You want to build your dream home? Let’s talk about money.


Houses can either be a commodity style – say a ranch style house – or they can be attempts at art. With ranch styles houses, there can be some differences in quality among them, but the shape and structure is typically the same. At their worst, the lowest possible denominator exists:  minimums everywhere – from weak footers, bottom feeding framing, sloppy electrical and plumbing, least efficient heating and cooling installed in the sloppiest possible way, leaky windows and doors, bare minimum insulation installed haphazardly, vinyl siding installed over a leaky exterior envelope. This is the ABSOLUTE norm in the housing market around here – particularly speculatively built houses. The price of this house is cheap on the front end – expensive as you go. 

     Houses which attempt art are another story. I’ve heard it said that the point of architecture is to evoke a certain emotion. Now you’re into something completely different. We’ve moved beyond basic shelter. We are in another realm. I think some people are more sensitive to architecture than others – just as some people are more sensitive to tastes than others – a certain wine here, a specific flavor there.  If you are someone who is susceptible to architecture, then read on.  If not, there is no good reason to build an architectural structure.  Do you simply feel better in certain kinds of space? What’s that worth to you? That’s what you are paying for. Comparisons to costs for typical housing are meaningless. 
        

      I’ve been at this for a while. I’ve built my share of complicated, architectural structures.  In this geographic area, I have a reputation for taking on difficult projects.  Some builders – who may otherwise have the skill to build these structures - don’t want to take them on because they are out of the “norm” and, consequently, they are exceedingly difficult to estimate - and that makes them uncomfortable.  It makes me uncomfortable too.  However, I just push on.
        

     First, let’s dispel the notion that these kind of projects are $ XXX per square foot. They cost what they cost.They are a function of the following:

• Foot print of structure (how much ground does it cover)
• Square footage of structure (total square footage on all levels)
• Volume of structure (cubic feet)
• Unique quality (how much does it veer from a “ranch” style house – scale from 1-10)
• Exterior finishes (what are they and how are they organized relative to each other)
• Interior finishes (what are they and how are they organized relative to each other.  I tell folks, the more you want to reach out and touch a finish, the more expensive.)
• Systems (all the parts that run the house)
• Tricks (these are things that are atypical, one offs, etc.  It’s been my experience that steel usually gets involved in “tricks.”)
• Site considerations (lots of room to work, flat ground with no rock, 50’ off the main road?  Or something else.)
• The “X” factor.  This is the unknown stuff on a job.  The more complicated the job, the bigger this factor. 

        I think the tendency to minimize the unique quality and the size of a structure is common.  But denial is an unfriendly building partner.  People want to convince themselves and the builder that their structure is not that big or not that different.   It’s my job to try to shed as much light on this as possible.  My favorite quote from an out-of-control designer many years ago – when confronted with a particular detail on his “just in time” design – was: “it’s not that bad.”  Said 100 times on a job, and you’ve got a disaster. 

      If you trust your builder, you are better off building time and material.  If you don’t trust your builder, you are better off getting another builder.  I recently built a very complicated fireplace.  It involved using an existing flu on the next floor up.  The fireplace itself was very complicated – involving steel (remember “tricks”.)  I contacted some masons.  These guys are the salt of the earth.  They are just working men.  They are not looking to get rich.  They just want what’s fair:  fair to them and the customer.  Perfect.  Now, I asked them to estimate the cost to build this fireplace.  We met with the architect and he explained it as best as he could.  These guys took the plans and studied them.  When they came back to me, they were greatly concerned.  They felt terrible.  They didn't know how much time it was going to take.  There were so many unknowns.  They had never done one like this.  They thought it would be around $30,000.  I was not surprised.  However, I trust these guys and felt that if we could get through the unknowns, it might get more straightforward.  In the end, this fireplace cost about $20,000.  So, had we had them bid this job, we would have paid more.  If we had them bid it and they missed it low, then we would have had unhappy folks looking to cut corners and get off the job as soon as possible.  Not a good situation either.  That’s the way it is on these complicated jobs:  most of the sub-contractors cannot see their part clearly.  They’ve never done one like this.  Remember, 99% of what they do is speculatively-built ranches.  Therefore, if pushed to bid a fixed price, they are going to cover themselves.  If you get someone to bid it low, chances are you have someone inexperienced, and now you have a whole new set of problems. 
        

      In the end – and here’s the important part – the owners decide how much the structure costs.  If your builder is working to control costs – knowing that no one is perfect – the cost of the structure is a function of the parts.  My job is much like that of a quilt maker:  the squares, many of them beautiful in their own right – need to be organized and sewn together.  That’s my job:  I organize and sew together the different pieces.  
       

     So, here’s the deal:  don’t ask an architect how much a structure is going to cost.  They don’t know.  Moreover, it is my experience that people do not want to hamper the creative process at the beginning.  They want to see what is architecturally possible and pull back from that.  Second, communicate honestly what your budget is.  Your budget is defined as the total amount of money you are able to spend on your project.  (Remember, if you don’t trust your builder, get another one.)  Then – and here’s the hard part – make an informed guess as to how far from the norm your house is – with “1” being a speculatively-built ranch and a “10” being a complete one-off design, plenty of tricks, nothing “typical.”  Based upon this number, you want to hold a percentage of your budget in reserve.  Assuming $500,000 available, your “reserve” should be: 

• 1 = 10%        $50,000
• 2 = 12%         $60,000
  
• 3 = 15%         $75,000
  
• 4 = 20%         $100,000
  
• 5 = 25%         $125,000
  
• 6 = 30%         $150,000
  
• 7 = 35%         $175,000
  
• 8 = 40%         $200,000
  
• 9 = 45%         $225,000
  
• 10 = 50%      $250,000
          

      This is a human endeavor.  Therefore, it’s not perfect. There will be missteps. There will be frustrations. There will be bliss. That’s what you are going to get.  The more you resolve money issues on the front end, make design and finish element decisions on the front end – the more enjoyable the process.  Building a house can be a lot of fun for the owners.  However, if money is important and it’s not dealt with honestly, it will make the process miserable for all concerned.