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Top 4 Costs to Consider Before Setting Your Custom Home Budget

Tony Panebianco | 08/27/2019

Top 4 Costs to Consider Before Setting Your Custom Home Budget

Building a new home can be an incredibly rewarding experience, both financially and emotionally. But with a plethora of decisions to make along the way, you may find your well-intentioned budget spiraling out of control. Before you pull the trigger on building your new home, check out these 4 factors that have a huge effect on your construction costs and future marketability.



Rationally speaking, where you choose to build your home will have an effect on the cost. But why? Consider this, the neighborhood, community, and zip code where you build all follow a spoken, sometimes unspoken rule: Keep it consistent.

Building in a neighborhood where homes sell between $800k and $1M is most likely not the ideal location to build your $2 million-dollar dream home. That’s called over-improvement and it’s the easiest way to lose money in the long run. This concept applies to ANY price point. As a Realtor in the building industry, I've watched many home sales fall through simply because there aren't enough comparable home sales in the area to support the high asking price. I listed a completely renovated home with high-quality finishes and stunning upgrades. Unfortunately, this home was located in a neighborhood that hadn't seen a sales price above $600k. In a different community, this gorgeous home could have sold for close to $1M, but without comparable home sales in the immediate area to "prove" the market value, the home couldn't break a $750k sales price. 

In South Florida, an enormous percentage of homes are located within a Home Owners Association-run community. With an HOA comes possible required club memberships plus restrictions on the type, design, and size of home you can build. Most require plan approvals from their Architectural Review Board. If you haven't done your homework, there's a possibility that the blueprints you've spent thousands of dollars creating, may not fall within the design restrictions. Unless your architect is a close friend that you've rescued from the edge of death,  making changes to plans are expensive.

Are you considering buying in a community with a mandatory club membership? Make sure you are clear on ALL of the fees involved, both initially and annually. Is this community in high enough demand that in the future you can sell without having to reduce your price or contribute to the new buyer's membership fees? 

The Fix: Before buying your home site, research sale prices in the community. Also, make sure you're aware of any mandatory memberships, Home Owner's Association rules, and architectural restrictions. 

Do you have dreams of a backyard oasis complete with a firepit, Infiniti edge swimming pool, waterslide, outdoor barbecue, and pool house? What about a luxurious motor court, free-standing garage with lifts for your car collection, or synthetic turf so you don’t have to mow? If you do, be prepared to pay a premium. Many amenities come with a reasonable price tag but can add up to a budget buster if left unchecked. Case in point, here at PB Built we recently finished renovating a home.

The owner had purchased the home for around $950k and afterward spent over $600k to build a fantastical pool surrounded by lush landscaping and outdoor lighting. 

The Fix: Prioritize the list of amenities you'd like to add to your new home. Once you're set on your must-haves, make any related decisions and selections during the planning phase. Making these types of decisions ahead of time is a must for creating a realistic and accurate budget.


Ron Rosenzweig, Inc.

Home Size

Outdoor Trend - Make the outdoors part of your living space. Flooring that flows from inside to the outside, pocket sliders for open access and outdoor living rooms.

The single greatest factor when creating your new home construction budget is the size.

Home sizes are generally measured by square footage. Break this down by living square footage—the amount of space that is air-conditioned, and total square footage—as well as non-air-conditioned garages, balconies, patios, and so on. When builders calculate the “price per square foot,” they calculate using living square footage. In South Florida, the going price per living square foot starts around $350. The larger the home, the more materials need to be purchased and installed. Bigger roof lines mean additional trusses and roofing. An additional bedroom adds an extra 150 living square feet. Multiply that by $350 per square foot and you're adding over $52k to your costs. 

An interesting fact regarding size; in homes with less than 4,000 living square feet, the price per square foot often increases. This is because smaller and larger homes have certain elements that aren’t necessarily based on square footage. For instance, a 20 x 20 kitchen in a 3,000-square-foot home and an identical 20 x 20 kitchen in a 5,000 square-foot home costs the same regardless of the total amount of living square footage. A 30 x 15 swimming pool will cost the same for a larger and smaller home. More square footage means a higher overall price. Less square footage means lower overall price, but will often break down to a higher price per square foot.

The Fix: Prioritize your living spaces and crunch numbers before you have plans drawn. Making adjustments to room sizes after plans have been drawn can be costly and more importantly can undermine the overall design, aesthetics, and functionality of your home. 

Omni Calculator has a great Square Footage Calculator that makes it easy to find room dimensions.

That gorgeous Italian marble you saw on Pinterest is perfect for your master bathroom! But guess what? An on-the-ball project manager or designer can find options that look just like that expensive marble, at a lower cost. We’re certainly not saying to run to a big box store to make your selections, we’re saying that the professionals you work with have a few tricks up their sleeves when it comes to materials. Most of the finishes you select for your home can be made without tossing the budget aside and without sacrificing one ounce of style and functionality. 

The Fix: Collect inspiration photos from sources like Houzz and Pinterest to show your project manager or interior designer. Remember, a great PM or designer will be able to provide alternatives for high-priced selections and work hard to keep your budget on track, even when you're dazzled by possibilities.


The opportunity to build a new home can really get those creative juices flowing! But remember, you’re not just building a home, more importantly, you’re building an investment. Keep your investment in the black by making smart choices and allow your new home professionals to lead the way.


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