Look through these five ways to build a new house and see what best fits you and your project. There is no right way — only the right way for you.
1) Traditional Owner-builder - The owner, with help from family and friends builds much of the project without standard contracted labor. The members of the work party often trade skills (I know roofing so I'll help you put on your roof if you come over with your backhoe next spring and help me dig out my foundation).
The owner either buys or trades for all materials. This method works best when you either have cash to work with or you financed the project with something other than the project itself as collateral. The standard loan manager will want to see a licensed builder somewhere in the loop.
Many older homesteads and cabins were built this way and the practice is still common in established rural areas.
Note: It helps to come from a large family!
This method can save as much as 50% (sometimes more) over contracted costs. Here are some of the best books for traditional owner-builder work.
2) Owner-manager - Here the owner takes on the role of general contractor, managing and organizing several different subcontractors who are competitively bidding for the job. The owner also researches product choices, gets bids from suppliers and buys and schedules all building materials.
This works best for a well-organized owner working in an area with many suppliers of materials and labor. If you will be financing the project with a bank loan you will need to show that you are a competent manager and that you can control both costs and quality (remember the bank is the real owner). Tight costing paperwork can make the right impression.
Owner-managers can save 20 to 35% of contracted costs. Here's the best owner-manager book (unfortunately titled the Owner-Builder Book!).
3) Owner-builder partnership - The owner hires a builder (often an experienced carpenter ready to move out on his own) at an hourly rate to work with him on the project.
The owner shops for and buys all materials, the builder and owner work together and hire out subcontracted labor for jobs they don't do themselves. The builder advises the owner on suppliers and trades people (which the owner pays directly). The project evolves as choices and decisions are made jointly.
Owners can choose how much of the project to do themselves and they often get coaching and help from the builder and other trades people. Good communication between all parties is essential.
The owner saves both the labor and materials markup and often has reduced labor costs as compared to a general contractor. The owner also taps the contacts and experience of the builder to help with choosing suppliers and tradespeople. The builder, in exchange, gets needed experience managing and running a full sized project. (Tip: be sure you have good insurance coverage for the work site materials and any liability.)
An owner-builder partnership can save 20 to 40% over contracted costs, and even more if the owner is a careful shopper. There is not much written about this method, but it's the one I used to build my own house. I saved about 35% over the then current construction costs (and without having to work too hard).
4) Standard Builder Contract - You, as owner, meet with several builders visiting projects they have done that are similar to what you are planning. You follow up with the builders' clients getting a feel for the way the builder works and how happy the clients were with the finished project and the final price.
The builder takes your plans and prepares a fixed price bid or other price proposal for the project. When getting several bids, the plans and call outs for material specifications must be complete to make the bids comparable. It is helpful to have a modifiable materials list for your plans so you can have a documented report not only on the basic materials of the shell but your choices for cabinets, flooring, windows, etc. The builder needs to know what quality range to shoot for in the bid..
For this option to work, you must be comfortable with the builder's character, construction quality and reputation. If you have chosen the right builder, and you are realistic about costs, then the budget can often be worked out. A good builder can help you determine where best to save money.
The right builder will see to it that your house is finished to a consistent level of quality that is hard to attain in the previous three methods. Builders often keep the best tradespeople for their own crews and can get the best work out of them.
This is the best method of building when a project is bank financed or if you plan to sell in the near future. This is often the only way to get a house that is actually finished!
5) Design, then Build - The owner has a set of plans or perhaps just some magazine clippings and some ideas. They call a local building designer or architect and go in for a consultation and project overview. What they want to know is if their plans for the project will work, if there are complications, and are there alternative solutions that might work better. Your designer might suggest a better building placement for the lot, or a substitution material or equipment choice that would work better in your climate. Such a person can make drawing changes, if needed. They might also know a builder you can work with or where to send you to get a materials bid.
Your involvement with a designer or architect might range from a couple of hours of consultation time to 10% to 15% of the cost of construction for a full custom home design for the house and site. At the higher end of this scale the designer will also oversee construction and handle all the building department and contractor interactions that most owner-builders expect to do themselves.
I think I can safely guess that most people reading this are not planning to build the $200 to $400 per square foot homes that end up in the glossy home magazines. Still, having a practical local designer on your design/build team can save you money and frustration well worth their fees. Try to find someone you can call for questions or to bounce ideas off. They might have a simple solution or design alternative that you hadn't seen or would have only learned about after the house was built. The plan is only a road map and lots of things come up between the idea and the reality.
We all want to eliminate that quote from Homer - "Duh!!!"
- Closing Notes -
Prices for good quality contracted new home construction vary widely by area but you can get a ballpark figure using the range of $80-120 per square foot of heated floor area. Cottage homes like the plans sold on CountryPlans are averaging about $80-90/ sf contracted (including site infrastructure costs). Involved owners can save more and folks on the West Coast generally pay more. Read our Estimating Building Costs article for more information.
Builders who are slightly fussier than the homeowners they work with build the best houses — everyone is usually happy with the outcome. When you are fussier than your builder you can end up with unresolved complaints. Try to find a match of both style and fussiness.
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