How to Design a Custom Home You Love… and Can Afford to Build

Have you dreamed of designing and building a custom home? Are you moving to a new area where you can’t find a home that suits your unique style, budget, and priorities? Perhaps, like so many people, you have lost your home in a disaster—and just want to get your home and your life back. There are many reasons to design and build a beautiful, modern, efficient, and low-maintenance home.  

If you have the resources and the motivation to design and build a custom home, it can be one of the most rewarding things you’ll ever do. You can include the features and amenities that light you up and make you feel totally at home. You will enjoy your “masterpiece” for years to come, maybe even for the rest of your life.

But, as you strive to transform your new-home dream into reality, you’ll face a number of hurdles. One of your biggest challenge will be establishing a realistic construction budget – especially if you go about it the traditional way.

New and Improved Home Design Process

Traditionally, people who want to build a custom home buy a lot. Then they hire a professional to help them  design their “dream home.” After the plans are complete, they request bids from several contractors. Unfortunately, they are often shocked when the bids come back. Sometimes their design is just too expensive to build—forcing them to abandon their dream or completely rethink their project.

There is a better way.

In this blog, I’ll explain how to design a home you love…that you can afford to build. You’ll learn how to closely estimate the final cost of your new home—before you buy a lot or spend a dime on formal construction plans. It’s my firm’s low surprise, low stress way to design and build a custom home. If you want to minimize “sticker shock,” frustration, and disappointment, use this proven, two-step process to design your new home (or major remodel.)

Determine if Your Budget is Realistic

Instead of starting with a building site and a finished plan, start with the end in mind. At our company, Sherman Homes Construction, we start with our client’s wish list and a working budget. Then we collaborate with them to design a home that checks off as many of their wish list items as possible—while staying within their financial comfort zone.

To determine if your budget is realistic for your new-home vision, have a feasibility discussion with an experienced, local home builder. To help our clients understand current home-building costs, we show them homes we have built and discuss how much they cost. We can also start with photos of homes, floor plans, or sketches that our clients have collected or created.

Once we have a good idea of what they want to build, we can provide our clients with a ballpark estimate of the finished cost. We simply compare their future home to similar homes that we have built in the past. Then we adjust the estimated cost up or down, based on their unique design and lot.

Manage Your Scope of Work

If our clients are comfortable with the estimated cost of their new home, that figure becomes their working budget. The working budget allows them to line up construction financing and to establish a budget for their lot (if they don’t already have one).

The next step is to refine the working budget into a construction project cost estimate, based on a specific home design and lot-improvement costs. The final cost of any construction project depends on the scope of work. This is a very specific and detailed list of exactly what is going to be done. The primary way we control the cost of a construction project is to control the scope of work. It’s simple, the bigger the scope of work, the more time, materials, and effort are required to complete the job. To keep a lid on costs, manage your scope of work carefully.

Assemble a Collaborative Design Team

To design a home that you can afford to build, add a competent home-building contractor to your design team, very early on. The right builder will have the knowledge, personality, and processes to help you make informed financial decisions, as you are designing your new home. Interview contractors until you find a competent, caring professional who has the information that you need. Be prepared to pay for their consulting time as they help you transform you vision into construction plans—while keeping you on budget.  

Determining exactly what you are going to build, defining the scope of work, and gathering accurate costs requires time, an organized process, and collaboration with a team of professionals. Your home design team will consist of you (and your significant other), your contractor, and your architect or home designer (design professional). A competent contractor will have collaborative relationships with design professionals. They can recommend a good one, based on your budget and needs.

If you have already selected your design professional, he or she should be able to refer you to a competent, helpful contractor to join your design team.

Clarify Your Vision

To decide exactly what you are going to build and what it will cost, you’ll have to collaborate with your contractor and your design professional. This is best accomplished in a series of face-to-face (or on-line) meetings. As you discuss ideas and wishes, your design professional will start by creating rough sketches and asking clarifying questions. And your contractor will provide you with real-time cost estimates of your various options. Collaborating like this makes the process super-fast and efficient!

After your first meeting, your design professional will transform your ideas and key design elements into a few different floor plans and exterior “looks” for your review and discussion. This gets your ideas out of your head and into the real world; onto paper, and then into a computer program, where they can be shared and refined. Every decision you make as you develop your plan will change your scope of work and the final cost.

Knowing roughly what each option costs empowers you to make informed decisions, as you go along. It prevents you from spending time and money creating plans that will be too expensive to build. And it allows you to prioritize how you spend your money, based on what is important to you.

Collaborate with your team to identify alternate materials and designs that will satisfy your wants and needs, at the best possible price. Refine the rough floor plan and elevations until you are happy with them—and their costs.

Estimate Your Construction Budget

Once you have a basic design on paper (and in the computer) you will need to make a list of all the amenities, features, and finish materials that will go into your new home. This is where the fun and the “brain overload” happen. But don’t worry. You can make all these decisions the same way you would eat an elephant; one bite at a time. 

Your contractor should be able to walk you through a detailed list of these items and help you select and price all of the most important ones. Make the easy materials and amenities selections and note the ones you have to research. Then, check them off as you decide what you want. This initial design phase can usually be accomplished in a few 90-minute meetings, plus some research and shopping on your part.

Before you go shopping, your contractor can help you establish realistic budget allocations for the remaining items. Then, you can get on the internet and visit suppliers to pin down the exact materials you want and their costs. When you’re finished, you will have a good idea what your new home will look like, it’s size, and most of the things that you want in it.

Refine Your Rough Design to Fit Your Budget

Armed with this information, your contractor can provide you with a line-by-line construction project cost estimate for your new home—based on everything that has been defined and documented so far. If the final price is too high, you can trim back the scope of work until you are comfortable with the price. Often, you can identify features or amenities that can be added in the future, after your home is finished.

With this collaborative process, you can quickly gain clarity and make great progress towards turning your vision into reality. When you complete this phase, you will have crossed the chasm from a concept to a specific plan and a realistic budget. But, your contractor won’t be able to give you a final contract price until the building plans and engineering drawings have been completed and you have identified the lot you are going to build on.

Prepare Your Construction Documents

Once you have selected a suitable lot, finalized your design, and have a solid construction cost estimate, you need to prepare to build your new home.

To complete the construction plans, your designer will need a survey, plot plan (verified map of your lot), and often, a topographical map with a grading plan (how much dirt needs to be moved and where it goes). These documents, along with an on-site inspection, will provide your contractor with the information they need to determine the cost of improving your lot, hooking up your utilities, removing trees, etc.

When you have all the lot information, you can authorize your design professional to draft the construction plans. Usually, they will email you PDFs of their work for your comments and approval. Most design professionals also show you fairly realistic 3D images of your future home to help you visualize it. You can also meet in person or on-line for in-depth discussions.

When the construction plan is finished, the design professional will send their plans and information packets to a structural engineer and an energy consultant. The engineering firm will crunch numbers and prepare construction details for the roof trusses, foundation, and other structural elements of your home. The energy consultant will calculate the home’s expected energy use and make sure it meets local building codes. When the engineering and energy details are ready, your design professional will integrate any required changes into your final construction plan. 

Finalize the Details and Sign the Contract

Now, with a lot specified, the final design and engineering complete, amenities and finish materials selected, and utility hook-up costs defined, your contractor has all the information he or she needs to give you a firm construction contract price. Since you were actively involved in all the decisions that added up to the final cost, there shouldn’t be any surprises with the final number.

If you want, you can send your construction plans to other contractors and request bids for your project. This will give you more information to help you hire the right contractor. If your consulting contractor has helped you develop a plan you love and that they can build for a price you can afford, give those factors strong consideration. You want a competent, caring contractor who is collaborative and committed to helping you stay on budget—throughout your project. Hopefully, you already have the right one on your team.

Your contractor will prepare a construction contract for you to sign. With that, you can finalize your construction financing.

Build Quickly and Efficiently

If you follow this process for designing your new, custom home (or major remodel), the actual construction phase will be as fast, easy, and fun as possible. Your well-informed decisions will minimize surprises, delays, and costly change orders. And you will have allocated your budget to perfectly fit your wants, needs, priorities, and style.

Now you know how to design a home you love and can afford to build. So, get started soon! It could be the most rewarding thing you ever do!

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Steve Moeller is Vice President of Marketing for Sherman Homes Construction, Inc. Based in Meadow Vista, California, the company designs and builds affordable custom homes and remodels in Placer, Nevada, El Dorado, and Butte counties. The cities served include Auburn, Meadow Vista, Newcastle, Loomis, Lincoln, Auburn Lake Trails, Cool, El Dorado Hills, Cameron Park, Folsom, Granite Bay, Grass Valley, Nevada City, Truckee, Tahoe City, Donner Lake, Paradise, CA, and surrounding areas.

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