Top 10 Ways to Save Money on a Custom Home
Publication date: 2005-05-26
| By Rich Binsacca |

The term "custom home" is often associated with big-budget projects, but that's a misnomer. In fact, what qualifies a house as custom is not the price tag, but rather that the owners are empowered to create a truly one-of-a-kind home that suits their lifestyle needs.
That responsibility demands careful consideration of the costs that will go into the design, construction, and eventual operation and maintenance of a new custom home.
And, in many cases, proper planning and investing in better products and systems at the building stage rewards you with a fast return on your dollar and long-term cost savings. Consider the following tips to lower upfront and ongoing expenses while still achieving the home of your dreams.

1. Establish a budget. Regardless of how you decide to access funds, it is critical to determine and stick to a budget for the project. Ideally, that number is directly related to what you can afford to pay on a monthly basis, either to a lender for a construction loan or directly to a contractor. During the often long building process, which can take a year or more from design to move-in, calculating your monthly amount and translating that into an overall project budget will help mitigate cost overruns, refine loan terms, and reduce stress.

2. Buy house plans. Architectural design and related fees can account for 15 percent or more of a custom home budget. House plans reduce that cost significantly. Not only are there thousands of plans to suit any taste and lifestyle need, they can be adapted to fit specific lot conditions, achieve ideal orientation, and accommodate a variety of changes. And, you still have the opportunity, with your contractor, to select your own slate of finishes to customize the house even more.

3. Hire a builder -- now. As soon as you can, get a professional you can trust to follow-through, hire the right help, and stay within your budget. Do the legwork to create a list of 5 or 6 reputable custom home builders in your area and conduct an initial interview with each one to determine your compatibility and shorten the list. Then, invite those left on your list to negotiate a contract based on your project budget (see #1 above) rather than ask them to competitively bid on your project.

4. Proper orientation, if possible. Work with your builder to find a lot or to place your house on a parcel in a way that optimizes its orientation to the sun. This is more than new-age, feng shui thinking; proper orientation directly impacts a home's energy use, daylighting options, and passive solar and ventilation opportunities that affect indoor comfort and ongoing costs. In conjunction with a plan designed to take advantage of passive solar properties-where windows and large thermal masses (such as fireplaces) soak up daylight and help radiate heat to the room-orientation can put a decent dent in your heating bills. Proper orientation may also optimize views, drainage, and other features that enhance and extend the value of your home.

5. Go green. Choose and follow the guidelines of a green-building program. Several local markets offer such programs, usually through a builder's association chapter, and there are national and regional guidelines, as well. Certifying the home with the program is a way to "prove" that the home meets an established green standard-and such certification will increase a home's market value. But the main goal is to build a better-performing and durable home that will hold its value and deliver comfort and energy cost savings for several years. With your builder, match the checklist to your list of specifications and budget, and do the best you can to earn the program's "points" without a cost overrun.

6. Select durable materials. Basic, authentic materials such as concrete will outlast and outperform cheap alternatives. Try it as a patterned and/or colored front walk or kitchen floor instead of more expensive stone or tile, or as a countertop material instead of granite. That being said, some of today's newer composites, including fiber cement siding, wood-look fiberglass doors, and engineered wood flooring, not only perform better than their natural counterparts, but also increasingly contain recycled material to help achieve a "greener" house.

7. Specify smart systems. Invest in a programmable thermostat, dimming lighting controls, on-demand water heaters, vent fans, and a low-voltage wiring scheme-all of which are affordable, mainstream products-to gain better control of your home's various energy-using systems and lower your utility bills.

8. Choose efficient products. There's no reason not to buy Energy Star-rated appliances for your home. Thousands of brand-name appliances across every price point and style have earned that distinction and will save you money in energy use and costs. Standard low-flow plumbing fixtures have worked out their performance bugs and are now proven to perform as well as traditional fixtures while significantly saving resources and related costs. The best investment in this regard, however, is insulated windows. Placed and sized properly, they'll pay back quickly and result in greater indoor comfort.

9. Mind your maintenance. If you follow steps 1- 8, you'll have an affordable home that performs better than nearly every other new home built today. Protect that investment and value by committing to a regular maintenance routine. Change your furnace filter as instructed and have the HVAC system inspected at least every other year. Clean out your gutters in the late summer and early spring, look for missing roof shingles or cracks in the siding, and follow the use and care instructions for your appliances to keep them in top form.

10. Lifestyle choices. There's no sense in going through a custom home building process, especially one that results in a better-built house, if the thermostat temperature remains above 68 in the winter and below 72 in the summer. The same can be said for neglecting to ventilate moisture from your bathroom, laundry, and kitchen and failing to follow a maintenance routine that preserves and extends the value of your investment, time, and diligence in cutting costs and achieving your dream home.