor living areas, etc.). Obviously, with price, the sky is the limit and you are bound only by your imagination and your budget. At $200 a foot, we are building products like you see illustrated in the nicest home building magazines and the “wow” factor is intense. In a cost-plus scenario, customers will tend to save 10-15% under the cost of a traditionally priced home. These costs are for the home only and do not include lot costs.
Shape/style of house
A two-story house will save approximately 10% compared with a ranch that has the exact same square footage. This is because large structural elements such as the footing, foundation, framing, roof, insulation, etc. can be used to cover twice the square footage without increasing their costs. Similar economies can be found with the use of basements and finished attic spaces. These areas are often constructed unfinished and then finished later in order to allow us to meet your budget now but allow you to have more space later without moving to a new house or performing expensive additions.
The more square a house is as opposed to long irregular shapes, the smaller the foundation and roof will be and the more cost-effective the design is. The more “bump-outs” or projections the house has, the more the price per square foot will increase. Basically, square shapes with simple roof lines that stack the footage (meaning the second floor footage is equal to or greater than the first floor footage) will be the cheapest to do per square foot.
The overall size of the house will also affect the cost per foot. The larger a home, the lower the cost per square foot. This is because some “fixed” costs such as water source, sewer, driveway, garage, clearing, etc. will generally be the same or close to the same but if those costs are averaged into a larger house, the overall cost is lower. For example, a $5,000 well will cost $1 per square foot on a 5,000 s.f. house and $2 a s.f. on a 2,500 s.f. house. Since houses with low square footage of finished space still tend to have garages, porches, and all the other site costs, the cost per square foot tends to be higher.
Cost-plus construction is generally the least expensive way to build a new home. In cost-plus construction, we build a home for actual builder cost plus a percentage as our management fee. This is basically an “open book” process where the customer has access to every piece of information we have in terms of estimates, costs, invoices, etc. Our customers get a weekly update on exact costs from that week’s payments, an updated projection based on changes, selections, actual costs to date, etc. and copies of every invoice we pay.
The customer will see every invoice, every projection, and every cost that is used to build their house without any mark up for the builder. Thus, the customer gets “contractor” pricing. Then, Blue Ridge Custom Homes charges a fee for overhead and profit based on a 15% margin. With only 15% built into the process for our company, there will not be better pricing available on any apples to apples bid from another home builder. There is simply not a viable business model that allows for a smaller margin. Given the size of our company, we are spending 8 million dollars or so a year (of course this varies), and thus we buy at better prices than our smaller competitors. And this buying power generates savings that go straight back to our customers.
In a “fixed price” scenario, a builder will add on overhead and profit of around 25%, then another 5% or so for variances from the budget. So, in cost plus, the customer can save 10-15% on average.
There are two reasons that we can cut our profits on cost-plus project. One is that the overhead and profit number is guaranteed. In a “fixed price” situation, the builder will absorb any variances, price increases from vendors, etc. Since the actual gross profit will only be determined after everything is complete, the builder must plan for some worst-case situations in his budget. In cost-plus this uncertainty does not exist. Since the builder has less risk, less profit is also appropriate. Secondly, Blue Ridge Custom Homes is designed to operate very efficiently with a “lean” business model that allows us to have a viable business with lower profit margins than our competitors. We do not hold large amounts of land, build model homes, have sales staffs, standing inventory, advertising programs, etc. which allows us to charge our customers less and still maintain a measure of profitability.
Another feature customers like about cost-plus is just being able to see where there money is going. Our detailed estimates help you to know exactly what you are spending your money on and thus ask questions, make cuts, etc. with the use of this extra level of information. See an example of what a budget looks like below.
Cost-plus is not for every project and it is not for every customer. We would like to speak with you in further detail concerning this approach. In addition, we can refer you to past cost-plus customers so you can see how well it worked for them.
|~ ~ ~ PHASE ~ ~ ~||PROJECTED|
|PERMITS / PROFFERS||2,765.80|
|~ ~ ~ 1st DRAW ~ ~ ~||22,956.30|
|TRUSSES, ENGINEERED LUMBER||6,351.90|
|~ ~ ~ 2ND DRAW ~ ~ ~||58,393.33|
|~ ~ ~ 3RD DRAW ~ ~ ~||59,201.95|
|~ ~ ~ 4TH DRAW ~ ~ ~||43,917.91|
|~ ~ ~ 5TH DRAW ~ ~ ~||15,640.00|
|REAR DECK/FRONT PORCH||5,934.00|
|TOP COAT DRIVE||1,200.00|
|EXTERIOR RAILS, POSTS||2,500.00|
|~ ~ ~ 6th DRAW ~ ~ ~||16,248.72|
|Estimated Cost of Construction||216,358.21|
|BRCH Overhead and Profit 15%||38,180.86|
|Total Cost of Project||254,539.07|