Building your new home promises a personalized result and the joy of creating a unique living space that is undeniably yours. However, many homebuilders focus their budgets solely on the structure, overlooking the numerous hidden expenses involved.
A decision to build comes with many rewarding outcomes, but also a complex process that can feel daunting. Investigating and being aware of these seven often-overlooked costs will equip you with the knowledge you need to formulate a more realistic and comprehensive budget for your dream home.
1. Temporary Housing and Storage
Construction timelines often extend beyond initial estimates, so including additional living expenses in your budget is essential. Consider including several extra months of rent or mortgage payments for your current residence, or, if you’ve already sold your previous home, add the cost of storage units for your furniture and belongings and temporary accommodation costs into your budget. These practical aspects escalate quickly, so planning for temporary housing and storage is a necessity to avoid financial strain throughout the building process.
2. Extensive Site and Land Preparation
The cost of the land for your new home’s location is just the beginning — cropland values rose by 14.3% from 2021 to 2022, with pasture value up by 11.5% in the same period. With land in urban areas likely even more expensive, balancing these known costs with additional construction preparation expenses is essential
Site and land preparation often involves thorough soil testing to ensure stability and clearing away trees, rocks, and other debris. You must also grade the land to facilitate proper drainage. Additionally, you’ll need to run initial utility lines for water, sewer or septic systems, electricity, and gas. These steps ensure a solid footing for your new home, but can quickly increase your budget if you haven’t made prior allowances.
3. Exterior and Landscaping Finishes
Many building contracts include the home’s structure but overlook exterior finishing touches. You should account for the various costs associated with enhancing the curb appeal of your new home, including driveway paving, walkway and path construction, and sod or grass seed for the lawn.
These, along with fencing and bare landscaping, such as trees, shrubs, and flower beds, are often left out of budgets and cause a significant impact. Ensuring you include these elements will provide a more holistic picture of your overall costs.
4. Permit, Survey, and Inspection Fees
After you’ve added the administrative costs associated with permits, surveys, and inspections to your expenses for the site work, you’ll likely have already invested over $30,000 into your new home’s preparation. These fees are nonnegotiable and can vary significantly by municipality.
You will typically have to cover costs for land surveys to establish property lines, preemptive building permits, and inspection fees at various stages of construction, including foundation, framing, and electrical work. Understanding these necessary expenses is vital to avoiding unexpected budget overruns and keeping the building process on track.
5. Interior Fixtures and Appliance Upgrades
Beware of “builder-grade” allowances. The quoted price you receive typically covers basic, low-end finishes that may be shy of your aesthetic expectations. Upgrading these items can significantly increase your final costs, sometimes by thousands of dollars.
For example, shifting from laminate countertops to granite or quartz and selecting premium appliance packages over standard offerings can elevate your home’s appeal but will also stretch your budget. Plan for these potential upgrades beforehand to avoid costly surprises.
6. A Realistic Budgetary Buffer
A construction project will very seldom go perfectly as planned, so it’s wise to include a realistic buffer in your budget. Set aside a contingency fund, typically 10-20% of the total construction cost, to help cover unexpected issues that may arise.
This buffer will mitigate the effects of weather-related delays, unanticipated material price increases, subcontractor issues, and changes or additions you decide on during the project. Preparing for such eventualities can help keep your budget and project on track.
7. Post-Construction Utility and Furnishing
Your costs can continue even after you’ve completed building your new house. Always account for those final expenses that can quickly add up. Utility connections and activation fees have a way of surprising new homeowners, and things like blinds or curtains get forgotten during initial budgeting.
Additionally, purchasing new furniture to suit the scale and style of your new home can be a substantial expense. Also, remember to factor in your moving costs to ensure a smooth transition to your new home.
Don’t Let Hidden Costs Derail Your Dream Home
Being aware and planning carefully are essential ways to stay on budget during a new home construction project. Anticipating hidden costs early and addressing them proactively means avoiding financial pitfalls that can impede your vision. A well-prepared homebuyer can navigate these challenges with confidence.
With the right approach, you can build the home of your dreams without being derailed by unexpected expenses. Embrace the exciting journey ahead and make your dream home a reality.
