While building a new construction home is more complicated than buying a turnkey property, it’s an opportunity to create that proverbial dream house.
The process involves a number of nuances. Knowing what to expect can simplify communication with your contractor, improve results, save money, and help avoid disappointments.
So, where do you start? Let’s take a closer look at what constructing a home from scratch involves.
Step #1: Purchasing a lot
Before you can proceed with the construction plans for your home, you need to purchase the land it will be built on. You can work with a real estate agent to find a lot suitable for your needs. To get permission for home construction on your land, consider the following:
Zoning Laws make sure the land you buy is legally suitable for building a new home. While a real estate agent should know such details, it’s up to the owner to ensure compliance with the local laws.
Obtain a soil and groundwater level report to analyze the soil integrity and makeup. It should show that the land is stable enough to build a home on. Even if there is already a house built on the lot you are buying, this report is still required to complete your permit application.
Is there sufficient sewer capacity in the town/city to make a connection to your home? You may need to install a private septic system if your land is far away from the sewer line.
Same as with the sewer system, you would need to check if you could hook up to the public water or opt for a private well.
Regulated water source
Constructing a home near wetlands, ponds, lakes, and rivers is regulated by a complex mix of federal, state, and local laws.
If you are buying land with an existing house, which would need to be demolished before the new construction project begins, be ready for extra expenses. The same is true for lots covered in trees.
Similarly, if your lot is on a slope, the construction project will be more complex and expensive. The additional foundation work required to build such a home (especially if the slope is over 10%) can be higher than the cost of building an entire house on flat ground.
Step #2: Identifying financing options
The cost to build a new home varies wildly depending on what you’re building and where you’re building it. Clients building new homes in Seattle and the surrounding areas can expect to pay somewhere between $250 and $320 per square foot.
Note that this number depends on numerous factors, starting from location and ending with the type of interior design. Keep in mind that the price tag doesn’t include the cost of land or design services. Costs add up quickly, which is why we recommend scheduling a free consultation so we can provide a detailed quote.
The majority of people who plan to build a new home prefers to apply for a loan. It’s worth knowing that mortgages for buying a new home and building one are different. New construction homes will require a construction loan (also called a self-build mortgage).
Construction loans are generally high-interest, short-term loans. The lender pays the money in stages as the construction work progresses. The reason why construction loan rates are higher than those for a traditional mortgage is that your home acts as a collateral. In case you fail to pay for a traditional mortgage, the bank can seize the home. With a construction loan, the bank doesn’t have anything to take.
Other options for financing a new construction home include personal loans, credit cards, and more. For a detailed breakdown, read our guide to common financing options.
Often, to obtain a construction loan, you must present your lender with a timetable for construction, detailed plans, and a realistic budget. As part of your project, we’re happy to help you collect the documents needed to submit your loan application.
Step #3: Planning for design services
Design is an integral part of the new home construction process. Generally, we recommend allocating about 10% of your overall build costs for an architect’s services.
To start working with a designer, you need to do some preparation work. To help you obtain an accurate fee proposal and speed up the construction process, we recommend coming prepared with a design brief.
The brief should list all the requirements you have for the project.
- Architectural style – Traditional or contemporary? Victorian, colonial, country, Georgian, ranch, log, and so forth.
- Floor plan – How many rooms do you want? How big should they be? What is the approximate internal layout of the rooms in the house? How many floors would you like?
- Special requests – Would you like the bedroom window facing a certain landscape element? Do you want to minimize direct sunshine in the bathroom?
- Heating strategy – Is energy efficiency important to you? Are you considering a green home?
- Budget – How much money are you willing to spend on the design?
Once you have a brief ready, consult with an architect. If you’re not sure where to look, know that the Pro.com team would be happy to recommend an architect whose personality, pricing, and style align with yours.
Step #4: Determining the interior finish quality
Finish level has a large influence on the total cost to build a new home, and it’s not easy to nail down until you’ve made all of your selections – from big-ticket items like kitchen appliances and bathtubs to smaller things like light fixtures and drawer pulls.
Until you’ve made those selections, contractors like Pro.com will use “allowances” to build out your project estimate. Allowances are essentially budget placeholders. If you know that you’d like mid-range cabinets or ceramic tile — but haven’t decided on a particular product yet, we’ll temporarily list that item an allowance in your bid.
A word of advice on selecting finishes: It’s normal to be cost-conscious when embarking on a major project. But when building a new home, be careful not to cut corners on finishes. While low-priced options are appealing, their usefulness is short-lived, and you’ll likely need to replace them within in a couple of years.
If you would like to save on the finishing efforts, you can invest more in the living space (kitchens, bedrooms), and reduce expenses when choosing the materials for less trafficked areas like basements, attics, and laundry rooms.
Step #5: Determining the Timeline
It’s important to understand that constructing a new home is a time-consuming process. If you don’t own land yet, it’s likely to take at least two years. Factors that affect the house-building timeline include:
- Finalizing the land deal – Depending on your preferences and budget, buying a lot could take up to a year.
- Obtaining permits – Waiting time depends on your local municipality. For example, in a house-dense city like Seattle, permits for a new single-family house may take between 8 and 12 months to obtain. It’s likely to take less time in less developed areas.
- Design – Depending on your requirements and the company you work with, coming up with design could take between two and four months.
- Construction – The building process itself can take between 6 and 24 months. In Seattle, it usually takes about 9 to 15 months. By contract, in Phoenix, it can take between 8 and 10 months.