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How to Guide: Hidden Costs Of Building Your New Home

It’s a struggle between deciding whether to buy an already existing home, or build your own bespoke home. You are excited to build your new home, and you have already consulted a reliable building contractor and got a reasonable quote for your dream home. However, quotes don’t always factor in all costs of building your home. There are a lot of hidden expenses lurking beneath the construction cost. They include the following.

1. Permit And Fees

Before any construction, you need to get the necessary permit and fees. Permits ensure your new home meets the building code, and it protects you from unsafe construction. These costs can build up and aren’t always included in a quotation. Thus, consult with your building contractor to know if they include these charges in their quote.

The council can also require:

  • Termite protection temporary fencing
  • Crossover protection
  • Sediment control
  • Site toilet
  • Bushfire attack perimeter safety barrier, etc.

2. Soil Tests

In most counties, councils require your contractor to perform a soil test before beginning construction. Soil tests help determine the soil’s properties. How much does the soil expand or shrink when the moisture content changes?

Soil properties impact the foundation of your home. It also helps the builder design your new home’s footings according to the soil type and its possible movements.

3. Site Development Costs

These are variable costs incurred when preparing the site for building. Every home is different, and each site is unique. Therefore, the site can affect your costs in various ways. For example, the location, type of soil, slope of the land, and design can affect the site development costs.

Costs under site development include demolition and clearing services like clearing bushes, tree removal on the site, and demolition of existing structures. It also includes excavation services like backfilling, digging for foundations, and rough grading.

The actual expenses cannot be estimated in most site development costs since it’s hard to tell until the builder begins digging. So, these costs can only be accurate after the work is complete. However, some builders add an allowance for site development costs in the quotes.

Some factors can add to site development expenses. For example, you might need extensive excavation or drainage costs depending on whether your home has been approved and the site level is okay. Thus, when asking for a quotation, it’s essential to ask your contractor what their quotation includes and excludes.

4. Connections To Utilities

Utilities like connection to gas lines, cables, and electricity lines are considered hidden costs since they are barely included in the contract. How much it costs to connect your new home to the power line or city water will depend on the land and the service company.

Usually, private septic systems and wells will cost more than public utilities. The most expensive utility is an electrical hookup. However, you might need to consider a temporary power option before installing a permanent supply, which could add to your costs. So, always have a builder visit your site for a more accurate quote to keep the unexpected costs low. Ask about the fees and get ready to pay some out-of-pocket costs.

5. Landscaping

When you go through your building contract, knowing what services you are buying is essential. Most building contracts don’t include landscaping, pathways, mailbox installation, or driveways. Instead, they focus on the dwelling, not the outside, forcing you to spend more on landscaping.

Depending on the drive or pathway design and material you choose, the price will vary. If you have enough to spend, you can always go for textured driveways or settle for concrete standard driveways if you are on a tight budget. Although some builders offer landscape services, it’s often a small area, several square meters.

6. Modifications

You already identified a good design for your house, but you realize you need to change a few things at the last minute. Even the most minor modifications can increase the cost of building, especially if the changes are structural.

Modifications translate to additional material and labor costs. Additionally, it may slow down the project and cause it to run behind schedule. Before signing a building contract, ensure you are comfortable with how your new home will appear before the building begins. Therefore, plan adequately in advance to avoid deviating.

7. Upgrades

If you rely on a custom home builder for your new home instead of contracting an architect and designer, your builder will likely choose a standard range of finishes and features. After these standard inclusions, you might need a few upgrades, which might cost more.

The best time to choose the finishes, materials, accessories, and products is when designing the house. Making choices early helps prevent hidden upgrade costs since it helps you and the builder have an accurate estimate of the project at the start. It also makes it easy to include these specific items in the construction contract, making it hard for the builder to charge additional fees for the same fixtures.

8. Allowances

In a construction contract, a specified amount is dedicated to an item like lighting, whose details aren’t entirely determined when drawing the contract. So, depending on your selection, the funds allocated to allowances can be lower or above the budgeted amount.

The builder will note these differentials and apply these costs to the final settlement during closing. Often, homeowners aren’t aware of these costs beforehand, especially when it’s an overage (when the actual amount spent is more than the allowance).

Overages mostly happen when the cost allocated for allowances is low; thus, leaving only a fair amount of selections. Hence, try deciding what you want before finding a building contractor for more specific details. Alternatively, you can allocate a considerable amount to avoid frustrations.

In Conclusion

Building a new home is a great initiative and adventure. You expect it to be a smooth, stress-free process that will make your dreams come true. Sometimes, the hidden costs can make the process less smooth. It’s important to plan end-to-end, for example considering the cost of actually selling your property will affect your budget for building your new home. As a homeowner-to-be, it’s essential to know these hidden costs to know what to expect. You can now allocate some part of your budget to these hidden expenses in anticipation. If you wouldn’t like the hassle of dealing with these costs and building projects, there is always the option of buying existing properties, for example homes for sale in San Antonio. It’s important to research both options thoroughly as a home is one of the biggest purchases you will ever make.


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About the Author

Kaya Wittenburg

Blog Author and CEO

Kaya Wittenburg is the Founder and CEO of Sky Five Properties. Since the age of 10, real estate has been deeply ingrained into his thoughts. With world-class negotiation and deal-making skills, he brings a highly impactful presence into every transaction that he touches.

He is here to help you use real estate as a vehicle to develop your own personal empire and feel deeply satisfied along the way. If you have an interest in buying, selling or renting property in South Florida, contact Kaya today.

Feel free to call me at: (305) 357-0635
or contact via email: [email protected]