Tips for Building your Own home
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This year we embarked on an adventure of a lifetime. We built our first custom home – our dream home.
Having talked to many couples who have gone through the same process, we knew we were in for some stressful times. Along the way, we managed to find several tips for saving money and wanted to pass some of these dollar saving tricks on to you.
Are you building a house soon? If so, take a breath, grab a notepad, and hang on–it's going to be a bumpy ride. And remember: what doesn't kill you, makes you stronger. Husbands, another piece of advice: The wife is always right. Always. Trust me. 🙂
Now, let's go build your dream home and save some money while you do it.
1. Selling Your Own Home Without a Realtor
That way you pocket the proceeds and avoid paying the 6% realtor commission. We started this direction because we weren't in a rush to sell the house. We also felt that we lived in a “high demand” neighborhood, and felt that a For Sale sign in the front yard would do the trick.
It did, in a sense, because we got several phone calls in the first weekend and even an offer. Unfortunately, the buyer couldn't get financing and the deal fell through.
We were bummed out, but not shortly after, had a second offer. Unfortunately, the second deal fell through as well. This is when we decided that being our own real estate agent was a little more work than we had hoped for.
However, if you're determined to save a buck, and willing to give up some of your free time, FSBO can save you a TON of money!
2. Hiring a Realtor with a Discount
When the first few deals fell through, we decided that we needed to generate more foot traffic to our house. Not ready to hire a real estate agent yet, we turned to FSBO.com. It allowed us to get a MLS listing so that every real estate agent in the market could see our house and it got listed on the top websites like Realtor.com and Zillow.
If a real estate agent showed our house, we would only have to pay a 3% commission fee; but if someone found our house directly, we could still sell it without having to pay a dime to the realtors.
3. Hire an Awesome Real Estate Agent
As we got close to our house nearing completion, we decided that it was time to bring in the professionals. We had several “lookers” and, reflecting back, we probably had our house a little too high. It was tough though, since we had two offers, but the competition was beating us out.
We found a local realtor who really knew our neighborhood and after the first meeting we realized how little we really knew.
After one planning meeting, we already felt much more comfortable with the situation compared to the previous experience we had. Turns out we had an offer two weeks later, and our house was off to escrow.
4. Get a Credit Card with 0% APR
Building your dream home may not be cheap, but you'll save oodles of money if you take advantage of a credit card with 0% APR. These cards offer 0% APR – as in zero interest – for anywhere from 12 -21 months, which means you can charge some of your home-related expenses without paying interest for a year or longer. No matter how you cut it, that's a pretty sweet deal!
Here is the top 0% offer to help you save money while you build your dream home:
Discover it® card – Another 0% APR card you should seriously consider is the Discover it® card. With this card, you'll get 0% APR for a full 18 months. Meanwhile, you'll earn 1 point per dollar spent on all of your purchases, plus 5X points in categories that rotate every quarter. Once you start racking up the points, you can turn them in for statement credits that can help you save even more money on your new dream home. This is honestly one of the BEST DEALS for anyone building a new home. With 18 months at 0% APR and rewards, this card is an absolute no-brainer. Read here to learn more about the Discover it® card
5. Have a Contingency Plan
The thought of carrying two mortgages did not excite us a bit. To prevent such a catastrophe, we wanted to make sure we had a back-up plan. We found some local real estate investors that were willing to pay us just over $1000/mo and then find a renter for our house. The house would still would be in our name and then after a five year period they would pay us an already agreed upon price.
The plus side is that we wouldn't have a mortgage payment (because the $1000 covered it). The downside was that the mortgage would still be in our name, which the bank would not like. It wasn't the ideal situation, but it was definitely a good plan B.
Luckily, our house sold and we didn't have to journey down this path. With the real estate market still not stable these days…I would highly suggest having a plan B.
6. Visit Many, Many Homes
You think you know what you want your dream home to be, but do you really? After scouring the home books, we drove around and visited as many homes as we could. We even drove to St. Louis (90 miles away) to get another perspective. If you can find a newly developed area, they may have some model homes that can give you tons of ideas.
7. Find a Good Architect
When it comes to having a vision of what something is to look like, I'm horrible! On top of that, we had purchased a lot where the back of the home would face a lake, but the front would be facing a culdesac. Essentially, we needed a unique layout that no home book could provide. (Good thing we borrowed them!)
Thankfully, the architect we hired really helped us establish a floor plan that was open (really open!) while maintaining the lake as a focal point when you walked in the home. In the end, the floor plan couldn't have been any more perfect and that's all thanks to the architect.
8. Hire The Right Builder
I can't stress this enough! The subdivision where we purchased our lot required us to use their builder. In many situations, this could be a really bad deal. We had seen his work and visited some of the other homes he had built, so we were confident in his ability but worried about the total cost. We negotiated with the developer's to allow us to get outside bids to make sure the builder's cost was within reason (more on that next).
If you have the option to hire your own builder, DO YOUR HOMEWORK! Hiring the wrong builder can be a horrendous experience.
Before you hire a builder, get a list of references and ask to see some of there work. GET EVERYTHING IN WRITING. And I mean everything! It's amazing how quickly people can forget a conversation. This applies to subcontractors, as well.
9. Bid out Your Cost
This is an easy way to save tens of thousands of dollars before you even begin the building process. As I mentioned above, we were required to use a certain builder but were still allowed to shop around to make sure his bid was fair. To our amazement, the 2nd closest bid (out of 4 bids total) was $40, 000 higher!
Yes, that reads FORTY THOUSANDS DOLLARS. That was a HUGE savings right out of the gate.
Why the difference? Honestly, we don't know. We were told that some home builders just don't need the work so they price themselves out. 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