Building a new home is a daunting idea for many, an idea full of questions and unknowns. Instead of ruling it out, we’re here to help shed light on six common questions people have about building a home.
Is building a home more expensive than buying?
Building a new home is a not so far fetched as it may seem! At the moment, there is a lack of existing inventory in our area. This lack of supply increases the demand, which makes finding an existing home within your price range more difficult, and when you do find it, you may overpay for it.
Because of this, we’re seeing more and more families opt to build a new home. More on that here (Post: Should You Build Your Next Home or Buy?)
And they’re finding out that doing so is actually more cost effective than purchasing an existing home when you factor in the costs of maintaining and updating an existing home versus walking into a brand new product with builder’s warranties.
How long does building a home take?
There’s a huge misconception when it comes to a realistic building timeline. I understand that it goes over better to tell a client that a home can be built in just a few months, but that’s a misleading comment.
In all reality, building a new home entails much more than just the actual construction phase of the process.
You’ve got a drawing phase where you’re actually designing a custom home that suits your families specific needs, which can take anywhere from two weeks to a year.
After the drawing phase comes the bidding phase. It typically takes about two weeks for a builder to send out and receive hard numbers back from the subcontractors that will be making your home dreams a reality.
Once this is complete, the builder must secure a construction loan which takes another two weeks or so. Then and only then can digging and construction begin.
Living in Minnesota, you’re well aware that a perfectly executed and planned out construction schedule can easily be delayed by weeks or months depending on weather.
So all in all, a 7-8 month process is the most realistic timeline I can provide to you, and that’s if there aren’t any major delays during the actual construction of the home.
How do we find a lot to build a home on?
If you already have a piece of land you’d like to build on, consider yourself lucky. Minneapolis and the surrounding communities are growing quickly, and so are land prices.
So it’s a common question: how exactly do we find the perfect lot? Well the answer isn’t simple. It depends on who’s representing you. Quite a lot of land is unlisted and not easy to find for someone outside of the real estate industry.
Having a good Realtor and/or builder on your side that will help you search for land that’s on and off the market is important. It’s also important to know that some neighborhoods only let one builder, or at best a select few, build in their neighborhood.
All of these details can be found and sorted by a good real estate agent or builder.
Do we have to choose from a list of floor plans when we build a home?
That depends. Some builders have an in-house draftsman, while others use an outside draftsman. If you’ve chosen a builder who shares a draftsman, you may not get a completely custom floor plan. Many builders use templates as a jumping off point.
These are nice places to start from and make custom changes without having to design the entire home. An in-house draftsman can sit down with you and design your home from start to finish, creating a custom dream home.
How does the financing work when building a new home?
Depending on the builder you’ve chosen, you can carry the construction loan yourself or have the builder do so.
The difference is if you choose to carry the loan yourself, you’ll save a bit in closing costs. The other option is to let the builder purchase the lot, handle the construction loan, and you purchase the full package on closing day, just like you would for an existing home.
Some of this is dependent upon the builder, and if they offer financing. Often, they can recommend a bank they work with to make financing as easy as possible.
Is a 2-story or ranch more expensive to build brand new?
Two-story homes are typically more cost effective to build simply because you can add square footage with each floor by stacking without increasing the size of the foundation or footprint of the structure.
That being said, you can also save a significant amount of money by taking your plan from a walkout basement to a daylight basement.
Thinking about building your new home? Read this…
Should You Build Your Next Home or Buy?