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Cost to Build New Home on Your Lot

9,981 Views | 48 Replies | Last: 19 days ago by ForeverAg
Harman Rabb Jr.
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Anyone have a ballpark idea of the cost per square foot to have a custom builder build a home on a lot that you own? I'm just looking for rough numbers. This would be in the Spring Valley area of Houston. Looking at the houses in the area, it looks like lots are averaging about $600,000, whereas new builds are somewhere between $1.2 and $1.4 million. That seems to be a pretty big delta, and I'm wondering if there is a spot in between to buy a lot and have a house built.

If anyone has done this and is willing to share their experience, I would appreciate it.
aggie_wes
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AG
I've seen as low as $75 /sqft (dude did a lot of the work himself) I'm sure it could be $120+ depending on how nice of materials, finishes, etc you are wanting.

I've seen Typical ballpark amounts in the $90-$100 /sqft range.

In a neighborhood with million+ dollar homes, I'd look at the high end of that.
jja79
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AG
I think you're looking above that for a custom.
aggie_wes
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AG
Entirely possible.

Through our builder, the cost was about $110 /sqft if I take out the price of the lot.

It's a difficult question when you get into fully custom b/c you can basically spend as much as you want.
texrover91
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AG
Just food for thought....

Have you checked deed restrictions and with the local P&Z?

Is there an HOA/Developer involved?

Good on you if you have already run your traps; if not, the above will guide what level of build out / materials required, size of structure etc.

Also do you have city service (water and sewer) or do you need a septic system?


Can't help you with costs since I'm not in the market, but, I do know a guy who does (or did) construction down that way; he's in Washington County now if you need an estimate (not referring him for construction necessarily, just advice)


I would also call some local contractors for some input - they're usually happy to advise; I'd also check to see how busy they are up our way it's incredibly difficult to get good contractors and schedule b/c they are so busy

Good luck!
Ducks4brkfast
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AG
budget closer to $200/ft than $100.
Dr T and the Women
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for custom homes it is very easy to be 225-300 per foot
No material on this site is intended to be a substitute for professional medical advice, diagnosis or treatment. See full Medical Disclaimer.
Sasappis
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AG
You can build a high end home in the $140 per square foot range, not counting lot cost and any demo or site work necessary. That also doesn't include pool or other things you might find in the million dollar price range.
BSD
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AG
I'd budget close to $200/SF for a nice home in SV but it can obviously be +/- that number depending on how customized you want it.

We have a lot there and are planning on contacting builders at year end to start the design/building process. SSH Homes is an Aggie business that has built some nice homes in SV. One is currently on Har.com right now (Lone Star Dr I believe). They will be our first call.

I have the same question as you though: if I take the risk and financial responsibility of buying the lot first, does the price difference I see between lots and finished homes that builders are selling go down and therefore the cost/SF go down along with it? (Anyways, I think that is what you are asking)
jja79
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AG
I'm not sure I fully understand your question. When you're in title to the lot you can finance to 80% (90% in some cases) of the appraised value of the property subject to completion. When the lot purchase is included in the construction financing you're limited to the lower of 80% acquisition plus construction or appraisal.

I would think this is a great time to look at building custom. We provide construction financing for custom homes (to the buyer not the builder) and quite a few of those we work with have inventory now they didn't plan to have. From those I've talked to several have mentioned being more negotiable on a true custom since they reduce their own risk by having the client provide the financing.

With rates where they are you can finance construction in the 2's and 3's so that's probably appealing.
BSD
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AG
My question isn't really about financing, it's more about the cost of construction.

For instance (real life example): a builder in Spring Valley bought a house to tear down and rebuild a new home for $620k (9240 sqft lot). The new house is 4757 sqft and the builder has it listed for $1,525,000 on har. if you take away the simple cost of the lot, the cost of construction and the profit combined to the builder is $905k which is $190/SF. Part of the cost/profit, I figure (and I know nothing about this topic), is the financing (materials and lot), the work done to find/acquire the lot, risk of holding the lot and possibly appreciation of lot value.

Now if I owned that lot (already owned, no financing to anyone involved)...what would the builder charge me for the exact same house?
jja79
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AG
I understood you were asking about cost and was merely pointing out how ownership does affect financing since few people can do these deals for cash.
BSD
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Understood and much appreciated. I was clarifying with a specific example since you said you didn't fully understand my question.
Harman Rabb Jr.
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That's my question as well. I also wonder how much control I could have over a "custom" home. Could I save costs by putting in cheap carpet or countertops, knowing that I could upgrade at a later date. Could I avoid finishing out an upstairs game room, and save it for a later date?

I may just wait for BSD to do it, and then I can ask him all these questions.
Sasappis
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AG
It depends on the contract with the builder. When a builder builds a house on speculation they expect to make more profit at the end because they have been bearing the risk and paying all the costs (financing, carrying costs, materials etc).

If they are building for you they are likely going to do so on either a cost plus contract or fixed price contract. There are positive and negatives to both.

Using the example above that the builder is listing the house for $1.5 mil has $600k in the lot and has $900k for construction, costs and profit. Just guessing and saying his true cost of construction is $125 per square and the house is 4,500 Sq ft that is true costs of $562. He also has been paying taxes on the lot, interest on his loan etc. Let's just round it up to an even $600k for costs and $300k in profit not a bad deal. If his true construction costs were $150 per foot that is $675 in costs and less than $200k in profit.

If you did a 20% cost plus contract with the builder and true costs were $562k you would pay him $112k. He takes home a lot less profit but you carry all the risk and associated expenses.
jja79
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AG
That was my point in saying I think it's a good time to negotiate a custom deal. Several of our builders got caught with inventory on contract jobs that busted out when O&G guys lost jobs or income. They're moving to more custom building since the financing risk is off loaded to the buyer.
BSD
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AG
quote:
That's my question as well. I also wonder how much control I could have over a "custom" home. Could I save costs by putting in cheap carpet or countertops, knowing that I could upgrade at a later date. Could I avoid finishing out an upstairs game room, and save it for a later date?
It's custom, you'd have a lot of control. You can skip out on finishing a few rooms and save the money upfront, as well as taxes on that square footage as well.

quote:
I may just wait for BSD to do it, and then I can ask him all these questions.

Ha, I like your style. I hope you are patient, though! It'll be a while.
BSD
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AG
thanks for the info. That is what I was hoping to hear.
Sasappis
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AG
quote:
That was my point in saying I think it's a good time to negotiate a custom deal. Several of our builders got caught with inventory on contract jobs that busted out when O&G guys lost jobs or income. They're moving to more custom building since the financing risk is off loaded to the buyer.


Yep. Lots of builders go bankrupt when a spec house or two go completely wrong. At this point in the cycle the smart builders are looking to minimize risk and do custom work as opposed to starting a new spec house. Some builders will also hedge their bets and do both at the same time.

Houses are still selling in Houston so builders are not in the street starving.
jja79
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AG
There are several guys I'm aware of sitting on unsold specs over a million. I know one guy with 6. Four were contract jobs that busted out with O&G people. He carried the interim himself and now regrets it.
JFrench
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AG
I dont know the answer to the question but Id be curious how it changes over the next several months to a year.

And also a comaprison to 2007-2009.

Sorry to shift gears.
Deats99
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AG
quote:
Anyone have a ballpark idea of the cost per square foot to have a custom builder build a home on a lot that you own? I'm just looking for rough numbers. This would be in the Spring Valley area of Houston. Looking at the houses in the area, it looks like lots are averaging about $600,000, whereas new builds are somewhere between $1.2 and $1.4 million. That seems to be a pretty big delta, and I'm wondering if there is a spot in between to buy a lot and have a house built.

If anyone has done this and is willing to share their experience, I would appreciate it.
I do build on your lot financing for custom builders($400K and beyond), so I see a few of these.

At that price point $90 a foot air conditioned gets you a decent house, cheap granite, mid grade appliances, maybe 900 sqft of hard woods, builder grade fixtures, a sufficient AC system, and a sufficient elecrtrical system, and a reliable builder. Now in that million dollar range you are not going to be happy with the 5000 sq/ft house on the half million dollar lot that $90 a foot gets you.

For that type of build I regularly see prices in the $125-150 range. Nice Granite, all hardwoods or high grade floor carpet, high-end appliances, outdoor kitchen, CAT-6 in home network, media room, high grade wall finishes, stacked moldings, all custom cabinets, high-efficiency windows, doors and AC, electrical service with multiple open slots and plenty of extra amperage available, and most importantly a special builder name.

So while you may be completely satisfied and happy with a 5000 square foot builder grade custom, it is not going to command the same kind of value as a true custom home.
A good plan violently executed now is better than a perfect plan executed next week.
-George S Patton
Dr T and the Women
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AG
I have been talking to people here in Austin. Most have quoted me 300 per foot over the telephone. Is there really that big a difference in labor cost?
No material on this site is intended to be a substitute for professional medical advice, diagnosis or treatment. See full Medical Disclaimer.
Sasappis
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AG
For what size house? $300 per square foot is extremely high.
Dr T and the Women
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AG
5200 feet. should bring the price down. I have had 3 builders quote that on the phone without even going into plans
No material on this site is intended to be a substitute for professional medical advice, diagnosis or treatment. See full Medical Disclaimer.
texrover91
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AG
Probably a reflection of the Austin market right now but either way that's pretty high

In North Texas a lot of my guys are only doing big renovations or new builds and won't even bid my work anymore because Dallas is too hot for them right now - heck even though I've worked with him before one of my guys wants me to pay him a refundable fee just to come up and do an estimate

My current contractor is quoting 120/130 sqft for two story; one story is higher 150
MAS444
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AG
I'm very interested in this as well. Another thing to consider is how much the actual square footage affects the $/ft price. There are economies of scale at play when you increase the square footage. I personally don't want or need a house over about 3000ft2 max. I believe my cost for a nice (but not over the top) 2500 - 3000 custom home inside or near the loop would be 175-200/foot. If I was doing 4000+ ft2, I think that $/ft number starts to go down some.
lockett93
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AG
Cost per sqft is really hard to quote. All of these items aren't even in the sqft but have varying costs:
2 or 3 car garage
Circle drive, or long driveway
Outdoor patios
Outdoor kitchen
Pool
Landscaping
Ceiling heights
Fancy iron doors
Subzero style refrigerator
8 burner range that costs $15k

Etc
BSD
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AG
I talked to a builder that just finished a nice house in my neighborhood (Spring Valley). I asked him what it would cost to build the same house on my lot. The 4757 sqft house would be about $700k he told me. That is just over $147/sf. I was rather surprised it was that low. Pleasantly surprised.
MAS444
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AG
Do you know what it would cost him to build a 3000ft2 house?
BSD
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I didn't ask that. I assume there are some economies of scale on the larger home so I'd guess price per SF goes up as home size goes down. FYI, this house was the typical SV new construction home with nice kitchen, patio, etc.
Diggity
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Seems like a good price compared to what new homes are going for and what lots cost in the area.
MAS444
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AG
I agree. Any hint as to who that builder is?
texrover91
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AG
MAS444 where are you located and what's your budget?

I can send you some recommendations - do you have plans?
MAS444
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AG
PM sent.
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