Accurately Estimating the Cost to Build a New Home in New Hampshire
Cost per square foot? As a customer it is a logical and eager question to ask a home builder. On paper, it's a nicely organized and itemized list of costs in one single figure. Unfortunately, it is not that simple. The reality is that the cost per square foot isn’t the greatest method of accurately estimating the costs associated with building a new home. Cost per square foot plays an important role but it also has limitations as an accurate predictor of construction costs.
For example, asking a custom home builder “What is the cost per square foot?” is very similar to asking an auto repair person what it will cost to fix your engine before she/he has had a chance to see it. With little information, a price is just a random number. Does your car just need an oil change, or do you need the engine rebuilt?
Why do clients ask builders for the price per square foot?
Will the home be affordable? Will the home you want be within your budget?
Everyone says it. Bank lenders, realtors, appraisers – it a common term used in the home market.
You want a fair price. With so many factors – using cost per square foot initially seems like a great way to ensure you are not paying more.
Price / square footage = Cost Per Square Foot (CPSF)
Cost per square foot explained
Until Groen has identified every cost associated with your home or commercial building, including construction materials, plans, labor, bids from all subcontractors, site work/lot preparation, interior finishes, etc., the “true” cost per square foot cannot be accurately calculated. In short, until an official estimate is drafted, this number will not be accurate. It is difficult and can be confusing to outline all the ways each builder determines the cost per square foot. At Groen Construction, we follow the industry standard for calculating square foot price:
Total cost of the home / Livable SqFt** of the home
**Garages, porches, driveways, unfinished spaces (like attics and basements) are not included in livable square feet, but the cost of these areas are included in the total cost.
Why can the cost per square foot be misleading?
If you are using the cost per square foot to compare construction estimates between contractors, you are likely not comparing apples to apples.
Groen Construction can build a 3,000 square foot home with a 300 square foot porch and a standard garage. Or, we can build a 3,000 square foot home with 600 square foot of porch and a three car garage. Although they are both 3,000 square feet, the later home will cost more on a square foot basis.
This also applies to finishes:
Groen can build a 3,000 square foot home with standard finishes and another 3,000 square foot home with vaulted ceilings, higher-end finishes and there could be a $50+ per square foot difference between the two projects. An important thing to remember is that the cost per square foot is only helpful when you know everything included in the builders cost. You need to consider all the costs associated with finishes. Example finishes to be considered (including but not limited to):
High efficiency furnaces
Premium garage doors
High end plumbing fixtures
Granite counter tops
Flooring and tile
Developing a detailed construction contract is critical and should be done as early as possible. The more detail included in the contract, the most accurate your home costs will be, and the greater likelihood that you will remain within your construction budget. Several key areas that you should identify in your contract are:
Reasonable building allowances
Costs of connecting utilities
Costs of septic system
Cost of driveway
Cost of sidewalk(s)
Cost of landscaping
What spaces will be heated and unheated
Energy efficient building materials
The final costs are not just determined by the size of your home. Specific features, material quality and the architecture style also play a critical role when establishing new residential construction costs.