If you’re planning to build a home for the first time, I imagine that going over budget when building your home is one of your biggest concerns. This fear is very valid considering most people do (unfortunately) go over budget when building a home. However, this doesn’t have to be YOUR story!
In this post, I’ll share why *most* people go over budget when building a home. Just remember that you don’t have to be like *most* people! You can do the opposite and you’ll have a much better chance of building your home without blowing your budget.
3 REASONS PEOPLE GO OVER BUDGET WHILE BUILDING
Many people who build a home think they can make design decisions along the way … tweak their budget along the way … and focus on one little piece of the home build at a time without understanding the full picture of what they want their home build experience to be like.
Guess what those people end up with … a mortgage that is WAY higher than they are comfortable with.
I don’t want this to happen to you. Let’s take a look at 3 of the top reasons people tend to creep significantly over their budget.
The first two reasons go hand-in-hand, so I’m combining them here:
1+2. NO VISION FOR FUTURE HOME + DON’T HAVE A REALISTIC BUDGET
Without a very clear vision of your future home, your builder will be unable to give you an accurate (realistic) bid on what it will cost to build your home.
Many people who build a home are so excited to get started that they don’t take the time to really consider all aspects of how they want their home to look and feel.
They don’t take the time to thoroughly consider layout (floor plan needs) and finishes (in general) before they have their builder quote their home.
Here’s the problem with that … your quote will be based on an incomplete picture of what you want in your future home.
If you aren’t honest with your builder (and yourself) long before you break ground, then he/she can’t come up with an accurate bid.
Without an accurate bid (i.e. based on EVERYTHING you envision in your home), it is very likely that you will go into your build WITHOUT a realistic budget. And without a realistic budget, you can kiss your chances of staying on budget ‘goodbye’.
Of course, you can’t predict everything; some issues will come up that are out of your control (hello, crazy lumber prices in 2020/2021) and require a change order (e.g. a discontinued product), BUT many change orders and ‘upgrades’ are simply a result of a lack of planning before you build.
3. ACCEPTING THE LOWEST BID
Not all ‘lowest bids’ are bad. However, sometimes when you accept the lowest bid to save money, you’ll find that you go WAY over that initial bid as you get into the thick of building your home.
Unfortunately, at that point, it’ll be too late to change course and you’ll have no choice but to continue increasing your construction loan and subsequent mortgage.
Keep this in mind … if you get three bids and one is significantly lower than the other two, I recommend that you really give thought to how this bid was determined before you choose that builder.
YOU CAN BUILD YOUR HOME WITHIN BUDGET!
Going over budget when building a home is NOT inevitable. This is YOUR story and YOU are in control of how the story ends.
You CAN stay on budget … it just takes the right planning and preparation before you ever even think about breaking ground on your new home.