If you are looking at a home’s cost per square foot and that cost includes the homesite, understand that building lot costs vary widely.
The location of your building lot encompasses several factors. Neighborhood amenities such as walking trails, public spaces, playgrounds, or a fitness center are costs absorbed into each building lot. Location, and proximity to schools, restaurants, shopping, health care, etc., will impact desirability, which will show up in the lot costs. And while the National Association of Home Builders found that on average 14.6% of your new home purchase price is due to regulations imposed during the lot’s development, that can vary greatly by neighborhood, too.
Of course, the size of the homesite generally correlates to its cost, at least within the same subdivision. Specific lots, such as a building lot at the end of a cul-de-sac or one that backs up to a small lake or golf course, may cost more. There can also be higher costs associated with lot specifics. For example, a sloping lot may require a costly retaining wall. Or the unexpected presence of rock when digging a basement foundation.
A loose rule of thumb is that finished lot costs represent 20%-30% of your new home purchase price. On average, $100,000 of a $400,000 new 2,500 square foot 2-story home can be attributed to the lot cost. Or $40 per square foot of the $160 per square foot overall cost of that home. But on the low side, an $80,000 building lot ($380,000 purchase price) nets you $152 per square foot, while a $120,000 homesite ($420,000 purchase price) works out to $168 per square foot.
Finally, though not directly a land cost, neighborhood covenants can impact your home’s cost. Restrictions prohibiting outdoor structures such as sheds encourage more expensive 3-car garages for that needed extra storage. Or maybe the garage door(s) cannot face the street. Side-entry garages are typically pricier due to added windows, masonry, etc., on the garage side that faces the street, plus the higher costs of a longer driveway.
Windows on a side-entry garage as seen on the Cedar Farm plan #42385W (top) vs. a front-entry garage as seen on the Cedar Creek plan #42340W (bottom) can have significant impact on cost.
From landscaping requirements to exterior finish specifications, the same home design built in two different neighborhoods can have a very different cost per square foot!
Next time: Intangibles and hidden costs.
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Outdoor living space. Two-story high spaces. Bonus rooms. Unfinished storage. Attics. Basements. Garages. Any attempt to come up with a “cost per square foot” for a new home begins with determining the home’s square footage. Sounds easy, right? Yes…and no. Yes, measurements exist. But which square feet are included may differ and have significant implications on the how the home “lives” for you.
We’ll use Design Basics’ Peony Grove (plan #42285) to illustrate the issues. The main floor comes in at 1,664 square feet. And the second floor is measured at 839 square feet. For a total of 2,503 total square feet. But there’s over 300 square feet of space on the second floor that is the two-story high ceiling in the Great Room. Should that be included? It’s heated space with walls and a roof atop, but it’s not “finished” – so it wasn’t counted. And how about the 342 square foot storage area over the garage? It wasn’t counted either, because it wasn’t “finished.” Does the cost per square foot you’ve seen advertised only consist of “finished” square feet? It would be relatively inexpensive to finish that storage area over the garage, which would bring down the home’s overall cost per square foot.
Garages typically aren’t included when calculating square footage, so the bigger and more expensive your garage, the higher the home’s cost per square foot. And garages have value – just look at how they impact your property taxes!
And that garage? It measures 851 square feet, but that’s not included either in the home’s reported 2,503 square feet. If the garage isn’t included in calculating the home’s square footage, size doesn’t matter, right? Except it does! The size of the garage has a very significant impact on the home’s cost, and therefore its cost per square foot as well as the home’s appeal to you!
Then there’s 158 square feet of covered front porch as well as 168 square feet of covered rear deck. Those wonderful outdoor living spaces make a huge difference in how you’ll enjoy the home, but they weren’t included in the 2.503 square foot number. And they’re not inexpensive – raising this home’s cost per square foot compared to a home without these outdoor living areas.
Building on a basement? What about that that lower level square footage? Typically, the portion of the lower level that is finished off as living space does get included in a home’s reported square footage. Like with finishing space in an attic or over the garage, finishing space in a basement is typically quite a bit less expensive than main floor square footage, so finishing off a lot of the lower level can bring the reported cost per square foot down.
Before comparing new homes on a cost per square foot basis, you must know which square feet have been included in order to get any sort of meaningful information. Still, that’s only one half of the equation.
Next time we address – What was included in the price?
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Tap into buyers’ emotions with solution-based selling.
The numbers are in, and they look good! The home’s width and square footage fit nicely, the exterior style plus design amenities should attract buyers, and the cost estimates suggest you can make a decent profit. You want to get this new plan to market and give the presentation artwork to your marketing person to showcase on your website. Interestingly, how you describe the home online will have a significant impact on its appeal. Take a look at these three approaches:
Approach 1: The Teglia Place is a brand-new 1642 square foot, three-bedroom ranch with two and one-half bathrooms. This exciting design features an open entertaining area with cathedral ceiling, island kitchen, and walk-in pantry. There are two sinks and a five-foot shower in the owner’s suite, and the walk-in closet has a direct connection to the laundry room. The laundry room can also be accessed from the rear foyer entry from the garage, where you’ll also find a bench topped by lockers and drop zone. There’s even the option of foregoing the powder bath to gain large walk-in closets in both secondary bedrooms!
Approach 2: The Teglia Place is a brand-new 1642 square foot, three-bedroom ranch with today’s most-wanted amenities! The home showcases open entertaining under a cathedral ceiling, lots of natural light, and extra kitchen storage with its double-deep island and walk-in pantry. Positioned for maximum privacy, the owner’s suite also offers interesting ceiling detail in the bedroom, two sinks, toilet privacy, and a spacious five-foot shower in the bathroom. Direct access between the walk-in closet and laundry room make quick work of hanging clothes straight out of the dryer. The secondary bedrooms are served by a Jack-and-Jill bathroom with two sinks. Or, opt for a centralized hall bathroom and you can have walk-in closets for both secondary bedrooms. No detail was overlooked in this home, as evidenced by the rear foyer entry from the garage with bench and lockers plus handy drop zone!
Approach 3: The Teglia Place is a brand-new 1642 square foot, three-bedroom ranch with great livability! Too often we arrive home and everything we’re carrying ends up on the kitchen island. Imagine entering in from the garage and being greeted by a drop zone cabinet to corral clutter, plus a bench and cubbies or lockers to organize coats, backpacks, and everything needed for school tomorrow. A cathedral ceiling dramatically unifies the open socializing area for memorable entertaining, and in the kitchen, back-to-back base island cabinets provide extra storage right where you need it making it easy to find what you’re looking for. Re-live daily the simple joys of an over-sized shower you experienced at that resort in your new owner’s bathroom. Tired of carrying overflowing laundry baskets around? What could be more convenient than a direct connection with the laundry room so that in just a couple steps you’re hanging clothes up straight out of the dryer? Finally, consider which you would prefer: a private Jack-and-Jill bathroom with two sinks for the secondary bedrooms and separate powder bath for guests; or a centralized hall bathroom and large walk-in closets for the secondary bedrooms providing room for everything!
Approach 1 is Joe Friday’s “Just the facts, ma’am.” Efficient, rational, and informative, yet uninspiring, “the walk-in closet has a direct connection to the laundry room.”
Approach 2 is better because it evolves facts into features and benefits, “direct access between the walk-in closet and laundry room making quick work of hanging clothes straight out of the dryer.”
Approach 3 better engages the reader by using a solutions-based approach, “Tired of carrying overflowing laundry baskets around? What could be more convenient than a direct connection with the laundry room so that in just a couple steps you’re hanging clothes up straight out of the dryer?”
Just like buyer expectations, new home marketing, continues to evolve. Thirty years ago, builders could get away with simply listing the home’s amenities. Then the world caught on to selling features and their benefits. But we can, and must, do better – focusing on people’s needs and solving problems.
At Design Basics, we have the tools to help you stand out from other builders:
You want your home buyers to make changes to your home plans. Let’s face it, you’d love to offer a home plan that’s right for each and every buyer, but realistically you can’t; therefore, you want buyers to make changes so the home design fits their needs. The tweaks buyers want to make are very personal and significant to them – after all, they’re probably spending a little bit more to achieve those changes in order to get the home that’s “just right.”
Home buyers are more committed to you and to their home if they see themselves involved in co-creating it. Prospects who take the time to dive deep into a home design, mentally “moving in,” have pretty much sold themselves on that design and on you as their builder.
Those buyers come to see themselves as “having designed their own home.” Without getting into the legal issues of authorship, copyright, and ownership of the plan, many times the buyers believe they created the resulting home design. They may give you some credit, “Oh, we started with their ‘Amelia’ plan, but we changed it.” This is one time when it’s best to keep your ego at bay.
The buyers believe their version of the plan is “better.” And, it is – for them. This is an opportune time to compliment them on the modifications they directed. Doing so furthers rapport, they come to like you even more and trust that you are the right builder for them.
Who you have modifying the plan matters. Design Basics home plan Construction Licenses allow the builder or other qualified local professional to make changes to our home plans. So, why do so many customers used Design Basics Plan Customization Designers to alter the plans? Quite simply, our Designers do more than just make the requested modifications. They take the time to get to know why the changes are desired and may be able to suggest alternative solutions that achieve the customer’s goals better, and/or more economically. Further, our Designers may recognize and be able to suggest additional opportunities afforded by the desired alterations that the buyers would love!
At Design Basics, we have the tools to help you stand out from other builders:
Your best framers may not be part of your construction crew; rather, they just might be found among your sales team. Known as forward framing, they employ the power of suggestion to influence prospective purchasers’ expectations regarding your homes. When visitors to your model home hear, “There are so many amenities you’ll find in our (model) home you just won’t see in other builders’ homes,” those hopeful buyers are primed to notice, appreciate, and remember those amenities.
In 7 Secrets of Persuasion, James Crimmins writes, “You can completely change the outcome of a test drive by leading the driver to anticipate the positive aspects of acceleration, braking, handling, and road feel. If you don’t set the expectation beforehand, there is a good chance the driver will miss key selling points.” Some key selling features are obvious – the stone countertops, for example; others might be overlooked – the pull-out drawers in your base cabinets can’t be appreciated if visitors don’t open those cabinet doors. And then there are amenities that are hidden assets – such as high-performance insulation; it’s covered up with drywall.
Visitors arrive at your model home and start in your garage sales center. Since the weather’s lousy, they begin their model home tour by entering from the garage. Maybe not the optimal first impression; however, if they hear, “Did you know, 92% of the time we go in and out of our homes through the garage rather than via the front door? That’s why we focus just as much attention on the design of the rear foyer as we do the front entry foyer,” those visitors will notice the rear foyer design and its amenities.
While visitors pause in the rear foyer, your new home sales professional uses forward framing in pointing out that the drop zone keeps clutter out of the kitchen, the bench is handy for tying or removing shoes, and lockers or cubbies for organizing the kids’ school needs for the next day helps de-stress the morning rush, getting everyone out the door on time with everything. Beyond merely noticing those amenities, this helps people appreciate, and value, them.
Your model home was built from Design Basics’ Cedar Hill (#42435) home plan. In talking with your prospective buyers, you find out his parents, who live in Oregon, come to visit every fall so they can take in a couple of their grandson’s football games. Using forward framing, your salesperson helps the visitors envision and appreciate having two owner’s suites as well as a third main floor bedroom. Then she shares her own story of moving her mother-in-law in after a fall and broken hip, and how wonderful it would have been to have an actual second bedroom suite.
The persuasive power of personal experience, and the emotion that comes through such stories, implants that thought and makes the dual owner’s suite concept more memorable. The hopeful buyers consider the fact that one day, they too, may want to move aging parents in and how desirable that suite would be. Another benefit, being more memorable, such amenities are more likely to be talked about, jump-starting word-of-mouth on your behalf.
As your salesperson leads the visitors into the kitchen, she talks about the importance of storage as she points to the oversized, work-in kitchen pantry. Again, forward framing makes certain design features more noticeable. She goes on to point out the electrical outlets in the pantry, suggesting that’s a great place for keeping small appliances plugged in and ready to use – an amenity that might have been underappreciated or perhaps missed entirely. Ultimately, visitors have a better model home experience due to your salesperson’s forward framing… and, your company sells more homes!
At Design Basics, we have the tools to help you stand out from other builders:
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Those buyers come to see themselves as “having designed their own home.” Without getting into the legal issues of authorship, copyright, and ownership of the plan, many times the buyers believe they created the resulting home design. They may give you some credit, “Oh, we started with their ‘Amelia’ plan, but we changed it.” This is one time when it’s best to keep your ego at bay.
