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7 Tips to Save Serious Money Building Your House, All Without Touching a Hammer

For You, Hammers

 

Everyone carries a perfect home in their hearts. Close your eyes and picture yours… what makes it special is as individual as your own dreams and priorities. Your dream home could linger in the “someday” part of your heart because of its features (sitting on a lush green yard surrounded by mature trees, a three-car garage with a special bay just for your tinker toys, or a floor-to-ceiling window overlooking the water), its location (on a larger lot with room for a swingset, on a smaller lot because your swingset days are behind you, perhaps in a different suburb closer to the grandchildren you rarely see), or even its economy (built smaller, smarter, or perhaps both). Don’t despair if you lack the knowledge or skills to save money by doing a portion of your new house’s building yourself. Even if your painting skills rival your preschooler’s, your insurance company demands a precert before you touch a power tool again, or you think the word ‘plumb’ might be a fruit you tried once, you can still save thousands building your house! Building smarter by following a few simple tips involving choices everyone makes during the planning process can free up thousands of dollars, funds you can invest in upgrades that will transform your next house into your dream home. The money you save could even provide enough wiggle-room in your monthly budget that you can follow some other dreams, the kind that become possible with a more manageable mortgage or no mortgage at all.

How would your life feel with no housenote?

This may be the perfect time to build a home you’ll treasure without breaking the bank by following these tips that builders and contractors already know. Your journey to savings begins by understanding your housing market. Know that a buyer’s market provides an unprecedented opportunity for building your dream home because increased competition traditionally drives down the price of goods and services. With annualized U.S. housing starts below 500,000 (as of February 2011) according to a report released by the National Association of Homebuilders, competition over fewer available new home construction jobs leaves an army of contractors, suppliers, and lenders ready to drop their prices in exchange for your business.

Helloo, three-car garage!

Here are seven tips to help cash in on current homebuilding conditions without placing your personal economy at risk:

1. Take advantage of negotiable land prices to purchase your dream lot for your new house. A buyer’s market can present a unique opportunity to purchase the ideal piece of land for your dream home. Have no shame in making an offer below the seller’s asking price. You could also try pointing out the money they’ll save in the coming year on property taxes and maintenance by unloading the lot. The seller might just surprise you by accepting your frugal offer.

2. Investigate house plans that don’t cost anything for you to use, such as a free plan offered promotionally on an online site or a plan for which your builder retains a multiple-use license. Using a multi-use plan to fill your dream scheme can save you thousands. If you can’t find a free plan that can evolve into your dream home, house plan brokers such as ePlans.com and CoolHousePlans.com carry an impressive selection of stock house plans to satisfy a myriad of tastes, plans that likely cost much less than ones home-grown with an architect, and more likely to meet International Building Code standards than anything you sketched on a napkin and thrust at your builder.

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3. Choose a house plan that minimizes expensive features you care nothing about. Another advantage to building your own home is the opportunity to avoid costly upgrades that mean little to you. If all you see when you look at a vaulted or two-story room are little dollar bills floating away through wasted utility costs and misused drywall, don’t buy a house plan overflowing with spaces marked “open to below.” Ornate coffered ceilings, a bevy of angles added to your house’s shape to make it look more interesting, or multiple-pitch roof lines can raise your home’s price tag by thousands of dollars. If these features don’t mean that much to you, either don’t pick a plan that has them or pay the plan’s architect a little extra to safely change them. Eliminating features you don’t value can become a great way to fund the ones you do, such as trading five double-hung windows per room for two to three single-hung energy-efficient windows (single-hung meaning for example that only the bottom half of the window opens instead of the bottom and top). These choices can result in funded upgrades, like a roomier appliance budget (double oven anyone?), or conserving overall costs to yield a lower mortgage. Another example of a simple cost-cutting tip is to save a few expensive features for later down the road, when you can save money to cash-flow them versus rolling them into your mortgage loan. To avoid over-upgrading by getting swept up in the shopping snowball that accompanies homebuilding, stay focused when shopping for items not on your list of “cannot live without it exactly this way” items. For example, when evaluating countertops and cabinets, start first with the reasonable in-stock options such as granite-look laminate countertops and finished hardwood cabinets in standard sizes. If you’re thoroughly pleased with what you see and could picture creating your dream kitchen around them, don’t continue exploring more expensive options. Custom cabinets and granite countertops can easily add tens of thousands of dollars to the footprint your new house leaves over time on your wallet.

4. Check references from your builder/ contractor’s more recent customers to determine satisfaction, final price per square foot of their homes, and flat rate charged to build their house. You wouldn’t hire an accountant to handle your money without first checking past references, why would you apply looser standards to hire the person responsible for perhaps the biggest ticket purchase of your life? Check to ensure comparable homes built recently didn’t excessively overrun the price per square foot quoted by the builder, which should be estimable based on your detailed house plan and finish preferences (granite versus laminate countertops, tile versus linoleum flooring, masonry versus wood finished exteriors, etc.). Taking into account the scope of your homebuilding project versus the referenced house, try offering less than the price charged for that house; if accepted, be certain to include that price in your written contract with the builder as well as a thorough listing of job expectations included for that price to avoid misunderstandings. Many proud new homeowners take joy in showing off their new domain – tour if offered and elicit feedback on how the building process exceeded (or didn’t meet) their expectations. When I built my current home with Mr. Richard Grant, before ground was broken at my building site we had in writing how much my home should cost, which finishes I’d chosen as well as how they should look, and how to contact Mr. Grant should I need him for any questions that arose during the building process. The house exceeded my expectations and I still call Mr. Grant for references today when I need painting or other maintenance because a bond of trust was forged in the affordable, effective professionalism with which he built my house. I also recommend steering away from paying your builder’s fee based on a percentage of the cost of your home with only rare exceptions – what’s their motivation to control costs if that cost dictates their paycheck?

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5. If building your house under a budgeted ‘allowance’ for items such as appliances, lighting fixtures, and bathroom furnishings, either do the shopping yourself or require receipts for major purchases. It’s a good idea to run your purchases by your builder to avoid costly mistakes (ranging from small flubs, like buying off-the-rack smoke detectors if your building code requires ones hard-wired into your electrical system, to bigger uh-ohs such as grabbing a stolen HVAC unit off a shady online ad); however, most people I know shop wiser when spending their own money than when spending someone else’s. If you don’t believe me, just ask my teenager. If time or trust leads you to leave the shopping to your builder, require clearly understandable receipts be placed in your hands and take the time to read them. Not only will your dilligence likely build an additional layer of cost control, the receipts could come in handy for returns, warranty claims, or product recalls later.

6. Evaluate reviews of desired or required items through outlets such as Consumer Reports before you purchase them for your new house. Price and word-of-mouth can prove unreliable indicators of quality. Checking items such as paint, appliances, even lightbulbs with a nonprofit, independent union like Consumer Reports via subscribing to their magazine or an online subscription can reap a small fortune in a variety of ways, such as lower utility bills from perusing energy ratings, improved longevity from expenses like carpet because your carefully reviewed vacuum cleaner actually picks up dirt, and more money in your pocket that won’t be spent on repairing/replacing a poorly performing item with a history (known to everyone but you) of inspiring buyer’s remorse.

7. Avoid getting trapped paying two mortgages: rent where you live between selling your old house and building your new one.

A sagging housing market can create a large selection of rental options. You may find this surplus spurred onward in your town as those unwilling to cement losses to their net worth or credit scores by selling their homes for less than they’re worth instead choose to rent them. Selling your current house before breaking ground, followed by taking advantage of abundant (sometimes desperate) rental choices while you build can insulate your financial risk during the construction or bridge loan portion of building. Even with the lure of locking in a mortgage with an impressively low rate, taking the time to sell your current home before embarking on the creation of your dream one beats gambling your financial sanity by risking two house notes for an unpredictable amount of time should your new house finish before your current one sells. If the idea of moving twice shrivels your resolve, focus on the personal purpose of your venture: building a home you love that you can pay down faster. Remember, what could you do with no mortgage draining your bank account monthly?

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One good land purchase, one stretch of resolve committed to disciplined choices across the building process, and one block of time in a rental focused on your new dream home could add up to a life-altering, financially enviable period in your life. Whether your heart’s desire is to retire early with no mortgage, live in a house your children would be proud to show their friends, or simply to have more money left in your account after paying the house note and utilities, taking advantage of cheaper lending and building costs could paint a happier, less stressful future for you and your family… and you never even had to touch a hammer to do it.
(Picture credit: Amy Coulson, avail. for use in public domain w/ credit.)

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