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How to Estimate Home Building Cost?

There are many factors that go into home building costs and it can be huge task to even come out with an estimate.

The quickest way to estimate home building costs is to find similar houses in the area that has the same overall look and size of one that you want to build. Then take the selling price, minus the cost of the land and you will have a rough and quick estimate of the construction cost. This is, of course not an exact science, but by following this basic rule you will be able to get a rough estimate.

If the house that you are comparing with was built a few years ago, then you should factor in the appreciation cost due to increase in the cost of labor and materials at between 2 to 5% per annum.

Home building costs can be further influence by the interior feature of the home. Let’s say you want a completely furnished basement and the house than you are using as a reference does not. You should factor this into the cost estimate. A little here and there can add up to thousands of dollars.

Another way is to seek the help of a construction company. If you show them the type of house that you are interested in they should be able to respond to you with a quick estimate. Usually, due to expertise and experience, their estimate can be quite close to the actual building cost.

What if the house that you plan to build is different from what is available in your vicinity? Here is a tip. Go online and type in the terms ‘home plans’ or ‘house plans’. You will find many sites that offer thousands of house plans. You can search by type, size, number of rooms etc and for a small price you can download the blueprint. Then ask your friendly construction company to give you an estimate.

Yet another way is to use home building kits. Again go online and type in ‘home building kits’. There are many companies offering home building kits than contains everything (except labor) that you need to build a house. Then ask your construction company to quote for labor charges. Labor charges constitute a significant portion of the cost of building your own home and if you have the expertise, using a home building kit and building it yourself can reduce your estimate significantly.

No matter how precise or detail oriented you are in the planning stages, you must keep in that there may be an unexpected cost overrun. It is a safe practice to put away about 10 or even 15 % for contingency to ensure that you have the money to cover any overrun.

Home building costs can often times be very difficult to pinpoint. But if you use some of the methods described above, and by being precise and detail oriented, you will be able to come up with a very close estimate on your home building costs.


About the Author: Ken Fong
www.therealestatescoop.com
Terra Bites of Real Estate Information




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