Pricing a Home (New Construction)

[hpp4me]

The rule of thumb seems to be that a new home runs approximately $130/square foot. So, when I see a model with these details. . .

2208 Square Feet
1280 sq' Living
928 sq' Lanai

. . . do I figure the cost based on the living area (about $130 x 1280) or on the total area ($130 x 2208)?

[John S. Rabi]

You are using the cost approach and while the $130/sq.ft. might be correct it would be about half of that for the lanai area. BTW, I got a $110/sq.ft. bid for a package home two weeks ago.

Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[hpp4me]

Wow! The contractors must really be hungry for work! Does that bid include all the infrastructure (electric hook up, catchment system, septic tank, lot leveling, etc.)?

[John S. Rabi]

It was for a small house and included everything except the clearing of the lot. There were limited allowances for flooring, countertops and cabinets.

Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[Kapohocat]

Although I agree with John in theory on the costs, some it will depend on your tastes, and negotiating skills. From what I have seen, I think John does a fine job of negotiating prices![] I am very impressed with that!

So that said, if you use $130/SF and spend less you can be pleasantly surprised. Spending more is never a pleasant surprise.

If there is something unexpected that you can use (such as some one selling granite at fire sale prices or ?) you will be able to fit the extra in your budget.

[hpp4me]

Kapohocat, as I recall you do project management for "owner builders." Am I correct in that recollection? If so, would there be any savings using this approach? For example, if a contractor bid $130, what might the cost be with a quality project manager?

[John S. Rabi]

quote:

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Originally posted by Kapohocat

From what I have seen, I think John does a fine job of negotiating prices![]

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Well, I do have an advantage since I have built at least one new home every year the past 10 years. I'm cash in the bank(?) for my builder. []

Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[Kapohocat]

quote:

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Originally posted by John S. Rabi...
Well, I do have an advantage since I have built at least one new home every year the past 10 years. I'm cash in the bank(?) for my builder. []

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Also I would think because you have built so many - you know what you want, you know what to do to get what you want, you probably don't make many changes, and yes you are a "return" customer - or an known entity which in your case probably affects your pricing in a good way.

Also surprises are usually expensive. I bet after doing it for so long - you have fewer surprises. In addition, working in real estate, you probably have a good idea what is a "good extra" in construction - such as top of the line kitchen - and what gives you no extra return on your investment as example a swimming pool.

Not to derail the thread but John, what do you think are the top 3 or 4 items buyers are looking for now (besides fire sale pricing)? This might help those deciding to build now - as to what to spend the "extra dollars" on.

[John S. Rabi]

Cat, I think you are right on the money with everything you posted. What's really interesting is that most people are terrified about building a house while not here, but it's really a piece of cake as long as you know what you want and work with a qualified GC. I hardly ever go to the construction site.
As to your question, there are two different kind of buyers out there right now. One that wants to buy for 30 cents on the dollar, and one that doesn't care much about such deals but wants everything on his list of "must haves."

Aloha,
John S. Rabi, GM,ARB,BFT,CM,CBR,FHS,PB,RB
808.989.1314
http://www.JohnRabi.com
Typically Tropical Properties
"The Next Level of Service!"

[EightFingers]

"... most people are terrified about building a house while not here ..."
That describes me!

Looking at $130/sqft...that's real cheap, makes me feel a little better about building in LZ1 - lava eats the house, not that big a deal......