In this post, I point out seven (pretty hefty) unexpected expenses when building a house!
It’s important to be realistic about ALL costs you’ll incur throughout the building (and moving in) process. Obviously you’ll have construction costs and architect fees (if applicable) … but there many other expenses you need to factor in as well!
UNEXPECTED EXPENSES WHEN BUILDING A HOME
EXPENSE #1: LAND and LAND PREP
Obviously you’ll need to purchase land to build your home on … whether this is via your builder or buying a plot of land on your own (FYI: my husband and I did the latter). Either way … you’re purchasing land!
Not only do you need to buy the land, but you also need to account for any excavating and clearing costs (e.g. we bought a wooded lot and had to pay roughly $3000 to remove trees). Be sure to consider any land preparation costs that apply to your lot … debris removal, tree removal, grading, leveling lot, bringing in fill dirt, deconstructing existing buildings, etc.
EXPENSE #2: BUILDER FEES
There are two ways builders typically charge: fixed-price and cost-plus. I’ll give a VERY brief explanation of these methods; you can get more details from your builder (or a Google search). Make sure to get VERY CLEAR on how YOUR builder will charge you before you build!
FIXED-PRICE: Your builder plans out every detail of your home ahead of time and gives you a ‘final’ cost of your home (including the builder fee). Of course you are responsible for paying for upgrades (e.g. allowance overages) and change orders, BUT your builder is responsible for mistakes and his/her profit margin decreases with mistakes (and with material/labor price increases).
COST-PLUS: You pay the actual cost of construction PLUS a fee (typically a percentage of the cost) to the builder. YOU are responsible for mistakes and material/labor price increases. The builder’s fee goes up with mistakes and material increases because YOU are paying more for your house.
EXPENSE #3: MOVING COSTS
Depending on how far you are moving, this can really add up! If you hire a moving company to move you, expect to pay thousands of dollars. Eek!
Of course, pricing is dependent on your locale and the time of year that you move. For example, we moved in January in the Midwest (i.e. it was FREEZING outside) so the moving cost was exponentially lower than the peak moving time of warm summer months!
You can keep moving costs relatively low by: (1) moving in an off month (if this works with your home build completion schedule), (2) packing boxes yourself, and (3) moving as many things as possible on your own!
Related Post: 8 SAVVY WAYS TO STAY ON BUDGET WHEN BUILDING A HOUSE
EXPENSE #4: CLOSING COSTS
This is a tricky one to discuss in this post because everyone’s situation is different. Make sure to get advice from YOUR lender and builder to understand YOUR closing costs and what you can expect to pay.
If you’re rolling your construction loan into your final mortgage, then your closing costs will be lower than if you plan to get a whole new mortgage for your completed home. So again … consider YOUR situation and talk to YOUR lender and builder for accurate info!
Here is a list of potential closing costs that *might* apply to you: escrow, appraisal, home inspection, attorney fees, city transfer tax, county transfer tax, title from builder to buyer, title from buyer to buyer’s lender, recording fees, prepaid HOA fee, prepaid property tax, homeowner’s insurance, etc.
Related Post: HOW TO FINANCE YOUR HOME BUILD
EXPENSE #5: WINDOW COVERINGS
Make sure to include room in your budget for window coverings. Even the most basic (inexpensive) window coverings can ADD UP (to an insane amount) when you are dealing with an entire home of windows! Be prepared to spend several thousand dollars on blinds or shades (YIKES).
Many people budget for new furniture post-move-in, but privacy via window shades is VERY important to consider too! If your budget is tight, simply start with the most important (i.e. the most used) rooms first … bedrooms, bathrooms, and family room … you can purchase window coverings for other rooms in stages.
EXPENSE #6: LANDSCAPE
Your yard will be a blank slate when you move in. Most HOAs require sod and/or grass seed ASAP … plus you’ll (eventually) want trees and plants!
The good news is that you can do your landscaping in stages! You can budget this out over several years … and you can do most of the work yourself to save money!
Tip: I recommend sodding your entire yard (if this is in your budget). We planted grass seed in our backyard and it took three years (and three seed planting tries) before our yard finally looked plush!
EXPENSE #7: FURNITURE
Furniture can really add up if you plan to start over for the most part … or if you now have extra rooms that you didn’t have in your previous home (i.e. you have NO current furniture to fill these rooms).
Like landscaping, you can buy furniture in stages! Focus on the most important pieces first and then replace other furniture over time. I walk you through the process of choosing what to buy NOW and what to purchase later in HOW TO FURNISH YOUR NEW HOME (WHEN BUILDING).
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In this post, we covered seven unexpected expenses to consider when building a house. These unexpected expenses include land, builder fees, moving expenses, closing costs, and the fun stuff … window coverings, landscaping, and furniture/decor!
It’s important to keep ALL of these in mind so you can create a REALISTIC budget when building your home!
If you enjoyed this post, I think you’ll really love my *FREE* Custom Home Build Prep Guide and learn the 5 crucial steps to prepare for a home build with less stress, more confidence, and without blowing your budget!