Building a Home without a Budget

[REWahoo]

Actually, I refused to sign the contract due to the budget deficiencies. The contract is between my wife and the builder .

So that gave her the legal right to approve whatever changes/upgrades the builder talked her into. I think I see the source of your problem...

 

[Sarah in SC]

Wingfoot, while I acted as GC on my job, I had a custom builder who was also our landlord while we were building actually act as GC for a 10% fee. He helped me get subs and when they didn't perform, he chased them for me. I spent many a quality hour going over lumber bills in his office, asking about every board. I think I got my money's worth in the end. We did a lot of the finish work ourselves: flooring, hanging doors, inside trim, and all the cabinetry. We also had to do the finish plumbing and call for inspections because the plumbers were thieving bastards.
Oh and we did all of the electrical, under a permit pulled by a friend. Shhh.....
I did like the percentage deal, as I wasn't comfortable setting it up for him to build it.

 

[Free To Canoe]

What an education reading this thread. I've often thought of having a home built out here in the country instead of living in the wonky one that we bought. Now I have an idea that having a home built would be a big time stressor.

 

[Midpack]

What an education reading this thread. I've often thought of having a home built out here in the country instead of living in the wonky one that we bought. Now I have an idea that having a home built would be a big time stressor.

It can be a stressful process, depends on the builder. But it's essentially the only way to get exactly what you want and most people nail down the budget unlike the OP. We had our stressful moments over 7 months and did not get along with our builder unfortunately, but the one house we had built was still far and away our favorite house of the four we've owned. Unfortunately I was promoted/transferred in less than 3 years...

 

[Bamaman]

All things considered, being within 143% to 200% of original cost isn't bad at all! Celebrate that it wasn't worse!

Kind of reminds me of my bathroom remodels, cost wasn't the issue, but the amount of my own labor and trials and tribulations and a lot of messy, plain terrible work. Half way through, you just want to torch the place.

But a few luxurious showers later, it's all forgotten(*), and you just enjoy the new bathroom. Time heals, (or at least softens the pain of) most wounds.


(*) Not forgotten enough to ever, ever talk myself into another bathroom remodel though!

-ERD50

We built a lake house on a cost plus 10% basis. We were paying cash, and handled all material orders, bill paying, etc.

We had 3 carpenters on the job, and we were paying them top pay. The only outside workers were drywall, plumbers and a roofer.

Our days were spent picking up building supplies, organizing the job site and cleaning up after they left for the day. By doing all the running around, we saved substantially over a carpenter having to do it.

You wouldn't believe how little we spent on the house. I recently bought my sister's half share in the property--for 5 times what the house cost to build. Of course, lake front property is deadly expensive now.

If you're considering building a very substantial house, my best suggestion is to buy an existing property. You can find a perfectly acceptable house that suits your needs--without all the hard feelings, hassles and potential lawsuits.

And if you have to build it, start by having a contract with the builder written by a good real estate attorney. Contractors should be paid in stages with time frame rewards built into the contract.

When we downsized, we bought a new low maintenance single story house with a daylight basement. We have everything we need on one floor, and an apartment downstairs in case we ever need live in help.

 

[Mulligan]

I feel your pain, Culture and I had no wife. And don't feel bad about not having a set price for building it either. I had one and it was kept. But there was still a few corners cut though to get there. And why the hell didn't they tell me a 2 car garage couldn't fit 2 cars in it? My "two car garage" can't fit 2 Escorts in it. I did finally blow a gasket when the cheap bastard thought a new house with a garage shouldn't have an automatic garage door opener. I told him this wasn't the 1950s, so he did cave in on that before closing.


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[papadad111]

Similar thing happened to my bro in law and sis in law.

They remodeled their home, set a budget but did not program manage the build. Left it to contractor /builder who wound up "spending" about 40 percent more than their initial budget.

They had to use a 401k loan to finance the overrun too. And worse, they didn't get all their dream features fulfilled. No good records of what materials cost, what the contractor markup was etc etc. Big lesson learned for them.

Don't let a fox guard the hen house.

Hope in the end she gets what she wants and lives long to enjoy it. That's all u can do now. No amount of complaining will fix the situation so best to move on and not get your blood pressure up. That's what we told BIL and SIL !

With the 401k loan now paid back they ONLY have to worry that the appraisal came back 100k below what they spent all-in for the house !!! Lucky they had the base house mostly paid off before remodeling began otherwise they would be hard pressed to find a lender that would loan to them given the appraisals. They did get a 15 year mortgage. In their mid 40s that does make sense.

 

[rayinpenn]

You're not going to live forever... Do you really want to spend precious time fretting over new house construction overruns?did you really not consider contingencies?and upgrades...

Get over it move in and just relax... 'Times is a wasting'

I would love to start building today...but I guess can't leave my September HS junior son can I? Can I? Come on please?


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[travelover]

Bummer. This sounds like a relationship problem. You really can't address the cost problem because you do not have your wife as an ally. If this makes her happy, then it's cheaper to keep her.

 

[Culture]

It can be a stressful process, depends on the builder. But it's essentially the only way to get exactly what you want and most people nail down the budget unlike the OP.

We had the budget nailed down (so I thought), and we have received everything explicitly included in the contract. The problem was in the details. No contract defines everything, and at some point you have to assume that the parties are going to behave "reasonably." I think where my contractor was unreasonable was in not telling us up front about cost he knew would be incurred later in order to get us to build the house. I suspect this is the norm in the industry.

The upgrades are solely on my wife.

 

[NW-Bound]

... Yes I am bitching, and I should be happy that I can afford a very nice, very beautiful new house in a very nice neighborhood. However, at this point I such negative associations with the new house I do not want to move into it. My wife and I are unable to even talk about the new house anymore as it starts an unpleasant argument every time. If I could get my money out of it, I would sell it...

Marriage involves many compromises, some more painful than others. This one is as painful as all of the previous ones combined together.

Aye, aye, aye... Yes, building a home is very stressful, even when the couple does not have such major disagreements.

But the house is built, and whatever happened happened. I think you need to take a trip elsewhere together, and come back calmer. You still have the existing home to sell, right?

PS. The 43% additional cost did make the home nicer, right? So, if the contractor gouged you, it was not 43% but something less. Let's look at that as a consolation.

PPS. We have been married 35 years, and have had some rocky times like most couples. Then, afterwards think about it and realize it was not all that important.

 

[haha]

Actually, I refused to sign the contract due to the budget deficiencies. The contract is between my wife and the builder . However, it is fair to say I consented.

It is also fair to say (ie. accurate) that you are on the hook for whatever she decides, whether you signed the contract or not. A married couple is an economic unit, her debts are your debts. You could always hock that ermine coat.

Lordy, Lordy, so much to learn!

Ha

 

[haha]

PPS. We have been married 35 years, and have had some rocky times like most couples. Then, afterwards think about it and realize it was not all that important.

And even if this rationalization fails, there is still the knowledge that someone in this situation has no remedies that will not damage him big time. Sunk costs and hard to measure contingencies play a big part in these decisions.

It can be compared to having a foot caught in a bear trap, late afternoon, on a cold, snowy day. Any attractive, low cost solutions come to mind?

Ha

 

[Midpack]

We had the budget nailed down (so I thought), and we have received everything explicitly included in the contract. The problem was in the details. No contract defines everything, and at some point you have to assume that the parties are going to behave "reasonably." I think where my contractor was unreasonable was in not telling us up front about cost he knew would be incurred later in order to get us to build the house. I suspect this is the norm in the industry.

The upgrades are solely on my wife.

I guess I just got extraordinarily lucky getting exactly the house we spec'd for exactly what we agreed to pay, not a penny more. It took a month or two longer than expected, and we didn't see eye to eye with our builder by any means as they tried to cut corners a few times, but evidently our simple contract defined everything sufficiently...

 

[Culture]

It can be compared to having a foot caught in a bear trap, late afternoon, on a cold, snowy day. Any attractive, low cost solutions come to mind?

Carefully step down on the spring and release the jaws, then drive to the hospital in my heated car or call 911 on my cell phone? Isn't that one of the advantages of opposable thumbs and intelligence ?

Wait, you said low cost and hospitals are anything but !

 

[Culture]

It is also fair to say (ie. accurate) that you are on the hook for whatever she decides, whether you signed the contract or not. A married couple is an economic unit, her debts are your debts. You could always hock that ermine coat.

Failing to sign was only symbolic from the get-go.

You can have my ermine coat when you pry it from my cold, dead hands!

 

[pb4uski]

Ours ended up being only 116% of budget, including some conscious splurges along the way (like the spa tub DW insisted on that has been hardly used ), so I was pretty happy. If we had been 200% like the OP I would have had a cow too.

I played GC so it doesn't count any of my effort getting bids for the subcontractors and coordinating their work with the main builder (carpenter). We also did all the priming and painting so that saved some money too but the original budget anticipated that we would do the priming and painting.

I would have been hesitant to hand over everything to a GC though some friends of ours did that and were 1500 miles away the entire time their house was being built and it all came out good.

 

[Culture]

If we had been 200% like the OP I would have had a cow too.

Just to be clear, the house we are building is currently at about 200% of the price of the used homes we were looking at before deciding to build, which most importantly means we were not making and apples to apples comparison in deciding to build new.

The house we are building is at 143% of the original contract price (and will likely be finished very near to this), about 50% of the increase because of upgrades and about 50% because of necessary things left out of the contract.

 

[pb4uski]

My bad, I misread your OP.

I think you'll find that like many other things, time heals all wounds, and in a year or two all this stress will be long forgotten and you'll be enjoying your new home.

 

[NW-Bound]

So, only 21% increase of the planned cost is due to overlooked items, the rest is to make your wife happy. Ah, it's really small in the bigger picture of life. For example, I am sure you have "lost" more than that in your investments in past years, and that did not kill you.

Let it go, man. You still have your ermine coat, what more does a guy need?

 

[Rustic23]

We contracted and built our current home. I designed it using a $35 piece of software. We met with the builder, he suggested we use a 'plans' drawer rather than an architect. Cost $200! After reviewing the plans he estimated $275,000 to build the home. (right at 3,000 sq.ft, four bedrooms, three and a half baths) That was in line with our estimates.

He charged us $25,000 flat fee for his services, included in the above price. He furnished receipts for everything. While we applied for interim finance, he used his money until a week before we were due to close. Then took less than $50,000 to keep the bank happy. Saved us a bunch of interest.

Home was built on schedule and under budget! We are still friends with the contractor and have been his guest at several Astro's games. In the ten years we have lived here, there have been a couple of minor things needing repair. His warranty, lifetime! His lifetime! "As long as I'm alive, I fix anything my contractors did that goes wrong!" and he has lived by this.