With summer in full swing, a new inventory of homes should hit the market in your area over the next few months. From cozy bungalows and farmhouses to high rise apartments, you can find any number of properties to fit your lifestyle and needs depending on your budget, of course, as well as where you live.
But, what happens when you can’t find anything you want? Should you keep looking, or should you build something brand new instead?
Hidden Costs of Building a Home
The benefits of building a home can be enough to lure almost anyone in – what, with builder incentives, the ability to choose your own floor plan and plot of land, and the potential to own something that hasn’t been altered or ruined by somebody else.
Still, there are some factors that many who build absolutely fail to acknowledge or plan for – and some expenses that tend to pop up out of thin air.
Before you build a new home, it’s crucial to know which features are included in the price of your new build – and what you’ll need to pay for yourself. To gain an insider’s perspective, we reached out to real estate expert and builder Karen Margrave of The Margrave Group to see which hidden costs surprise people the most.
Hidden Costs to Plan for When You Build a New Home
Scared building might leave you in the red? Here are the surprise costs that catch many new homeowners who build by surprise:
Permits and Fees – No matter where you’re building, says Margrave, there are normal permit fees to contend with along with fees for parks, schools, and traffic impact. The fees and the permits you need will vary heavily depending on where you live and local laws that govern new construction. If your builder hasn’t made you aware of these fees, it’s important to inquire with the Building and Planning Department in your area.
Getting Power and Water – While building in an existing neighborhood can give you direct access to local power and water lines, that isn’t always the case. Plus, there can be other fees and additional costs involved in getting power and water connected to your home. And sometimes, your builder doesn’t even know what they are. “Sometimes a new builder doesn’t understand that though you have paid a fee, say for electrical, that you still will need to purchase the electric meter separate,” says Margrave.
Interior Finishes – As Margrave notes, most builders offer their clients a selection of interior finishes to choose from that are included in the price of the new build. Some builders, however, make a profit on certain upgrades and interior finishes, and that profit can cause the cost of your home to soar. “Know what the policy of the builder is,” says Margrave. That way, you can choose interior finishes you can actually afford and won’t find an unwelcome surprise on your final bill.
Appliances – Where some builders include basic appliances in your package, others only include those that are considered “built-ins,” says Margrave. The same thing can be said about your laundry room, she adds. Be sure to find out which, if any, appliances are included in your home so you can plan accordingly.
Interior Upgrades – If you don’t like the color palette or interior finishes offered by your builder, you certainly have the option to upgrade them – at a cost. Common interior upgrades can include everything from higher quality finishes to special paint colors, upgraded lighting packages, extra wiring for AV equipment, or security cameras. Never assume any extras are included in the price of your home, and find out what they might cost ahead of time.
Landscaping – Depending on where you live, you might need to fork over the cash for your own exterior landscaping – at least in your backyard. While some builders include sod in the front, many only plant grass seed or nothing at all in the back. Make sure to understand your builder’s policy so you can budget for additional landscape work on your own.
Driveways – Some new builds, and especially rural properties, don’t include sidewalks or driveways in the basic package price. And if you live far off the road, the cost of concrete can be staggering. Make sure to find out if a driveway or exterior sidewalks are included, and if not, how much they’ll cost.
Exterior Upgrades – Exterior upgrades that aren’t generally included in the price of your home can include things like additional hardscaping, stamped patios and walkways, landscape lighting, sprinkler systems, retaining walls, pools, and mature trees, says Margrave. If you want any of these “extras,” she says, make sure to plan for them.
Window Coverings – New homes come with new windows, but absolutely nothing to cover them up. If you want window coverings, blinds, or curtains, you will need to pay for them yourself. And if you have a lot of windows, that cost of doing so can add up fast.
Interior Décor – Even after the majority of your interior and exterior are complete, you’ll still have an empty house with nothing on the walls and zero charm. If you don’t have décor you can use from your last place, plan a budget for wall hangings, picture frames, and anything else that might make your space more appealing.
Building a new home can be an exciting, yet expensive, endeavor. To make sure you don’t get in over your head, ask as many questions as you can and plan for every detail of your new build.
As Margrave will attest, people often get so excited about building their “dream home” that they let the situation turn into a financial nightmare.
“Make sure you have a set budget that you are comfortable with, and stay within it,” she says. “Spend your money where it has the most value, and don’t spend on “trendy” items, but those that will stand the test of time.”
And most importantly, get every detail of your new home deal in writing. Just like any other transaction, the devil is often found in the details.
Holly D. Johnson
Holly Johnson is a financial expert and award-winning writer with an obsession towards frugality, budgeting, and travel. In addition to serving as Contributing Editor for The Simple Dollar, Holly writes for U.S. News and World Report Travel, Personal Capital, LendingTree, and Frugal Travel Guy. Holly is the owner of the websites Club Thrifty and Travel Blue Book.
- Your Mortgage GPS: Step-by-Step Directions for Getting a Mortgage 11,912 views
- Should You Give Out Your Social Security Number to Get a Mortgage Quote? 8,815 views
- 15 Things to Know About Your New EMV Credit Card Chip 7,521 views
- The Ultimate Credit Score Survival Guide: 45 Rules to Help Increase Your Credit Score 7,200 views
- 5 Things You Should Never Put on a Credit Card 4,519 views
- How Do You Compare Personal Loans and Get the Best Deal? 4,062 views
- Mortgage Rates Might Fall Today – Maybe Significantly 3,913 views