Understanding New Construction Costs

Understanding New Construction Costs

Building a home is a rewarding process that allows you to fully customize your space, your land, and your home to suit your family’s needs. There can be a lot of hidden costs associated with building and purchasing a new home. A reputable builder like Red Door Homes will help you understand these costs so you can be prepared before the process even begins. 

The first step in homebuilding is site preparation. Readying the site of your new home will require a number of contractors and tradespeople, specialized equipment, and materials. The cost will vary depending on the difficulty of the site and the distance from your home to the street. 

The land must be cleared to allow for construction and leave enough space around the home to protect the roof and comply with applicable codes. The site must be leveled and properly graded to provide for safety, drainage and utility installation. Finally, the infrastructure for your utilities must be laid such as water, sewer, gas, and electricity from your home to the municipal lines. 

In addition to site preparation costs, there are a few fees that you and your builder will want to account for when planning the budget for your new home. Home building is a multi-step process with different layers of regulations and fees. 

  • Permits: You’ll need permits for much of the work being completed. For construction work, most cities require fees for permitting and inspection. 
  • Tie-in fees: Your home will need to be connected to the municipal utilities. Cities require fees to support the infrastructure of these services. 
  • Impact fees: Different cities will charge varying amounts and the costs will go to different services depending on the municipal rules. In general, these fees go to schools, roads, and emergency services in order to offset the added cost to the community for providing services to more people. 

These costs are associated with building a home, but they are not factored into the value of the home. Home values are based on location, specifications, and conditions of the dwelling. Because these fees don’t contribute to the value of the home, the costs are generally not recovered when the home is sold. Don’t fret though! Most people who build their homes live in them longer, on average, than people who purchase an existing home. This means your home and land have time to appreciate in value before you would sell, which helps offset the initial fees. 

Red Door Homes will guide you through the process

With the wrong builder, new-build fees can derail timelines, increase costs, or force owners to compromise on features to maintain the budget. At Red Door Homes we’ll guide you through the process to ensure that your home is built on time and within your budget.

2020-10-01