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Building Your Dream Home Sounds Sooo Romantic, But…

Building your dream home is a lifelong aspiration for many, but the process itself isn’t all that dreamy. Here are six pains to the new home construction process (and herding a dozen different contractors is only the beginning).

Building your dream home may not be as dreamy as you thiknk.Remember that Grey’s Anatomy episode where McDreamy brings Meredith to the top of a mountain at night and uses hundreds of candles to light up the layout for their dream home that he plans on building? It was the swoon heard ‘round the world. If you’ve ever thought about building your dream home instead of buying a “used” home, that possibility may be within reach. But anyone who’s built their own home before can tell you that building your dream home isn’t all romance.

The process of building your own home is mentally draining even if you hire a contractor to do all of the physical work. The process of building a new home involves hundreds of decisions that you must make, some of them that you have to make very quickly.

To buy or to build, that is the question

Building a home is preferable to buying an existing home in some aspects because you get to choose all the details. How often have you walked into a home and thought, “I love the layout, but I would have to change the white tile on the kitchen countertops to granite and I hate the color of carpet”?

Instead of buying an existing home and having to change just about everything but the structure and “bones” of the house over time, if you build it just the way you want it from the start you won’t have to deal with projects down the road.

Another advantage of building instead of buying used is the quality of construction. Though not always the case, typically newer builds use superior (and safer) construction materials. You won’t find asbestos or lead-based paint in a brand-new home.

That’s the good stuff. But building your dream home is not all fun interior design decisions. Here are six BIG pains of new home construction to consider before you build.

Six pains of new home construction

1. Building new may cost you more.

In some cases, you may be able to build a new home for less than you could buy a similar existing home, but it often doesn’t work out that way. Remember that construction is almost always “over time and over budget”. With an existing home, the benefit is you know how much you’re going to spend. Any additional renovations may be done down the road. With a custom build, it’s harder to budget.

If you’re going to go the new construction route, build because you can afford it and it’s what you want, not because you think you’ll save money.

2. Custom homes are harder to sell

Consider the needs of your family, now and in the future. If you customize your house too much it will be harder to sell it. For example, if a family of two decides to build a custom 4,000 square foot home with only two bedrooms but lots of entertainment space, they’d better be prepared to stay there for a while.

If you are at the stage in your life where your family may expand, you should consider building at least one extra bedroom than you need right now. You can always use it as an office, exercise room or guest bedroom for the time being. In the designing stage of your home, create a list of needs first and budget for those. If you have any extra room in the budget then move on to a list of wants. For example, work on getting bids for a beautiful kitchen and the amount of bedrooms and bathrooms that you need before creating a man-cave or a salon.

3. Buying land isn’t easy

Buying land is the second step in the home building process, after the preliminary planning and budgeting step. It’s an extremely important step because as the saying goes, “location, location, location”. Land is immovable and has a huge impact on value. Use a real estate agent or broker who sells land (not every agent does).

Be sure to find out what stage of the entitlement process the land is in. Is it raw? Does it need utilities like power lines and sewer? Are their paved streets to the driveway? Most importantly, do local zoning laws allow you to build the kind of home you want on the land? There are many varying degrees of completion and zoning restrictions on land so you need to be sure to find out what stage the land is in otherwise you could end up with a big project (and the big bills to go with it).

When you’re in escrow to purchase the land, get friendly with the city or county’s building and planning department. Find out everything you need to know about local building permits so you know what fees to expect.

4. Prepare to spend on the unsexy stuff

It’s easy to get caught up in the parts of a new home you see — countertops and door hardware, for example — but the things you don’t see are actually far more important. Don’t skimp on the big four line items in building a new home: plumbing, roof, electric and HVAC.

Make sure the “bones” of your new home are of quality materials and ensure that the right tools and equipment are used during construction. One can easily change the faucet, sink, counters, but it is difficult and costly to repair roofing, insulation, or windows and frames of a home.

5. You’ll need cash (and lots of it)

It’s more difficult to find financing for land (as opposed to an existing home), so many buyers pay cash.

However, if you do end up getting a loan on land or an interim/construction loan, do not pay late! Falling behind could mean halted construction or, in the worst case, losing your home before it’s even built.

If at all possible, save up as much prior to the project so that you can either buy all cash or put down as much money as possible because interest rates on construction loans can be high. If you get a loan for the construction you can refinance into a traditional mortgage once the home is completed.

For in-depth home building plans, you may want to use a computer program or website. For as little as $5.95 per month, Homezada.com will help you track your home-related finances, home improvement budget, and to do list and forecast your spending over time. It will even help back up your documents such as warranties and contracts.

6. Contractors! (Need we say more?)

Everyone who owns a home has a contractor story. Yes, you have to watch out for shady contractors. In reality, though, most contractors are well-meaning and do good work, but some either a.) overbook themselves and fall behind or b.) are good at their trade but need some help with their communication skills.

Do your research before hiring any contractors. If it’s available in your city, subscribe to Angie’s List as a place to start gathering recommendations, then call references before you hire.

If you’re trying to save money, do NOT do it by hiring the cheapest contractor.

If possible, ensure you get a fixed price contract from your contractor to lessen budget problems and unforeseen cost overruns. Also, consider when you would like to move into your new home and construct a timeline with your contractor so you are not left estimating and guessing throughout the process. Read more about how to hire contractors successfully.

When work begins, be sure to pay all of your contractors on time (did we mention it helps to have a lot of cash?) In many states a subcontractor and file a lien on your property if he isn’t paid by the general contractor, even if you did pay the general contractor on time.

Building your dream home is a lifelong aspiration for many, as such it’s not something to rush into. The key to building your own home successfully (and cost-effectively) is to take your time and plan carefully. If you’re crunched for either time or money, save yourself the hassle and heartache.

Have you ever built a house before? If so would you do it again?

Published or updated on December 18, 2013

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About Sarah Davis

Sarah Davis is a real estate broker in San Diego, Calif. She enjoys helping both buyers and sellers and was voted one of the top 10 best real estate agents in San Diego in 2013 by Union Tribune readers. In her spare time she talks about real estate on a local radio show and manages her website RealtorSD.com.


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  1. Jason says:

    To add on to the “bones” importance. Make sure a house is well insulated and not juts built to the minimum allowed by code. There should be no excuse to still 2×4 walls instead of slightly costlier 2×6 construction.

    Also – make sure that the inspectors actually inspect…which can involve following them around. While most do good work, there are some that will inspect the home with a cup of coffee from the driveway, particularly if it’s a later house in a development.

  2. Jim says:

    Great post Sarah, and you are so right. Paying for the unsexy things is such an important lesson. We owned a house where the previous owners didn’t live by this principal, because the house never heated or cooled efficiently. As a result, our utility bills were excessive. One other thing with building a new house, drywall and nails pop, tape pops and tears, and concrete settles. You better be ready to hire a drywall professional about 2-3 years into owning a new house, oh and then a painter to repaint what had to be fixed.

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