Can you accurately price a custom home using price-per-square-foot?
Have you been looking for a quick way to figure out what your custom home would cost?
You’ve been scouring the internet, ‘What is the cost per square foot to build a house in Canada?’ or e-mailing builders asking for their square-foot price (newsflash: this is one of the most riskiest ways to choose your builder).
You don’t know any better, and it’s not even your fault because the old square-foot-price myth has been around for years (because back then it was a simpler time). Some builders still advertise a square-foot price for the basics and then work off of allowances (an allotment of money that you can spend on a certain thing, like light fixtures). Some builders are eager to make that sale by looking like the hero in answering your biggest burning question: “What’s your square-foot-price?”
You’ll be put at ease if that aligns with your top-spend, and you’ll sign on the dotted line to start building your custom home.
Meanwhile, the builder may very well know that there’s a good chance the square-foot price estimate and allowances they provided you with will be too low for what your actual needs and wants are. They’re tallying it up as you go, after construction has started. This is because they don’t have a thorough design process which is fundamental to accurately pricing a job.
But in their defense, they don’t know what your home is going to cost either. How could they know until every single detail is finalized? They’re not set up for that though. They’re just builders and are eager to give you a quick estimate based off square-foot pricing and allowances from previous jobs.
Quoting a custom home can take a builder weeks of time to do. Builders who don’t work on a fixed-price model don’t want to invest the time it takes to accurately quote your custom home because their contract will be set up that you must pay the difference if your selections are over your allowances. The risk is on you.
This is very risky for you because as you’re selecting things after construction starts, you may quickly realize you’re about to blow your budget real fast.
And if you’re way over budget, you may be faced with two options. Halt construction or continue the build with your not-so-favourite selections and regret your custom home in the end, wishing you would’ve waited and saved up for a bit longer in order to get exactly what you’ve been dreaming of.
“Everything should be made as simple as possible, but not simpler.” – Albert Einstein
The Answer to Your Burning Question
“75 per cent of owners were over planned budgets on their projects.”
Square-Foot Pricing Still Exists
Square-foot-pricing is still a thing, but for production builders only. The model floor plan, structure and selections have been made, therefore a production builder can work backwards and figure out their square-foot price and continue to build the same house over and over again.
Custom home builders start from scratch every single time (hence the term ‘custom’). Every single home they’ve built is different; from the floor plan, the roof style, the wall heights, the amount of windows, the cabinetry, the type of flooring, and on and on and on. Therefore, a custom home builder has nothing to look back on to determine a square-foot price for your custom home because the house simply does not exist in order to do those calculations. Sure, a custom home builder could share the square-foot-price of their previous builds, but it’s not necessarily going to be an accurate number to serve you.
People think the most common way a custom home builder prices a home is by the cost-per-square-foot.
The Biggest Myth
People think a square-foot price is the most common way to figure out the cost of a custom home.
The only relevance a square-foot price has is for the specific build that it was for. Square-foot pricing is used for large volume builders doing the same cookie-cutter production homes; they can look backwards and determine a square-foot price). But you cannot look forward and translate square-foot pricing over to a custom home; it’s like comparing apples to ice cream.
Some “custom” home builders may tell you a square-foot price to lure you in so you start building with them. And not until the build starts is when you go out and choose your selections (all the fun stuff) like cabinetry, flooring, tile, railing, etc.) based on the allowances that may have also been derived from a square-foot price.
The history of square-foot-pricing started back in the day when the majority of homes built were production homes. Builders would have a few models to choose from, and that’s all you’d get. Drive around any neighborhood in Saskatoon (i.e. Silverwood Heights; Varsity View; Hampton Village; Brighton) and you’ll quickly be able to pick out the same style of home over and over again. Additionally, there weren’t as many ‘bells and whistles’ to choose from back then. Everyone got their linoleum flooring, shag carpet, and 1 light in each room, with the exception of the living room; for some reason nobody got a light in there.
Custom homes were not very common until the last couple decades.
Custom home builders start from scratch every single time (hence the term ‘custom’). Every single home they’ve built is different; from the floor plan, the roof style, the wall heights, the amount of windows, the cabinetry, the type of flooring, and on and on and on. Therefore, a custom home builder has nothing to look back on to determine a square-foot price for your custom home because the house simply does not exist in order to do those calculations. Sure, a custom home builder could share the square-foot-price of their previous builds, but it’s not necessarily going to be an accurate number to serve you.
People think the most common way a custom home builder prices a home is by the cost-per-square-foot.
10 Questions to Ask if You’re Told a Square-Foot Price
If a builder quickly offers a square foot price, take caution before signing a construction agreement without your design and selections being finalized. Be sure to understand what the square-foot-price includes, otherwise you cannot compare apples-to-apples and may be choosing the wrong builder for the wrong reasons.
Does it include GST & PST? That’s a cool 11% added to your bill!
What are the ceiling heights? 8’ or 9’ basement and main floor?
What type of insulation is used? Are the rim joists spray foamed?
Are the windows dual- or triple-pane? Black or white interior? Black or white exterior? Are they all able to open?
Is a garage included? Is it insulated? Is it heated? Is it boarded, taped and painted?
What kind of siding? Vinyl of fiber cement?
Is landscaping included?
What about a fence?
Are utilities included?
Are appliances included? Which brand/models?
Why an Honest Builder Will Not Give You an Answer to Your Square-Foot Price Question
When designing a custom home, there are up to 400 selections that need to be made (an undertaking you should not do alone). Not only do these selections need to be chosen, but they also need to be priced. Let’s pick just 3 out of the 400 selections: windows, appliances and interior doors.
Windows
On previous jobs, we’ve had windows cost as low as $9/square-foot and as high as $40/square-foot. That’s a swing of $31/square-foot. Now here’s the kicker. Windows vary at least 15% on each side depending if you go with white or black. Even if you said you want white windows, we can’t fictitiously determine how many windows will be going into your custom home, let alone the size of them. And even if we did know that information once a drawing is done, the window suppliers do not price by the square foot.
Appliances
Do you want the Samsung special for $6/square-foot or high-end Miele appliances for $30/square-foot? That’s a swing of $34/square-foot. Keep in mind that the number of appliances in a custom home can vary. Some want a built-in coffeemaker, and some want multiple panel-ready bar fridges. Either way, you know just as well that you can’t walk into Trail appliances and ask what the square-foot-price of their fridges are.
Interior Doors
This is an interesting one because interior doors are also not priced by the square-foot. They are priced by the size and style. Usually the style that is most trendy tends to be the most expensive. Door heights can drive the cost significantly. From our own experience, we were debating between 7’ doors and 8’ doors throughout a project that included a finished basement. The cost difference between those two sizes was $6,000. That’s a spread of $3/square-foot when guessing how much your home is going to cost using square-foot pricing.
Just these 3 items alone could swing your budget by $68 per-square-foot, and we’ve got 397 selections to go!
You can probably see now why we’re not so quick to give a square-foot-price because we don’t want to be misleading and need to respect the design and pricing process that must methodically take place in order to provide you with an accurate number.
The only way to know what the custom home you’ve been dreaming of will cost is to work with a design-build company.
How to Know Exactly What Your Home will Cost
If you want to know exactly what your home is going to cost before you get started on construction, you need to work with a design-build firm that does fixed-price contracts. Fixed-pricing is included in our design phase so that there is no guesswork and therefore no surprises or stressful, “you’re over budget” phone calls from your builder by the time construction is underway.
Everything you need to know is included in this free guide for consumers looking to better understand the custom home building journey so you can have your own custom home without any regrets in the end!
