8 New Construction Money Mistakes That Could Cost You

Building your own home is an exercise in careful budgeting. Each and every dollar needs to be accounted for, or your build could get away from you. Still, even if you’re careful with your budget, you might be making mistakes that cost you in the end. Maxing out your money might be less about choosing cheaper tile and more about managing your build with the future in mind. Don’t make these mistakes or you could be paying for years to come.

Consider resale value even if you don’t plan on selling your home. Image: Livingstone Design + Build

Ignore Resale Value

Most families build custom homes because they want a specific end product. Unless you’re building a home as an investment to sell, chances are you plan on spending years in your new place. But just because you don’t plan on selling doesn’t mean you won’t. Changes in lifestyle, careers, and budget could result in needing to sell. If you designed and built your home only thinking of what appeals to you personally, it might be a hard sell. Distinct features you fell in love with could be dealbreakers for buyers. That’s why it’s best to add personality in less permanent ways. Remember, paint color is easy to change; bright yellow bathroom tile isn’t.

Borrow Your Max

Building the house of your dreams means you have to be comfortable with spending money. But maxing out your mortgage on day one can cause you thousands in interest and stretch your budget too thin. The general rule of thumb for mortgages is that your housing costs (including HOA and any other fees) shouldn’t exceed 28 percent of your total income. Just because your bank is willing to lend you more doesn’t mean you should borrow the maximum amount. Make some concessions, borrow less, and you’ll be glad for it.

Negotiate for design credits or incentives to save money. Image: 30E Design

Not Negotiating 

Building a new home isn’t like buying an existing one. Builders have their costs, so there’s no room for negotiation, right? It’s a common misconception in real estate, but it couldn’t be farther from the truth. Builders have room for negotiation and agreeing to their price right away could cost you thousands. Whether you ask for a better price outright or negotiate for better incentives or allowances, don’t accept that first price at face value.

Forgetting Your Responsibilities

Unless your builder agreed to finish the home and landscaping start to finish, there are parts of the build that are your responsibility. Usually, this includes things like minor landscaping (think laying sod or planting your garden) but it may also include sweat equity items, like painting or putting up trim. Whatever your responsibilities, don’t forget to budget for them. The materials and labor won’t be included in your builder’s price and you’ll need to pay for them out of pocket.

Building Too Big

A spacious home sounds like the American dream–until it comes time to heat and cool it, that is. See, even if you have the money to build a large home, it might not be the most cost-effective option when it comes to paying for utilities and the day-to-day running of the place. Building bigger doesn’t always mean building better. A good designer can create smart spaces that feel spacious without being too expensive for everyday living.

It may be cheaper to finish your basement now. Image: Grace Hill Design

Procrastinating Projects

It’s an all-too-common way to save on a new build: just put off some of the finishes for another time. An unfinished basement seems like a money-saving tactic now, but it could cost you in the long run. It’s much cheaper to pay for a finished basement when contractors are already there and purchasing materials in bulk. Procrastinate that project for a few years and you’ll pay a premium for a contractor to purchase materials and come to your home specifically to work on your basement. If you have money in the budget and you know you want a finished basement (or completed deck, or landscaped backyard), have it done as part of the build process and save.

Use Your Builder’s Lender

Almost all builders have a “preferred lender,” where they send most of their buyers. And, if that lender offers the best rates and incentives, they very well might be the best for the job. But it’s always best to shop around for lenders that will offer the best rates, especially if you already have a lender you like. A builder might offer upgrades for using the preferred lender, so you can use that as a bargaining chip when negotiating rates or getting the best bang for you upgrade bucks. Remember, you’ll have your lender for decades; it’s best to make sure you work with one you trust.

Trying to keep track of your build budget can have you wishing you’d paid better attention in math class. But as you add up receipts and make choices, don’t forget to keep the bigger picture in mind. Paying for a new home doesn’t only happen during the build process, but for years to come after your move-in date. Make smart choices now and you’ll be paid in peace of mind later.

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How to Visit Your New Home Construction Site

After months of prep, your new construction home is finally starting to take shape. You’re excited, and you understandably want to track your home’s progress from top to bottom. Visiting your construction site is a great way to stay connected to your home throughout the process, but popping in unannounced could do more harm than good. If you plan to visit your new home during construction, remember that it’s about respect. Workers, superintendents and contractors are working hard on your home, and your visit shouldn’t derail their progress. Here are some things to keep in mind as you visit your new home construction site.

visit your new home safety

Talk to your builder about the potential to visit your new home. Image: Erotas Custom Builders

Talk to your builder

If you plan to visit your new home construction site, ask your builder about safety rules. Your builder likely has policies in place to protect homeowners from injury while visiting construction sites; ignoring those rules could put you at risk. Your builder may also invite you to the construction site for informal inspections throughout the build process, so scheduling your own visits could be unnecessary.

Make sure you follow all of your builder’s rules, especially those for safety. You might be counseled to wear certain clothes or be asked to leave your kids at home to reduce the builder’s liability in the event of an injury.

Schedule a time

Driving or walking by your build site every so often is no big deal, but if you want a closer look, it’s best to schedule a visit. A new build is a complicated dance of scheduling and contractors, and having you there could mean stopping work. While there may be contractors on site, your superintendent or general contractor might only come by once a day to check progress. Without a superintendent, you won’t have a reliable guide to walk you through the home. It’s unlikely that various contractors will know anything about your schedule or progress, so it’s best to wait until your super is there. That way, the build site can be decluttered for safety and you won’t be disrupting contractors as they try to get the job done.

Schedule an appointment with your super for a tour. Image: Domiteaux Architects

Dress appropriately

New build sites are messy, dusty and potentially dangerous. Visiting the site without the proper clothing and footwear could cause injury. Here are some general tips for dressing the part.

  • Wear closed-toe shoes. Exposed nails and wood splinters are common complaints for unfinished homes, and sandals and flip flops leave you at risk.
  • Expect to get dirty. Wear older clothes you don’t mind getting dirty and expect dust, paint and plaster.
  • Bring a flashlight and measuring tape. You might not have electricity, and a tape measure comes in handy for thinking about furniture or window treatments.
  • Follow all instructions for safety gear from your builder. Hardhats, gloves and goggles may be required for site visits.

If you don’t dress the part, your construction site visit could be cut short or be downright dangerous.

Document the visit

Don’t forget to spend some of your site visit documenting the build process. Pictures are great mementos, but documenting dates, measurements and processes can also help you in the future. Say you’d like to replace a light fixture, for example: Pictures you took during the process could help your electrician locate wiring and panels. Recording your paint colors means a better match when you accidentally scuff a wall. A shot of your newly framed wall allows you to find a strong stud before hanging a heavy mirror.

As you walk through your new build, take plenty of pictures and keep a folder of things like paint options, countertop choices and plumbing and electrical details. It might be hard to imagine now, but you’ll look back on the build process fondly. Having good documentation contributes to your home’s legacy.

When a new build feels like it’s dragging on and on, it’s important to visit your new home to stay sane. Tracking your home’s progress makes you feel more optimistic and enables you to see how far you’ve truly come. Just make sure a home visit doesn’t inadvertently throw your build off track. By scheduling a time with your builder and obeying safety rules, you can check out your progress and stay on schedule.

Do you have any additional tips for visiting a new build construction site? We’d love to hear them below.

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