The biggest benefit to building your own home is saving money. Owner Builders can save a significant amount of money allowing them to build their dream home sooner, build a larger home or to simply meet budget constraints. Building a house yourself, without a general contractor, is a secret that has been used by thousands of individuals to build their home for less than everybody else.
The key to saving money is taking on management duties yourself. This doesn’t mean picking up a hammer to do the framing, learning how to plumb or even painting the walls. Of course, you can do these things if you’d like… But we don’t recommend it! Owner Builders manage the project themselves and thereby get rewarded in saving the expense of a general contractor and real estate commissions.
In total, owner builders can save up to 25% on the total cost of their home. Let’s break it down.
Where do the savings come from?
- Eliminating The General Contractor (10-25% Savings)
- Reduced Real Estate Fees (3-7% Savings)
- More Control Over Costs
Eliminating The General Contractor
By managing the construction of your home, you eliminate the need for a general contractor. General contractors typically charge between 10% to 25% of the total cost of a home. These rates vary drastically between general contractors with custom home builders charging higher rates than high volume “cookie cutter” builders. In most cases, more expensive homes will be charged a higher percentage by the builder.
The key to keep in mind is that eliminating the general contractor means that you will be responsible for these management tasks. All of the actual work will still be completed by subcontractors, but you will need to oversee them. You will need to work with an architect on design, get bids from subcontractors, schedule the work and make sure everyone shows up on time. If something gets missed or overlooked, you will pay for it.
To learn more about what’s involved, sign-up for our free mini-course.
Reduced Real Estate Fees & Commissions
In many cases building a home yourself will allow you to reduce, or even eliminate, real estate commissions. Many home builders partner with local realtor to sell their homes, the result is that all of their clients are subject to real estate commissions. By building yourself you can avoid paying these commissions. You are likely to still need a realtor to assist with the purchase of your land or lot, but the fees assessed will be significantly less than those that would apply to the finished home.
More Control Over Costs
When you build a home yourself, you have control over everything. You can get as many bids as you’d like, choose components from any supplier and eliminate any feature you deem un-necessary. When working with a builder, you don’t have this level of flexibility. Most builders only work with certain subcontractors and suppliers, leaving you with fewer choices.
The cost savings you realize from subcontractor and supplier selection will be driven by the amount of time you invest. The goal being to find a subcontractor who can deliver your desired level of quality at the best price.
Summary: Owner Builders Can Save Up To 25%
When all the cost savings are totaled up, an owner builder will typically save an average of 15% on the cost of their home. While savings of up to 25% are possible, this level of savings is more difficult to achieve. Owner builders who invest in educating themselves, planning their build and soliciting bids will achieve a higher level of savings.
For those looking to maximize cost savings, avoid mistakes and mitigate risk; we recommend completing an online course before kicking off your build.