Well, it's been a long road to get to this point. The days of renting are almost over for us! A few months ago, my wife and I started the home buying process, and through some twists and turns have landed on building a home.
Very fortunately, we have a lot of people around us that have also built homes in the past (including our realtor…which I'll get to shortly).
We were able to pick up a bunch of wisdom during this first part of the process before the actual construction phase happens, which I felt would be really valuable for a lot of the young people out there that might go with the route of building a home later on.
There are few things that I've learned about building a home so far that could save you money
The home buying process isn't easy for sure, and I know that a lot of millennials like me are starting to dip their toes in the water.
One of the reasons that we decided to build instead of buy a resale home is that the Houston real estate market is pretty heavily tilted towards sellers right now. It looks like it will be for at least a little longer since inventory supply hasn't even come close to catching up with demand.
There were homes we were interested in that within one day had nine offers (at or above asking price) and were off the market almost instantly.
So, we decided to build (which takes about 5-6 months on average for our builder). It turned out to be in the perfect location for us, great schools for when we eventually have kids, and also most importantly…close enough to the water. 🙂
Here's what you need to know about building a home:
1. The initial price is NOT what you will actually pay
Fortunately, we went in knowing this ahead of time. Builders tend to price their homes in a really attractive way compared to the market, but the upgrades can absolutely destroy your budget if you don't have iron-clad discipline.
Nearly everything is more expensive through the builder. They count on new buyers opting for convenience and the idea of walking into a fully completed home instead of having work done cheaper later down the road.
In fact, the sales rep for the company told us that straight-up (which I actually appreciated).
You'll have structural upgrades, and then interior design upgrades. Our goal going in to this process was to focus on things that would help the eventual resale value of the home in both areas.
2. An experienced real estate agent is key
You can go into the home building process without an agent, but I'd highly recommend against it. Our real estate agent is highly successful, experienced, AND has built a home for themselves in the past.
When the sales people are giving their pitch on various items, having an agent that you can look over to and ask: “Can we do that cheaper later?”, or, “Do we actually need that?” is huge.
She really guided us to put our upgrades in the kitchens and bathrooms, but stay reasonable at the same time.
For example: get the granite that comes standard with the home because it's desirable to future buyers and great for resale, but don't buy the level 14 mega upgraded granite hand polished by Tibetan monks and cleansed in holy water.
It's a waste of money, because future buyers probably won't appreciate the difference. They just want to check granite off of the list.
3. Build a B house in an A neighborhood
Just based one what we are seeing from existing homes in the neighborhood, some people opted to build the largest and most expensive (4,000+ square feet!) homes possible from their builder.
While that sounds awesome, it also might make it harder for them come resale time. If you have one of the most expensive homes in a middle/upper-middle class neighborhood, there's a good chance that you are limiting your potential future buyers.
If a person can afford the largest home in our neighborhood, there probably isn't much stopping them from buying a slightly smaller house in an even nicer neighborhood instead.
We opted to go more towards the middle of the spectrum with our home size, which will probably make it easier to sell later.
4. Surviving the “design center” *MUST READ*
This is where the biggest bloodbath can occur, and is an experience that is clearly designed to make you spend way more money than you originally planned.
In the case of our builder, we needed to have all of our design options picked out before construction could start. We had two design center appointments, the first one being two hours and the next was three hours.
The problem with building a home is that the models you look at all have the upgraded options in them, which forces you to have a skewed picture in your head of what your house will look like.
If you were to pick everything from the design center that you saw in the model home, you're probably looking at $60,000 – $75,000 in upgrades. Just crazy.
Don't fall for the “convenience” of having everything done when you move in.
Again, the builder is counting on you just wanting to have everything done when you close on the house. Our strategy was to be more patient, and find places we could save money by either having the work done outside of the builder, or identifying things we could do on our own.
Here are a few suggestions:
1. Consider getting your floors done outside of the builder
Out of everything that we looked at, floors seemed to have the most insane markup. After our first design center meeting, we went to a few flooring stores to get quotes for the same work that the builder had quoted us, and it was pretty shocking.
For us, it will cost half as much to go outside of the builder and get better quality flooring.
That means that the house won't quite be “done” when we get the keys, but is it really ever done anyways?
2. Don't be afraid of a little sweat equity
The builder will get you on a lot of little things, like upgrading to fancier light switches for $300.
After researching the electrical blueprint of the house and doing some quick math on the amount of switches, I could probably do the same upgrade for $50 (or less) with an hour of time and a screwdriver.
In fact – most lights, fans, door handles, and anything else that's a small thing can probably be done much cheaper on your own. If you don't like the cheapest option or what already comes built into the price, just do it later by yourself.
Where you don't want to kid yourself is on the more serious things like major changes to electrical or tile work. If you think there is a high chance that you'll get fried by trying to add extra GFIs or something like that…let the builder do it.
3. Put your money in the kitchen and bathrooms, but don't be dumb
If you want to put in some tile accents in the bathroom or something that makes those spaces look “nicer”, that's cool. But similar to the granite that I mentioned earlier, don't put in some mega upgrade that nobody will notice.
If one style of accent tile costs $150 and looks pretty good, and another one looks incredible for $1,000, I'd suggest going with the cheaper one. You can get the nicer one when you're building your forever home later.
Also – don't get destroyed on cabinets. There are so many different add-ons you can do there (all expensive), but I'd just make sure you pick nice colors and good quality and be done with it.
4. Don't date your house too much
This is a term that I learned from my wife, but apparently “greige” (a mix of grey and beige colors) is super hot on Pinterest right now.
I'll admit, it looks pretty nice and I like a lot of the grey color schemes for floors, paint, and cabinets that we looked through. However, if you go too hard on a current design trend you might make your house a little harder to sell later.
Just like wallpaper and weird pink tile in the bathroom, the grey stuff will go out of style at some point. You don't want your potential future buyer walking into your home 10 years from now and saying “oh wow this looks SO 2017.”
As long as you keep future buyers in mind while you're choosing this stuff, you'll probably be fine.
5. Get outside opinions from people you trust and take pictures!
One of the most helpful things we did was take pictures of everything we could after our first design meeting and then show our friends to get their opinion.
I didn't care as much about what they thought from a “does this look pretty” standpoint. I wanted functionality tips.
Was our tile color too light? Is this carpet going to be a problem with pets? What do you think about the switches being here instead of there? Is this upgrade worth it over the long-run?
Experienced homebuyers will help you think of things that you didn't even know would be an issue if you've never owned a home.
The next post in this mini-series will be about the actual building process (expect it about 6 months from now)
We were told that the home would be done in October, but I'm expecting at least some delays and think it will realistically be finished in late November or even December.
I'm actually really looking forward to documenting everything and sharing that part of the experience. I keep hearing that you have to stay on the builders almost daily to make sure they don't cut corners, so I'll definitely be there!