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What is Cost Per Square Foot?

Anyone thinking of building or buying a home will want to ask the question “How much does it cost per square foot?” This single metric is arguably the single most important factor for people choosing to buy or build a house. The answer can make or break a sale for a home builder.

But what is cost per square foot? It seems easy enough, but it is important to know what is, and is NOT included in the metric. Without a clear definition, you won’t be comparing apples to apples.

As an industry standard, the Cost Per Square Foot does not include the property. It also does not include outbuildings, digging a well, installing a septic system, or adding a basement. Spaces such as an outdoor deck and garage are typically not included in the square foot pricing.

When you are talking to a builder about a hypothetical house on a hypothetical lot, with hypothetical amenities – there a few assumptions to keep in mind. The cost per square foot should be based on a relatively flat developed lot and ready to build on. It has utilities to the property, does not have expensive design constraints, and uses standard materials. With this in mind, don’t be surprised if a builder gives you a range. It is a quick answer to a complex question. The more information that a potential client can give, the better the answer.

As the complexity, design, and budget gets bigger, the cost per square foot metric becomes less useful to a custom home builder. The range is so wide and varied that not much important information can be gleaned from it.

We have built 1800 SF homes and 10,000 SF homes. The difference per foot between the two is vast.

This metric works best for mass-produced homes where the plans are recycled and cost is the most important thing to the buyer. These types of homes usually have property restrictions that limit design and material differences – which make them much easier to compare. The math becomes more fuzzy as homes climb in price and there is more room to be creative and make atypical choices.

A better approach is to break the question down into several different components.

  1. How much does the General Contractor get paid? The best way in our opinion is the Cost-Plus contract. There is a separate line for the General Contractor fee. The cost of the house is passed to the client without mark-up. This will eliminate the incentive to cut corners, as well as overspend.
  2. How long have they been in business? What level of experience do they have?  A good builder will have an excellent grasp on the process that will save money vs. someone learning the ropes for the first time.
  3. Are there signs that they are too expensive? Do they spend their money on the business to improve the product with things like tools, equipment, and trucks, or do they have expansive showrooms, a marketing team on the payroll, and swanky offices downtown? This is a more subjective question where you are trying to determine if the money you are spending will end up in your house or somewhere else.
  4. Ask if there will be mark ups on anything
  5. Ask to see an example budget. This will allow you to compare a price with an actual house and the amenities that went in to it.
  6. Do a spot check. Compare a couple labor items. What is the typical labor per foot to install hardwood flooring? How much does a plumber cost per fixture? What is a tile floor cost per foot? Sourcing materials is a pretty level playing field. The question is more about the quality of work at a reasonable price.

At the end of the day, you need more than just one qualifier to choose a builder. Remember, you have to work with this person for the next 9 months while they build your dream home. You need a team mate who will have your back.  

What is Custom?

Every commercial, print ad, or sales pitch you’ve ever received about a home builder has inevitably included the most over-used word in the building industry – “Custom”. If you hear it too often, the word begins to lose it’s meaning.

This may seem like an easy word to define, but it means different things to different builders. Certainly there are different degrees of customization.

A custom home for us is easy to define. It is simply a house that has never been built before and will never be built again. It is uniquely designed for the property, and is a reflection of our client’s personality and tastes, rather than trying to appeal to a wider audience.

The process of customization includes far more than the building phase. It starts with finding the right piece of property. We help clients assess property from a building perspective.

We also have an extensive network of designers, architects, suppliers, and subcontractors to call upon. This means you are not stuck with a limited selection of in-house talent. You can collaborate with the right person for what you want to accomplish.

We have never built a custom home that did include a couple of changes along the way. It is a requirement for a custom home builder to be flexible and patient. Do you want to make some last-minute changes now that the house is framed and you can actually walk through it? No problem, as a smaller team, it is easier for us to pivot, make changes on the fly, and come up with creative solutions than other larger companies.

If you are the type of person that wants to play a significant role in the design and selection process for your next house, a truly custom home by Alway Homes is the right place to start.

What is Quality?

Quality is a catchy word that is thrown around by Home builders almost as much as the word “custom” (which deserves its’ very own definition). It’s important to determine exactly what the word quality means because it is often used incorrectly.

The most common misconception is that “quality” is synonymous with “expensive”. When you walk into a new house and see lots of tile, a sea of granite, and shiny plumbing fixtures it can be easy to think it is a high-quality home.

This is not the case.

Quality is a measure of how closely a finished product matches the specifications. If the plans call for a wall that is 10 feet tall – anything longer or shorter than that mark would be ‘out of spec’ and considered a poor-quality wall.

A house with an expensive hardwood floor that creaks is not “quality”, no matter how much it costs.

Anyone can go out and source a higher rated window, a more efficient HVAC system, or a top of the line plumbing package and spend a commensurate amount of money. We let our clients make the selections that fit their budget and performance requirements.

As the home builder, we focus less on the clients’ selections, and more on the execution. In this way, we can build a quality home at both ends of the price spectrum.

It should not cost more for work to be done correctly.  If you involve experienced people – experts in their field – and approach each project with a method, process, and plan, the result should be a quality finished product.

As Jess will tell you, “What you can’t see is just as important as what you can.”

What is cost per square foot?

Anyone thinking of building or buying a home will want to ask the question “How much does it cost per square foot?” This single metric is arguably the single most important factor for people choosing to buy or build a house. The answer can make or break a sale for a home builder.

But what is cost per square foot? It seems easy enough, but it is important to know what is, and is NOT included in the metric. Without a clear definition, you won’t be comparing apples to apples.

As an industry standard, the Cost Per Square Foot does not include the property. It also does not include outbuildings, digging a well, installing a septic system, or adding a basement. Spaces such as an outdoor deck and garage are typically not included in the square foot pricing.

When you are talking to a builder about a hypothetical house on a hypothetical lot, with hypothetical amenities – there a few assumptions to keep in mind. The cost per square foot should be based on a relatively flat developed lot and ready to build on. It has utilities to the property, does not have expensive design constraints, and uses standard materials. With this in mind, don’t be surprised if a builder gives you a range. It is a quick answer to a complex question. The more information that a potential client can give, the better the answer.

As the complexity, design, and budget gets bigger, the cost per square foot metric becomes less useful to a custom home builder. The range is so wide and varied that not much important information can be gleaned from it.

We have built 1800 SF homes and 10,000 SF homes. The difference per foot between the two is vast.

This metric works best for mass-produced homes where the plans are recycled and cost is the most important thing to the buyer. These types of homes usually have property restrictions that limit design and material differences – which make them much easier to compare. The math becomes more fuzzy as homes climb in price and there is more room to be creative and make atypical choices.

A better approach is to break the question down into several different components.

  1. How much does the General Contractor get paid? The best way in our opinion is the Cost-Plus contract. There is a separate line for the General Contractor fee. The cost of the house is passed to the client without mark-up. This will eliminate the incentive to cut corners, as well as overspend.
  2. How long have they been in business? What level of experience do they have?  A good builder will have an excellent grasp on the process that will save money vs. someone learning the ropes for the first time.
  3. Are there signs that they are too expensive? Do they spend their money on the business to improve the product with things like tools, equipment, and trucks, or do they have expansive showrooms, a marketing team on the payroll, and swanky offices downtown? This is a more subjective question where you are trying to determine if the money you are spending will end up in your house or somewhere else.
  4. Ask if there will be mark ups on anything
  5. Ask to see an example budget. This will allow you to compare a price with an actual house and the amenities that went in to it.
  6. Do a spot check. Compare a couple labor items. What is the typical labor per foot to install hardwood flooring? How much does a plumber cost per fixture? What is a tile floor cost per foot? Sourcing materials is a pretty level playing field. The question is more about the quality of work at a reasonable price.

At the end of the day, you need more than just one qualifier to choose a builder. Remember, you have to work with this person for the next 9 months while they build your dream home. You need a team mate who will have your back.  

What is "custom"?

Every commercial, print ad, or sales pitch you’ve ever received about a home builder has inevitably included the most over-used word in the building industry – “Custom”. If you hear it too often, the word begins to lose it’s meaning.

This may seem like an easy word to define, but it means different things to different builders. Certainly there are different degrees of customization.

A custom home for us is easy to define. It is simply a house that has never been built before and will never be built again. It is uniquely designed for the property, and is a reflection of our client’s personality and tastes, rather than trying to appeal to a wider audience.

The process of customization includes far more than the building phase. It starts with finding the right piece of property. We help clients assess property from a building perspective.

We also have an extensive network of designers, architects, suppliers, and subcontractors to call upon. This means you are not stuck with a limited selection of in-house talent. You can collaborate with the right person for what you want to accomplish.

We have never built a custom home that did include a couple of changes along the way. It is a requirement for a custom home builder to be flexible and patient. Do you want to make some last-minute changes now that the house is framed and you can actually walk through it? No problem, as a smaller team, it is easier for us to pivot, make changes on the fly, and come up with creative solutions than other larger companies.

If you are the type of person that wants to play a significant role in the design and selection process for your next house, a truly custom home by Alway Homes is the right place to start.

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Alway Homes is a company that prides itself on achieving high standards of quality and customer service. As a result, we expect the same level of professionalism from each and every trade partner.