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· Registered
27,559 Posts
Discussion Starter · #1 ·
Another thread made me consider that we haven't had this discussion in quite, here it is for open discussion: How do the builders price new homes?

I use a a specific cost plus, and give an estimate based on the total square feet, of all known aspects, with specific notes that change orders, special features not discussed at the time of the budget being drawn, and client choices will affect the final numbers.

A local realtor/builder and friend said that I am going against the industry standard...and that standard says homes are priced solely on living space.....I am still waiting on him to show me anything outside of what realtors claim to be the rules that says that.....:rolleyes:

My point is that while I will not nail down a specific price like many large builders can, I will do a true cost plus, which is way more bang for the buck. If they pick out granite counters, they have a cost. In the end, I may not get close to some really nice homes, but I don't have nasty surprises or cost over-runs either.

The average price of a custom home in Oklahoma today is running anywhere from $135 a sq/ft and up, depending on lot and location. The expected features of course are 3 car garage, and granite counters, custom kitchens, etc. The true cost of building these homes run somewhere around $70 on the total footage plus lot, and I think most "custom" builders literally price on the living space, and features, and try to beat the actual cost down so they make the percentage necessary on perceived value.

So how are the rest of you guys pricing?

· Always Learning
9,364 Posts
We are similar to you. We price a home for the features we can get the client to commit to and then budget the rest. Any item that can change due to selection get a budget and until the final selection is made that number is not fixed.

We don't price anything out by the sq. ft., but we are not doing cracker boxes or specs so every home we have built has been completely different.

I can say our average is similar to yours, around 135 on up. That's no lot and some upgrades. Thats just living sq. ft, the garage and basement are not used in the calculation.

It takes us weeks to complete a new home proposal and sometimes longer. I love it and hate it at the same time.

· Fine Handcrafted Opinions
2,227 Posts
Joasis said:
A local realtor/builder and friend said that I am going against the industry standard...and that standard says homes are priced solely on living space.....I am still waiting on him to show me anything outside of what realtors claim to be the rules that says that.....:rolleyes:
I think realtors are pretty much worthless, yet almost indispensable at the same time. It's kind of a scam that we've all bought into, and it just became the way it is. 6% seems retardedly overpriced. Actually, mine only charges 5%, and I still wince every time when I see her commission at closing....

I know when I build a spec that upgrades make very little difference in what I can sell it for. Cosmetic upgrades help a little. Things like a high efficiency HVAC or extra insulation that can't be seen don't really help at all. Sales price really is almost totally based on the locally going sq ft price, generally.

Custom homes, sq ft prices don't apply at all. It can't apply, because there's too many variations. I've built customs that couldn't be sold on the open market for what the owner was paying to have it built, but it was what the owner wanted. Others have been simple and below local sq ft averages. Pricing a custom home based solely on square feet would be insane.

· Builder
38,246 Posts
Hard costs and allowances. Break the plans down and figure a material list for concrete, framing, cornice . Same for inhouse labor. Figure cabinets by elevation and specifications. MEPs, drywall, paint, ect.... bid by my subs.

Allowances for windows, flooring, glass, appliances, granite, light fixtures and plumbing fixtures, ect...

Generally use 2% of the homes value for a lighting package and 1-1.5% for plumbing fixtures.

The last new house we built was in 2011, other than 1, 000 sq ft cottage we built last year, cost plus. The last 7 I bid, I bid at a fixed price. I didnt get any of them though, lol.

My dad likes cost plus, I like fixed for almost all projects.

· Registered
27,559 Posts
Discussion Starter · #7 ·
I prefer fixed cost both as a contractor and a HO. I rather know the score upfront than leave it open ended.
I can buy that...but, by expecting to know up front, assuming no change orders, you are accepting that you will not get the best deal. I will not cut a bid to tight margins if I have to one price it. Obviously, I would prefer to see a one price, and then beat the cost down. Nothing like a 30% margin.

· Craftsman
44 Posts
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· Money Maker
867 Posts
bizusn said:
I found it in the Oklahoma City Craigslist. Is it really that big ofa discount? When we bid a cost plus, the subs don't generally disclose material cost so I really don't know where it falls in the big picture. Have you ever worked out the material only on your new builds?
honestly I've never tried to figure out JUST the materials on a new home build.
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