COST PER SQUARE FOOT: WHY IT’S A TERRIBLE WAY TO PREDICT THE COST OF YOUR HOME

“How much will my house cost per square foot”?  It’s a question that builders get asked a lot and it’s a fair question.  However, when a potential client asks this question without plans in hand, builders literally cringe.  It’s not that we don’t want to answer it, it’s just that there isn’t a simple answer and builders struggle to communicate  as to why there isn’t a simple answer.  In addition, it’s a terrible way to predict the cost of your home.

Imagine if someone called up a car dealer and asked how much it would cost for a car.  They tell the salesman that they are looking for a really nice car but not top of the line.  The dealer would have to have much more information in order to even come close to an estimate.  First of all, “really nice” is relative.  To some, a Ford Explorer might be really nice but to others, that might mean an Autobiography Range Rover.   Big difference in price.  And beyond that, do they want leather seats? A sunroof? What about the stereo system? 2 wheel or 4 wheel drive? Turbo?

Now extrapolate that out into a custom home that is many, many times more expensive, thereby exaggerating the price range differences.  In addition, there are far more options on a home with a very broad range of costs.  When you carry out all of the potential differences in all of the thousands of potential components in a custom home, the range is so wide that you might not even land in the ballpark.  We really have no idea how much your custom home will cost without seeing at least conceptual plans.

Curves are more expensive than straight
You can imagine the cost difference between a ceiling like this and a flat, 10′, ceiling.

A few months ago, a potential client was trying to figure out how much framing would cost, knowing that this has become the major cost in a custom home.  “Well you know how much it will cost per square  foot  to frame a house, right?”, they insisted.   No, we don’t.  Is the house going to be a simple rectangle or will it have angles or curves?  Also, did you know that it costs far more per square foot to build a long, shallow home than a big square home? That’s because the ratio of walls per square foot is much higher in a long rectangle than a square.   Is the lot flat or will earth work be required?  Are the walls 2 x 4, 2 x 6,  or 2 x 8 or a combination of these sizes? How high will the ceilings be (10 ft versus 8 ft makes a big difference in price) and will they be the same height throughout?  How many window and door openings, etc. etc. etc.  And that’s just the framing!

An area that impacts the cost in a huge way is that of finish materials.  Take for example an appliance package.  You can get an entire suite of GE Stainless appliances for $3,000 but just your Wolf Dual Fuel Steam range can set you back almost $20,000.00.  As you can see, there are so many elements can drive huge price differences, making a cost per square foot estimate

This Wolf 60″ Dual Fuel Steam Range will set you back almost $20,000.00

very unreliable.  To illustrate even further how difficult it is to give a cost per square foot estimate that will even be relevant…. we could build several homes with the same exact plans, on the same lot and the cost per square foot could vary from $165- $385-  just due to the variances in the finish materials selected!

Then add the fact that different builders quote cost per square foot differently.  It used to be that only air conditioned square footage was the number that was used (called livable square footage) but now some builders are including expensive non-air-conditioned space (non-livable), as well. Let me explain, back in the day the non air-conditioned spaces were relatively inexpensive shells: garages, patios, etc.  But many custom garages now have cabinets, epoxy floors, a sink, a ceiling fan, expensive garage doors, exterior architectural elements, etc.   Patios no longer just have the standard grey broom finished concrete.  They  have expensive flooring, outdoor fireplaces, and the same expensive roof over it.  If you have that expensive non-livable square footage being thrown into the livable square footage, it makes the cost per square foot in the a/c space deceivingly expensive.   Imagine if one builder is giving a cost per square foot estimate based on this method versus one who is quoting it based only on the livable space?  This would be skewed on the low side.  Think about it, an expensive garage has a far greater cost per square foot than a basic bedroom so by excluding this from the cost per square foot estimate, you are leaving out some major costs.  Something else to keep in mind when talking cost per square foot is that,  all things being equal, a smaller home will have a higher cost per square foot because expensive spaces; such as, kitchens and bathrooms, are a greater percentage of the overall space.

When a builder is pressed for an answer on cost per square foot , if he (or she) guesses too high, the client may not move forward with a home that actually would fit within their budget and if he guess too low, they may proceed and then not be able to afford the home.  It’s a real catch 22 and that’s why builders hate this question and struggle to answer it.  It’s not as simple as one might think.

Some things can you do to make sure that you don’t end up with a home you can’t afford to build

First of all, you can have your builder show you some plans, elevations, the finish material list and approximate cost of some of the homes they have built.  That way you can get a general idea about what kind of home  can be built in a certain price range.

The other is to get architect and building designer recommendations from your builder. Find one that’s a good fit,  then have everyone sit down to discuss the client’s expectations. If both the builder and designer think that this is doable, then you can proceed with confidence and if not, then you can decide where you go from there. If you move ahead, then you have a team who is well aware of the parameters in which they must work and the builder can check in with his trades and weigh in in real time.  In addition, if the owner is going to use an interior designer (highly recommend), then this is the time to bring them in, as well.

I can’t even tell you how many times people have come to us after plans have been drawn with an expectation of a certain price point based on a cost per square foot estimate and then are highly disappointed to find that the price comes substantially higher.  Often this is a result of the plans being designed with expensive architectural details or materials that aren’t easy to eliminate without going back to the drawing board.   Sad.  

I hope that this has given you a little more insight into why builders struggle when you ask them about cost per square foot.  They aren’t trying to hedge or be vague.  They just know that there’s a good chance that they will be wrong without more information.  Please feel free to share your input, questions or stories and let me know if there is subject that you would like me to address.

By Kimberley Cullumber Alexander, Partner,  Alexander Enterprises Construction & Development, Inc.

Disclaimer:  This content is proprietary and can only be shared as a link or if credit is given to the author.

CHOOSING A CUSTOM HOME BUILDER … are they more than glorified babysitters?

See more of this project on our website at http://www.buildnaz.com/gallery.php

So imagine that you have worked for years, saving enough money to finally build your dream home.  You get a few builders to bid your home and you figure that they are all about the same, I mean, how hard can it be to babysit a bunch of construction workers?  Might as well save some money and go for the lowest price, right?  One truth I’ve found to be true over and over again  is this quote by Red Adai that the owner of our elevator company has as a byline on his email signature,  “If you think hiring a professional is expensive, wait until you hire an amateur”!  Nowhere is this as true as it is in choosing a custom home builder.  Many times over the years we have seen where the cheapest bid ended up being the most expensive.  This can be due to inexperience,  incompetence or intentional deceit, among other things.  There is no need to for this to happen to you, as there are quality, seasoned,  builders in every part of the country.  You just have to know what to look for.  The builder you choose will be the determining factor as to whether your project is a disaster or a success.

The client is good at their particular field, and that’s why they have hundreds of thousands or millions of dollars to build a custom home in the first place.  However, they are not experts in the intricacies and complexities of custom building, so the situation is often one of Buyer Beware. They don’t necessarily know how to tell if corners are being cut or games are being played.  This is why it’s essential to find a builder with a long track record (do you want the surgeon who has only done a few surgeries or do you want one who has operated on hundreds of patients?) and who has the clients’ best interest at heart.    As builders, we feel that one of our key roles is that of the homeowners “Protector”, per se.   A builder is the homeowner’s advocate and one with integrity will not allow the customer to be taken advantage of, spend more than necessary and he keeps everyone in check, so to speak.  Another way a quality builder protects the homeowner is by surrounding himself with like-minded trades, suppliers and reps.   The team we surround ourselves with prides themselves on educating the client, when needed, so that that homeowner can make wise and informed decisions on their selections.  In addition, these reputable companies will be there to help should any issues arise down the road.

A few months ago, we got a call from homeowners who were upset about some issues that had cropped up in their custom home that was about 4 years old.  They said they choose their builder because he was about $50,000 cheaper than the other 2 builders.  He had a winning personality and a clean record with the registrar but had only been building for a few years.  They said they knew of our reputation and thats why they called us to give honest input on the issues (keep this point in mind when you get to the end of the paragraph) .  When Kevin got to their home, he found that the upstairs shower had not been waterproofed or sealed properly and water had been leaking down the wall into the bathroom below, which had created a substantial mold issue.  Also, the granite top in the kitchen was cracked and come to find out there had not been any support placed below a span of 7′ of granite!   In addition, there was a good chance that the backsplashes would be destroyed when the granite was removed.   Also, the sub-floor had been installed poorly, there were leaky skylights and the shower in the master had one of those rectangular drains that was placed along the top of the sloping shower floor, forcing the owners to swish the water towards it with their feet in order to drain the water (I don’t even have words for this one),  just to name a few of the issues.  They said they had no idea at the time that they were choosing a custom home builder how many things could go wrong.  Oh, and he is out of business now.   I’m sure that this guy was well-intentioned but he clearly had no clue how to tell if the work being done was done properly.  They may be able to recover some money from the Recovery fund but that is a real pain in the you-know-what and only goes up to $30K.  After Kevin pointed out the issues, told them what needed to be done and gave them a competitive price to fix everything, they thanked him profusely but said they needed to find someone cheaper because they were already out so much money.  I guess they wanted to learn the same lesson twice!

Just a point I would like to mention here that is a real point of pride to me, and has a lot to do with choosing a custom home builder.  After Kevin graduated with a business degree, he went to work as a roofer and then a framer.  He had already been doing restoration work in high school but said that he was not going to be one of those drive-by builders.  He wanted to know and understand everything in a hands-on way.  So, I had convinced this California, surfer boy to move to Arizona after he graduated, and he went to work for a roofer in what was one of the hottest summers on record!  When he didn’t run back to Cali, I knew then that he would be an outstanding builder!  My point is not that every quality builder needs to have worked in the trades, but that they possess a deep knowledge of the nuts and bolts of building.

Complex 2nd story addition on a custom home we built several years earlier. We were able to preserve the existing ceilings, which is extremely difficult to do, which saved the homeowner’s a great amount of expense.  Kevin and our amazing framer figured out a system to keep the ceilings below in tact and the only evidence of all the demo above were a few nail pops.

Most of our clients come to us on their second custom home,  as after the first one they understand and appreciate the value of a seasoned builder who has survived the ups and downs of the economy.  A true professional will not only save aggravation, headaches and time, but they are almost always less expensive in the long run.

Think of a home builder as the hub or conductor that is orchestrating a complex project where quality and timing must be coordinated like a fine machine to pull off a successful project.  We interact with, coordinate and/or manage hundreds of people on any given project; such as,  the architect or building designer, engineers, interior designers, the lender, title companies, government authorities, inspectors, suppliers, reps, subcontractors, owners, HOA associations, architectural review boards,  realtors and developers, just to name a few.   In addition, a builder has to be able to solve problems and issues creatively, efficiently,  and in a cost effective and timely manner because many challenges arise on every project- it’s just par for the course. Also consider that the standards for your project will rarely rise above the standards of your builder.   So you see, there really are very important things to consider when choosing a custom home builder and we really are more than babysitters.  

Thank you for joining the conversation, which has been more of a general overview; however,  in Part II,  I will give you the insider details on what to look for when choosing a custom home builder and the Red Flags to watch for.

 

 

 

 

 

 

ENERGY EFFICIENCY: When is it worth the cost to upgrade?

Clients often ask how they should go about deciding if the cost of more energy efficiency is worth it.  This is NOT meant to be the end all be all on energy efficiency.   I’m just offering a few simple things that you can do to get a feel for whether the extra investment might be worth it-or not.

For example, a common thing that our clients have to make a decision on is what SEER value to go with on their HVAC units.  Should they go with a 16 or a 19?  How can they decide whether it’s worth it to pay more for that 19 SEER vs. the 16 SEER?   It’s not always a black and white thing, well it can be but that might take too much time, so you can solve for the basics and if it looks like it might be worthwhile, then ask a few more questions and get more information to make the decision more clear.

STEP 1:  FORMULA to calculate how long it will take to recoup your savings:

Divide the initial cost of the energy-saving investment by the projected annual energy cost savings.

Investment/savings per year= how many years to recoup

For example, if going up in Seer value on an A/C unit costs $3000 more per unit and the projected savings is $300 per year, then $3000/$300=  10.  It will take 10 years to recoup your investment and start paying off.

  • Will you still be in your home 10 years from now?   If so, then….
  • Will the material or item still be working at that point?
    • Many technologies are evolving so fast that it could very well be obsolete in 5, 10 or 15 years.
  • Will maintenance costs  increase or decrease?  If so, then factor in the increase or decrease in cost  for this.
  • How will the upgraded product influence resale or desirability of your home?
  • Is there any enjoyment factor or aesthetic, other than cost savings, that would make it worth it to you even if you didn’t recoup your money?

After answering these questions, it starts to become clear as to whether you should spend that extra money on more energy efficiency.

Here’s a quick example:

If going from a 14 SEER to a 16 SEER saves you approx. $81 per year and you paid $1000 more for the 16 SEER, then it would take approx. 12 years to recoup your money.  Then I always take into account having to pay up front for future savings, which causes me to discount it a bit.  I say a bit- there are formulas for this- but I just discount it a bit depending on how long I will have to wait to recoup the savings. The further the spread of efficiency between 2 things, the greater the savings; but that doesn’t mean that the savings is necessarily worth it,  although it often is.

Quick Side notes:

HVAC systems:  Your heating and cooling costs account for approximately 40-45% of your total energy bill so they are one of the first areas to investigate, as far as energy efficiency goes.  Units last between 10-15 years, so if you plan to stay in your home for less than that, and it will take 10 years or longer to recoup the investment, then it might not be worth it unless there is evidence that a buyer would value that enough to pay enough to offset the cost.

Appliances:  As far as appliances are concerned, they account for approximately 15% of your energy bill.  My suppliers have told me if an appliance was made in the 1990’s- it’s almost a no brainer that an energy efficient upgrade will pay off.    If appliances are newer, you have to be aware of the likely life of the product and make sure that the product won’t have to be replaced or that you won’t move before you recoup your money.  If you are deciding between 2 things with one having just a little better energy efficiency, then paying the higher price probably won’t pay off in a significant way.  One thing that can reduce your bill significantly are programmable water heaters.  Program them to not heat up during on-peak hours or times when nobody is home.  Otherwise, they are constantly heating up when there is no need to do so.

Windows:  Energy Star estimates that energy efficient windows can save up to 15% on your energy bill so they’re pretty important.  Energy efficient windows contain something called Low E, which is microscopically thin layer of metallic oxides that both reflect the sun’s ultraviolet rays and control infrared light .  New windows can cost anywhere from $8,000- 50,000+ and could take decades to pay off so if your existing windows  are pretty good already, then going up to a little bit better windows probably won’t pay off.  However, if windows are outdated with very little protection, it could be a wise investment.

Insulation:  Insulation is an area that can return more money than was invested, as far as resale on an existing home.  This is a big deal in energy efficiency but I will leave it for a future post.

I hope this helps a bit but it can definitely get complicated.  Our trades and suppliers are always willing to educate people on the ins and outs of the various products and help them make these decisions.  In addition, Energy.Gov’s site has a comprehensive collection of information on everything from windows to heating and cooling.

If any of my readers can shed any more light on this subject,  please do.

Here are a few other links that might be of interest:

Net Zero Homes

Energy Efficient Windows  

INTERIOR DESIGN TRENDS – a Builder’s Perspective (Part III)

Now that we’ve talked about all these cool Interior Design Trends, let’s talk interior design mistakes and why you should use common sense when incorporating trends.

Right now, there is a huge issue in neighborhoods across the country (and even in my own neighborhood) with homes that were done in the trend of the day.  For example, the homes that went with the heavy Tuscan vibe back in the day are not getting much love.  To remodel some of these can run into hundreds of thousands of dollars.   Tayler Alexander-Perez , of Launch Real Estate in Scottsdale, AZ, says,  “Years ago, people didn’t mind buying something and fixing it up but now days buyers want a home that is move-in ready.  At some point these hot trends cycle out of favor so if a trend has been used with a heavy hand, at some point the owner will either have to invest  a significant amount of money to remodel, reduce the price accordingly, or find a buyer gutsy enough to take on a major project”.     I find this to be true, we get calls after a home has sat on the market and the owner wants to know what they can do to make it sellable.  In a million dollar plus home, this can run into hundreds of thousands of dollars. This is good for our business but it really hurts to see fabulous homes that have become irrelevant due to trends.   To avoid this happening to your home, try to incorporate the trends in things that are not that big a deal to switch out and keep the big ticket items more timeless.  If you do your entire floor in a trendy pattern or every counter top in the trend of the day, then ripping it out and re-doing it is a major expense.  For some, money is not an issue and they can go for it, enjoy it and call us down the road, but for most people this is an issue.

Although they were all the rage years ago, overdone Tuscans aren’t getting any love these days.

I like to think of Interior Design Trends like my wardrobe.  If everything is trendy in my closet, then I’ll have to spend a lot of money every time the trends change. But if I have a few cool, trendy pieces that I can put with a mostly classic wardrobe, then I am able to transition with minimal cost throughout the seasons.  If you are unsure about how trendy you should go, it can be worth every penny to consult with a designer who is able to strike the perfect balance between Trend and Timeless Design (and yes, I know of some great ones).

Hey, thanks for spending some time with me discussing Interior DesignTrends and let me know your thoughts! I’m interested!

INTERIOR DESIGN TRENDS – a Builder’s Perspective (Part II)

Current Interior Design Trends continued (Builder’s perspective in Part III).

CREAMY NEUTRALS… IS GRAY PASSE?

I am hoping that some design professionals might comment on this.  I’ve heard from a few designers that Gray is going away….at least as far as being the main event in a space.  I am told that in New York and L.A., creamy neutrals, taupes, and bones are “THE THING” and I also noticed that there were very few of the cliche all gray and white colorscapes in the recent ASID design awards.  I understand that Grays will be incorporated as more of a minor accent role to layer with neutrals.  I love the whole gray carrerra marble/white cabinet trend but those who have used this throughout their entire house may end up regretting it.

Builder: Alexander Enterprises Constr. & Dev., Inc. Designer: Amy Bubier, AB Design Elements

WHITE OUT

According to the most recent edition of Remodeling magazine, “Homeowners are ready to ditch all-white kitchens”.       Darker cabinets (even black) are making a comeback and they are being used on their own as well as being mixed in with lighter cabinetry (see photo above, as well).

Builder: Alexander Enterprises Constr. & Dev., Inc. Design by Kimberley Cullumber-Alexander

CONCRETE

This is one of the biggest interior design trends of 2018.  Whether it’s a concrete floor, countertop or a faux concrete look on the wall, concrete’s neutral color is organic, earthy, durable and low maintenance. Geometric concrete tiles are going to be a thing, too.  

Builder: Alexander Enterprises Constr. & Dev., Inc. Design by Kimberley Cullumber-Alexander in collaboration with other design professionals.  Concrete floors, copper fire surround, Porcelanosa concrete look wall tiles.

VINTAGE: Especially Lighting Fixtures & Bucket or Trough Sinks.

Think farm sinks and nostalgia.  I LOVE Kohler’s new Farmstead cast iron vintage farm sink !  We have some client’s looking at this one and I would love to see it in their kitchen!  Note the matte black faucet (matte black is another current interior design trend).

Kohler Co. design center

REDS, PINKS BOLD YELLOWS & TEAL

Builder:  Alexander Enterprises Constr. & Development, Inc. . A bathroom from one of our award winning projects. .

I’ve seen yellow being used on a large scale and I love yellow because it exudes happiness and confidence. Be careful, though. In too great a quantity,  yellow can create anxiety, but in small pops, it is powerful.

Pinks, purples and gold quartz tops- one of the most fun bathrooms we’ve done!  Builder: Alexander Enterprises Constr. & Dev., Inc.,

Hey, thanks for spending some time with me discussing Interior DesignTrends! Let me know your thoughts! I’m interested!

Alexander Enterprises – Building Arizona Luxury Homes

Cabo Wabo - A luxury home by Alexander Enterprises
Cabo Wabo – A luxury home by Alexander Enterprises

Alexander Enterprises Construction & Development Co., Inc. is an award-winning boutique custom home builder, specializing in high-end, luxury custom homes in the Phoenix Metropolitan area since 1992. The founders, Kevin and Kimberley Alexander, are a husband and wife team who bring unsurpassed commitment and a combined experience to their clients of over 50 years. Their reputation as meticulous builders of the highest integrity is known throughout the industry. Their projects include custom homes, modest to lavish remodels, pools, commercial, commercial build outs and tenant improvements. Their award winning custom homes and remodels are among the finest in the Phoenix area.”  Let them know if they can be of service to you!