10 Mistakes When Building a New Home
Updated: Aug 17, 2021
Drawing on our 40+ years of experience, we’ve put together this list of the top home-building tips to keep in mind when you’re ready to break ground on your new house:
1. Select Your Lot Carefully
You may already own your land. If so, the building process will be more straightforward. If you’re buying land with the intent to build a home, however, there are a few things you can do to make the building process go more smoothly.
First, don’t settle. Many people settle on a lot because it’s the only one left in a particular subdivision, but the site you choose will play a major role in your home. It’s worth making sure you like size, shape and view of your lot.
You should also consider the surrounding infrastructure. What is the local traffic like? Can you get to amenities like grocery stores easily? What type of offices and health care services are nearby?
Many people also consider the quality of the school system when they buy a house. Even if you don’t have children, consider researching the local schools. A good school system can improve the resale value of your home.
If you plan to build your home, it’s also important to be aware of the land costs associated with the home-building process. Grading a lot, building a driveway and connecting sewer, water and gas lines are all essential. If the lot is in a subdivision, it may already have been evaluated for utility hookups. If not, make sure it will be feasible to connect these essential services.
Visit our website to find out more about building on your own lot and lot-specific building costs.
2. Learn to Read a Bid
Construction bids can be a foreign language.
Many people look at the total bid price and select the lowest bidder. However, they might find that their home ultimately costs more to build than the bid — and more than they anticipated. They could also find that the quality of their home isn’t what they expected.
Learning how to read and compare bids will help you decide which contractor is the best fit for you. First, you’ll want to find out what method the contractor is using to create their bid. Most contractors use one of three methods: square foot pricing, assembly pricing or unit pricing.
Square foot pricing is the least reliable since it simply assigns an average price to each square foot of the space — it doesn’t necessarily take into account specific costs of materials for the area. Assembly pricing is more accurate and detailed, being based on how much each component costs to build instead of just using the average. Unit pricing is the most accurate, but it’s also the most time consuming to prepare. It’s based on the cost of all of the supplies needed.
You should also ask how the builder accounts for unexpected expenses during the building process. Many contractors “pad” their bids. This padding provides a buffer for unexpected delays, materials that need to be recut and other issues that can come up during the construction process.
A builder who doesn’t include this buffer often offers the lowest bid. However, if a contractor doesn’t include this buffer in their bid, it’s easy to go over the original bid’s construction cost. Homeowners may find that a higher bid on paper is actually better than a lower bid without a buffer.
A buffer is critical because there are a number of unexpected issues that can show up during the construction process. For example, the cost of supplies or shipping may be higher than anticipated. Materials can be damaged by weather, and regional building trends can affect the cost of labor.
You can ask your builder about whether they account for these issues and how they do so. Although it’s possible that none of these problems will arise, staying aware of the possibility will help you determine your costs more accurately. You’ll also have a better sense of what your mortgage could cost and how long the building process will actually take.
3. Choosing a Contractor vs. Being Your Own Contractor
Many first-time home builders consider being their own contractor when they build a house. Building your home this way can save money, but it’s not always a wise choice.
Contractors and owner-builders need several essential skills. Decide whether you're comfortable:
Reviewing building plans for potential problems. Estimating the cost of materials and labor. Obtaining building permits. Hiring and scheduling employees and subcontractors. Ordering materials and scheduling deliveries.
If these feel overwhelming to you, hiring a contractor or building company is a better choice. They’ll handle the building process, from getting plans approved to managing accounts payable to keep you within budget.
Although many people tout DIY contracting as a way to save money, a contractor can be a more financially prudent choice. A good contractor should be able to help you get your dream home built on schedule and within budget. Because of their experience selecting building materials, identifying problems and working with subcontractors, you may find that hiring a contractor actually saves you money.
If you’re building a home in Alabama, contact us to find out more about our custom building and real estate services. We have extensive experience managing the home-building process from start to finish, and we also have an in-house real estate agency to help you through the process of financing a design-build home.
4. Keep Your Mortgage Costs in Check
When you build a custom home, it’s easy to end up with a bigger mortgage than you’d bargained for. Changes in the middle of construction, unexpected delays and upgraded materials can all change the price of your home.
Remember that your mortgage will last for 15 to 30 years, so it’s worth making sure it’s a manageable payment. There are many things you can do to keep your mortgage in check — and you’ll still be able to build your dream home!
To start, have a good sense of materials and the design you’re looking for up front. If there are particular materials or building designs you love, say so early. Your contractor can help you price them out so you can decide whether they’re worth the investment.
Consider the total size of your home as well. Do you need a 4,000 or 5,000 square foot home, or can a well-designed 2,500 square foot home serve you just as well? The average cost of building a home is $150 per square foot. If you have too much space, some of your mortgage will go toward paying for underutilized rooms.
It’s also important to remember that you can shop around for mortgages for custom-built homes just like you can for buying a pre-built home. We work with an in-house broker to find the best mortgages for your situation. You’ll be able to compare:
Closing costs Interest rates Whether you’ll need to pay private mortgage insurance
Because building a custom home is different from other types of home sales, you may want to consider looking for a mortgage from a company that specializes in loans for custom-built homes.
5. Avoid Making Big Purchases While Building a Home
While you’re building a home, avoid big purchases like buying a new car. And though it’s tempting, wait until after the mortgage paperwork is signed before buying new furniture, too.
The reason is because these big purchases often change your debt-to-income ratio, which can impact your mortgage eligibility. The debt-to-income ratio is the percentage of your gross income that’s needed to pay for your non-housing expenses. It’s used by lenders to determine whether you’re eligible for a mortgage, and how much they’ll lend you.
A high debt-to-income ratio can signal that a homeowner will have a hard time making mortgage payments. Almost all lenders want to see a debt-to-income ratio of less than 43 percent. The lower your ratio, the more likely you are to get a mortgage with a low-interest rate.
If you know you’ll need to make a big purchase, try to do so before starting the home-building process. Alternatively, delay it until after you’ve signed your mortgage paperwork.
6. Think About Your Space Needs Before Deciding on a Floor Plan
By far, one of the most common design mistakes we see is short-term space planning. If you’re designing a custom home, you’re likely to live in it for a while. That means the spaces you need now may change over the next few years. Consider how long you’ll stay in this home and what types of spaces you’ll need during that time.
When you’re looking at your space requirements, make sure to include bedrooms, closets, storage areas and living spaces. Asking yourself the following questions may help you accurately gauge how much space you’re going to want:
How many bedrooms do you need? Where do you spend most of your time at home? Do you cook regularly, or are you rarely in the kitchen? Do you work at home? Do you need a home office? How often do you entertain? Do you have family or friends who visit regularly? Do you need space for a guest room? Do you have or plan to have children and need bedrooms for them? Do you have older children who will be moving out? If you’re building a playroom or game room, what will it be used for in a few years? Do you have hobbies and activities that need extensive storage?
Good space planning can help keep your home useful throughout your time in it. If you anticipate lots of changes, it can help to design multi-purpose rooms. Consider whether a guest room can be converted to an office, or whether you’ll need two different rooms.
7. Make Changes During the Design Phase, Not the Construction Phase
It’s common to make a few changes to a custom floor plan. You may find that you want to change the materials you use for flooring or cabinetry. You might also realize that you want to make larger changes like adding a room or changing the layout.
However, remember that changes during the construction process are more expensive than changes during the design phase — and that cost isn’t just financial. There may also be delays in acquiring the supplies needed, and your timeline might be slowed down by these delays. Additionally, the extra construction may add to the total cost — and to your monthly mortgage payment.
You’ll reduce the number and size of changes you make by considering your needs early in the process. If you know what you need early, your architect and building designer can help you to incorporate these features into your initial design.
You can also cut back on changes by taking the time to view similar homes. Many people love the look of a home on paper, but they have trouble visualizing what that home will look like once built. If you’re considering using an existing floor plan, we can help you find other homes that use this floor plan. You’ll be able to get a better sense of what the finished house will look like.
8. Prioritize Which Amenities Are Important
We often see people who build a home and scrimp on amenities to save money. On the other extreme, some homeowners overspend on top-of-the-line upgrades across the board. Neither extreme is ideal.
Remember that even a “standard” floor plan can include lots of amenities, so be sure to look at what options are included. For instance, our standard floor plans include energy-efficient features like low emissivity windows.
We recommend that you prioritize which features and amenities are most important to you. If you’re interested in upgrades, focus on these areas. These are the areas you’ll use the most, and you’ll appreciate the extras.
For instance, many homeowners find that upgrading their lighting and windows is a good investment. Good lighting can change a home’s atmosphere and make everyday tasks easier.
Other homeowners focus on upgrades in the kitchen. Since many families spend a lot of their time in the kitchen, upgrading kitchen appliances and cabinetry can be a good investment as well.
There are also others who prioritize energy-efficient upgrades to their heating, plumbing and water fixtures. These upgrades often pay off in lower utility bills.
At the same time, it’s easy to go overboard with upgrades. That’s especially true when you’re building a new home. If an area isn’t on your list of priorities and won’t help your home resale value, it’s okay not to upgrade.
9. Consider Your Home’s Resale Value
When you’re building a home, it’s easy to make it unique. In fact, it’s encouraged!
It is possible to be too unique, though. If a home showcases too many unusual features, it can be hard to sell. Even worse, you could get tired of these one-of-a-kind designs and struggle to remodel them. Whether you plan to sell your house in a few years or live in it for a long time, it’s worth taking a little extra time to consider your home’s staying power.
Be aware that very unique homes have a limited pool of potential buyers. If you’re building a home shaped like a space ship or a Victorian reconstruction, keep in mind that selling your home may be challenging. Many of these houses require unconventional marketing strategies, and owners need to be prepared for a long wait before they sell.
You should also consider whether these unique features will still appeal to you in five or ten years. If you’ve considered your space needs and how they might change, you might already have an answer.
Think about whether you’ll like the design, too! Will this look dated in a few years? Can you change decoration or repaint easily if you decide to? Will removing the feature take extensive work?
If you’re considering a unique design, and you think you’ll get tired of it — or it will lower your resale value — see if you can find other ways to include the features you want.
10. Know Which Upgrades to Include and Which to Avoid Choosing which upgrades to include or avoid should be a priority for any homeowner before the process of building your dream home gets underway. It may be tempting to incorporate every upgrade that catches your eye, but that may not be the wisest choice. By thinking ahead about how you want to spend your construction budget, you can stretch each dollar and only incur costs where you'll get the most bang for your buck.
The most important thing to consider is what you'd like to get done immediately and which upgrades to avoid for now. Here are a few questions to ask yourself as you decide which home improvements to go for right off the bat and which ones can wait:
Will waiting to upgrade require major renovations? Will waiting incur more cost down the line? If you wait to upgrade, will you have to live with a large mess during the renovation process? Will investing in this upgrade now increase your home's value? Are you willing to pay out of pocket for this future upgrade
Basically, when deciding whether to upgrade, it comes down to if it's worth the money to do it now or if it can wait. Of course, you don't have to be pragmatic about every upgrade. Some home improvements you'll want because they make your new house feel like a home to you.
Home Upgrade Ideas You'll Want Now Sometimes waiting to upgrade does not save you money. It will cost you more in the end and creates a major headache once you're finally ready to address the improvement. If it will require a big tear out, mess or expense to replace later on, then spend the money now and get something you'll be happy with for a long time.
Here are a few examples:
Flooring: Quality flooring adds both beauty and value to your home and holds up better over time. Bathroom tile: It's a great idea to get the hard surfaces in your bathroom right the first time around. Waiting to change it out can be a big hassle. Cabinetry: It's always good to invest in higher quality cabinetry as an updated, modern kitchen is a great investment and a great addition to your home. Choose a simple yet elegant style that will stand the test of time. You may also want to include tall upper cabinets, soft close drawers and an integrated trashcan as these are features that will help your kitchen stand out. Wood stairs: Most staircases feature carpet over plywood, which would have to be ripped out later if you prefer wood stairs. Recessed lighting: If you know you'll eventually want recessed lighting, then don't wait for an electrician to cut into your brand-new drywall. Get pre-wired now. Anything to do with windows: Whether its additional windows, larger windows or specialty windows, work with your builder to include these in your initial building plan. Unfinished basement: If a basement is a priority, now is the time to include this extra square footage into your dream home.
Upgrades to Avoid in the Initial Process Most of your home's decorative elements are upgrades that can wait until later on down the road. Whether you hire a professional or tackle these home improvement projects yourself, these things can be more easily changed in the future. So, save your money and wait.
Plus, in a few years, your personal style and interior décor trends are bound to evolve and change. Better to go with something generic now so you can pick a stylish upgrade you'll love down the road.
Some upgrades that can wait until after your home is built include:
Lighting fixtures Cabinet hardware Mirrors Backsplashes Appliances Crown molding
11. Choose a Good Builder
Choosing a builder is one of the biggest challenges when you’re building a home. Your builder will help to shape the design of your house. They’re responsible for making sure construction is done on time and up to standards.
Many homeowners get several bids before they begin the construction process. Be sure to research the potential builders ahead of time to make sure your bids are coming from reliable, reputable companies.
Some questions to ask potential builders include:
How long has the builder been in business? Has the builder worked on similar types of homes before? Can they provide referrals from previous customers? Does the builder have a financing plan available? Can you add options to an existing floor plan? How much can you customize an existing building plan? Can the builder work with you to create a custom floor plan? Does the builder include a home warranty? Can the builder leave some rooms — like a basement or garage — unfinished? Is landscaping included in the cost of building?
You can also ask about subdivisions that the builder has worked on, and then drive through these subdivisions. You’ll be able to see whether the homes are visually appealing, and you may even be able to ask residents whether they like their homes or have had problems.
All of these answers can help you to find the right builder for your home.
If you’re interested in building a home here in Alabama, Rhodes Brothers Construction can help. Contact us to learn more about how to get started. You can also view existing floor plans and find out more about building on your own lot.