Did you know that there are actually three parts that make up the final cost of a custom home? This is something new to many customers when they start the journey, so we’re going to break it down for you here.

Many consider the cost of the home construction and the cost or value of their lot as factors, but there is actually one more key variable, and that is the cost in getting your lot ready to build on. This is also known for short as the “site prep“.

Site prep is figured separately from the price of the new home because those costs are highly variable and are almost 100% determined by characteristics of your specific lot, independent of the style home you choose to have constructed.

Site prep includes the following, among other items:

• septic or sewer hookups
• well or water lines
• excavation
• grading
• driveway
• electric lines

Basically site prep is everything required to be able to build the house on your lot, and these costs can vary from as little as $10,000-$15,000 to as much as $40,000, in total.  Additionally, it’s important to know that there are several different ways that builders charge for these costs.

If you’re building on a lot owned by the builder, these costs should be included  in the price of the home.  The builder most likely calculated them before he even purchased the property, knowing they’d be selling the lot as a package with everything included.

If you own or are purchasing your lot, as most of our customers are, there are three ways to account for the cost. 

Method 1 – Standard allowance

The most common method  is to give standard allowances for everything on the lot. This doesn’t require the builder to visit the site or obtain bids for all the work.  Of course, if your allowance is $15,000 and the cost turns out to be $30,000, you’re on the hook for the difference. 

Method 2 – Included in home price as a service

Another common way is for the builder to get the estimates, add his normal profit and overhead and include it in the final price of the home.  There’s certainly less risk for you that way, but now you’re paying several thousand dollars on top of the cost, if he includes his markup. There will also still be a clause that you have to pay the additional cost if say for example, they hit rock or have to go deeper for the well.  That’s fair since the builder can’t know those things for sure, but you’re still paying that additional profit of several thousand dollars for their management of this work.

Method 3 – Our Method

There are a few builders like us that will go out to lots you’re considering purchasing, and inspect and evaluate them with you. We’ll also obtain exact bids for all the work that will need done. If you choose to build your new home with us, we will include these items in the final contract price, at cost, without any markup, and you’ll see the same invoices that we do.

Of course, as unforeseen circumstances can occur with lot work, we do include a clause, as do all builders, that you’re responsible for any unforeseeable costs. But again you pay only cost for any work done, with zero markup by us, and of course we and the professional we work with evaluate the lot as thoroughly as we can to help lower the risk of surprises beneath the surface.  We feel our way is the fairest  for the customer.

Have questions on typical costs? Click here to get in touch.

We can provide you with an actual dollar for dollar detailed breakdown of what these typical site prep costs are and how much to they normally run. Just send us a note on our response page and we’ll send out a complete realistic breakdown.

Have a lot and are interested in a lot inspection? Just contact us via our contact page or give us ring at 434-266-1070 . There is no obligation, and we’ll out  take a look at your lot or one you’re considering buying, at no cost to you