House Watch: Hiring your architect and home builder in tandem can save you money
By Katherine Salant,
Homeowners embarking on the construction of a custom home or a remodeling project are often inundated with pitches for “smart” technology — from “smart” wiring to “smart” appliances.
But the most important decision these homeowners will make is how to wisely use their money. Making smart decisions will get them the best house for their budget — though not necessarily the biggest home or one with the most trophy features.
Here are some of my smart-money tips:
Start by hiring experience. An experienced architect or home builder won’t waste time or money on projects that are outside of your budget. Experienced home builders also have relationships with reliable subcontractors, which can be an important part of completing a project on budget.
It’s always difficult to nail down the price of something that is being built for the first time. But there are ways to minimize the risk of cost overruns. The method I prefer is hiring an architect and builder at the same time to work together. Under such a “negotiated bid” contract, their respective fees are determined upfront along with the construction budget.
During the initial phase of the project, the homeowner works with the architect to design the house and the builder monitors the work to ensure that it can be done within the homeowner’s budget. Another plus with this arrangement: A builder can often spot simpler and cheaper ways to achieve the architect’s vision.
Many homeowners are convinced that a traditional process in which they hire an architect to design the home and then receive bids from a builder to complete the project will produce the best — or lowest — price. But that’s not necessarily true.
Even the most conscientious architect can make an error or omission in the design documents that form the basis of the builder’s competitive bid price. When an error emerges during the construction process, the builder will issue a change order to correct the mistake at an additional cost. But they’re not obliged to offer to do it at the lowest price. And the change orders can poison the atmosphere on a project when homeowners have a lot of money on the line.
But with a negotiated bid, the builder’s job is to catch errors during the design phase. And they have a big incentive to make sure they do: Their profit margin is on the line.
Some homeowners are also convinced they can save money by using a “design-build” contract, which is often touted as “design that’s buildable and affordable.” Under this arrangement, the builder hires the architect, who answers to the builder, not the homeowner. But if there is a disagreement, the architect will not advocate on the homeowner’s behalf.
Generally under these arrangements, architects also have less input on the design and far less contact with the homeowner. The architect may produce a schematic design, for example, but the builder will fill in the details.
Homeowners should also consider the cost per square foot of the home they want. It can be a useful tool at the beginning of the project to determine what is possible under different budget constraints.
If you are building a custom home, divide your budget by the size of the home you plan to build. On a $375,000 budget, for example, a homeowner can build a 2,500-square-foot home for $150 per square foot. Using that cost figure, an experienced architect or home builder can estimate what finishes and features would be affordable.
You may quickly realize that you will have to build a smaller house to get the features you want or accept more modest finishes.
But remember, the cost per square foot is averaged over the entire house. The cost of a specific square foot depends on what’s in it. A square foot in your kitchen is more expensive than a corner of your living room that’s merely empty space.
And getting a lot of luxury features at a low cost per square foot is not the hallmark of a good deal. In fact, it can be just the opposite — a sure indication that a builder is using inferior materials or cheap subcontractors. It may also be a sign that the builder, desperate for the work, cut costs to the bone and is at risk of going belly up halfway through the project.
It’s also important to factor in the lifetime costs of maintaining a home, not just the upfront cost of building it.
This distinction becomes clear when selecting building materials. For example, you can save a bundle on cheap windows. But when you factor in the cost of replacing the windows once or twice over the 20 to 30 years of your occupancy, they become the most expensive option. Skimp on insulation and you will saddle yourself with higher utility bills from Day One. Purchase cheaper but less efficient heating and cooling equipment and you’ll have to replace the equipment long before you move out.
Katherine Salant has an architecture degree from Harvard. A native Washingtonian, she grew up in Fairfax County and now lives in Michigan. If you have questions or would like to suggest topics for coverage, contact her by e-mail or at katherinesalant.com.