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You can build a home and stay on budget

You can build a home and stay on budget


You can build a home and stay on budget


Alexis Pokorski, a stay-at-home mom, wanted to move from one part of New Jersey to another to be closer to family. But finding the right new home grew tough.

She only saw fixer-uppers, and the prospect of building a new house at an affordable price seemed remote. Or at least that’s what she thought.

Then Pokorski visited the Reserve at Franklin Lakes, a planned community in northern New Jersey built by the Toll Brothers company. It was then that the idea of building new took hold in her mind.

Like many people, she assumed that to get her desired features, she would need to build a custom home that would be too costly and require an overwhelming number of decisions. Instead, she and her husband, Michael, a 40-year-old management consultant, discovered that one option was a semi-custom home, in which they could add some personal touches to the floor plan and finishes. 

“When they showed us that we could pick the exterior style, the lot, the square footage and the outdoor living space we wanted and still afford it, we jumped on it,” says Pokorski, 37, whose search for a home began about 18 months ago. 

Constructing a new home that addresses every item on your wish list can range from $350,000 to more than $1.5 million, depending on the location, size and materials, according to HomeAdvisor.

Pokorski declined to say how much their home cost, but base prices for the Windermere floor plan they chose start at $1.5 million.

Every newly built home is essentially a custom home, says Nick Slevin, publisher and editor-in-chief of Builder Media and developer of the ABC Green Home, an energy-efficient custom home in Crestline, California.

“Buyers choose the floor plan that best suits their lifestyle,” he says. “Builders also offer varying degrees of personalization, from a package choice of A, B or C to complete personalization.”

The median purchase price of a newly built home in March 2019 was $302,700, according to the Census Bureau, about 17% higher than the median sales price of an existing home that same month, according to the National Association of Realtors. 

Knowing what upgrades cost

New homebuyers should start with a loan preapproval so they know what they can afford to spend on upgrades while still qualifying to buy, says Slevin. Then, they can compare what’s included in the base price with their priorities. 

“Buyers should do their research and ask about what choices are available for standard features and what upgrades may cost,” says Brian Hoffman, a third-generation owner of Red Seal Homes, a custom and semi-custom home builder in Chicago.

A budget discussion should be part of the first meeting between buyers and a builder, says Jennifer Vargas, senior designer for Thomas James Homes, a custom and semi-custom home builder in Aliso Viejo, California. She says she helps people make smart choices for the features they want – based on how budget-conscious they are.

Pokorski prioritized her spending on the best plot of land her family could afford and choosing room sizes that fit their long-term needs.

“We focused on putting our money into the lot we wanted and things that can’t be changed,” Pokorski says. “Design trends can change in 10 years, but you can’t easily change the size of your family room.”

How long you intend to keep the home should influence your appetite for customization and your budget.

“If you plan to be in the house for the long term, it could make sense to spend more to get the house you want. But if you’re more transitory, you should be conscious of overspending,” says James Simpson, chief financial officer of Thomas James Homes.

Get help with choices

Coordination between a designer and a field supervisor for your house can keep you on budget by reducing the need for change orders for things like flooring or window placements, Simpson says.

Most builders have a “design center” where buyers can consult an expert to see their options for finishes, like kitchen cabinets and bathroom tiles.

“Our builder gave us an idea about how much money people typically spend in the design center and we stayed well below that,” says Sue Gallice, a stay-at-home mom to three children who bought a house designed and constructed by Darling Homes, a semi-custom home builder in Houston.

Sue, 46, and her husband, Frederic, 47, a geophysicist, relied on advice from their real estate agent to make choices that wouldn’t negatively impact the resale value of the property. A home that’s drastically different from its neighbors could be tough to sell.

“My husband has a seven-year itch when it comes to houses, so we needed to be careful to build something comparable with the rest of the neighborhood,” Gallice says. 

Design center experts and builders can also help buyers stay on track.

Gallice, for example, balked at the $7,000 price tag to add a picture window to the family room. Instead, her builder moved the windows in the plan one foot higher to provide the view she wanted. She also saved $3,000 by taking the designer’s advice to install fewer of the expensive hexagonal tiles she liked. 

Gallice declined to say how much they spent on their home, but base prices in their community start at around $687,000.

In New Jersey, Pokorski found ways to lower the cost of her home by working with the designer to tweak the kitchen plan.

“She helped us figure out where we could make compromises, such as keeping the standard kitchen cabinets we liked but upgrading the counters,” she says. 

Upgrades are usually financed into the mortgage, but excessively expensive options can trigger a bigger cash requirement. 

“If someone is spending a lot on upgrades, we may require 25% or even 100% of the options to be paid with a deposit,” says Hoffman of Red Seal Homes in Chicago.

If you’re eager to move quickly, that should factor into your decision about building a new house.

It takes as little as six or seven months to build a production house, a home that is one of many in a community and built from just a few available floor plans with a limited menu of choices.

But building a completely customized home can take up two years, says Simpson. Semi-custom homes fall in between in terms of price and time required.

Getting what you want doesn’t have to break the bank; the right builder can provide personalization to match your budget.


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