Is 2023 the year you and your family will build your dream home with a custom home builder near you? If it is, you may be wondering how you can reduce home costs throughout the building process so you can invest that money elsewhere in your home, or have more money in your pocket at the end of the home building home building experience.
Below, we have provided 6 proven ways to save money on a custom home:
1. Choose a Builder Who Will Save You Money
2. Utilize Instant Equity for Additional Savings
3. Offer Sweat Equity in DIY Projects
4. Pay for Site Work at Cost or Do Some Yourself
5. Provide Your Own Design Materials
6. Save on Projects You Could Do Later
Just keep in mind that what options and flexibility you have will depend on your location and the home builder you choose.
When selecting your custom home builder, look closely at their value engineering processes. Are they already providing parts of the project at the lowest cost?
At Hedgefield Homes, we have already value-engineered our homes and our home designs to start at an affordable entry price, which allows people who want to customize their home to do so to their own specs and wishes.
Think about car improvements. You won’t see someone buy a Lexus and then say they want to trim out the leather interior and fine handling of the car to make it into something different. It would make more sense for someone to buy a Toyota Camry that they then engineer and make into a Toyota Highlander.
You can think of it in a similar way with custom home building. You start with a home that is already designed and engineered in a way that is beautiful, functional and high quality but something you can add your own preferences and upgrades to to make it what you want.
Another great way to save money on your custom home build is to make sure you are properly utilizing instant equity.
For instance, the larger the down payment you can make, the more equity you can have in your home. The shorter the loan term, the more equity. The more improvements you can make at an affordable cost to your custom home, the more equity you’ll be able to get in the appraisal.
To help you, we have provided some information on which feature upgrades will add the most value to your home.
Before assuming you can do some of the work yourself, make sure you talk with the builder you’ve chosen about this - as each builder has their own set of processes and allowances.
For our customers, we are happy to work with them in a few different ways if they want to provide their own labor to save money, but we also have a few areas where we cannot source out work.
If you would like to work on your home and save some money, there are some projects we can source out to you. However, we have to have a clear understanding between us that we will only source this out as long as the work can be done in a professional and high-quality way - or else it could negatively affect the appraisal value of your home and the work we put into it.
Some common work we can source out in our home projects include:
- Painting - If you want to paint your house and provide the paint, you can certainly do that. It's a great way to save some money, and we can credit you the price of the labor we would have charged and the cost of paint.
- Tiling - If you want to do tile or flooring and you can do this in a professional way - and the municipality where your home is being built allows it - we will allow you to do that.
- Contract Work - If you are a licensed contractor of a particular trade, we may be able to make use of your skill set on your home project, as long as you qualify through insurance as a vendor for our vendor onboarding program.
There are a few pieces to your custom home build that we cannot allow you to do, just as part of our own set of processes and wanting to ensure the integrity of your home.
- Foundation
- MEPs (mechanical, electrical, plumbing)
- Drywall
- Roofing
- Framing
- Cabinetry & counterops
These projects require professional contractors and are integral to the integrity of the home. And as shown above, even though there are some other foundational elements we can allow you to do, you have to be licensed professionals within our program before we are okay with signing off on that.
So when you think about what projects you would want to do yourself to save some money on your custom home, think the more cosmetic the project, the more likely we will be willing to consider it.
Another way to save money is finding a builder who offers to assist with site development at cost.
Your builder needs to make sure your lot is ready for a house to be built on it, and this can sometimes take a lot of improvements - i.e. tree clearing, dirt work, pad site grading, etc.
Find a builder who will help you get this work done at cost and will help you budget for site work at the very beginning. There may be some areas of the site work that you would feel confident doing yourself, in which case you may be able to do that work and get some money back into your pocket for that labor.
A few builders though - us included - do not mark up the site work. These builders will assist the owner in gathering quotes for things like wells, septic systems or electrical runs, and will help facilitate the work without actually including in their scope of work. So you don't pay markups on site work like you would if you were buying a house/lot combination.
There are some design materials that we are happy to let you provide for your home and that we could credit back to you.
For instance, some of these materials might include:
- Light fixtures
- Appliances
- Specialty sinks
- Front door
If it’s something that is important to the project timeline and needs to be installed by our builders, you just need to get the materials to our vendors when they need it for the install.
There are some projects that may not be critical to add from the beginning - i.e. landscaping, putting in a pool, adding a fence, installing a storm shelter, finishing out a bonus room, etc.
If you are tight on budget and trying to save money while you get your house built, think about saving some of these other projects for later; just keep in mind and talk with your builder about which items will add to the initial appraisal of your home and which will not, as this can be another financial factor to consider.
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