Dilemmas with Pricing the House per Square Foot

After sorting through the issues of location, price, floor plan and features, do we go with Builder A or Builder B? For many new home buyers, the choice comes down to which one offers a lowest cost-per-square foot price.

Unfortunately, It has been said that estimating a home on a per square foot bases is like estimating the cost of building a house by counting the number of electrical power points in the building plan.

There are several problems with this approach. First, no two builders work alike or use identical materials, so the calculation will not be an apples to apples comparison.

Observant buyers who know something about material costs may factor this in. For example, if Builder A's standard kitchen cabinets are white with vinyl wrapped raised panel doors and Builder B has oak cabinets with flat panel doors, Builder B's costs are higher.

Builder B's costs may also be higher in less obvious ways. For example, he may use a 90 percent efficient gas furnace instead of a 78 per cent efficient one. Or he may use plastic pipes instead of copper ones, or he may use stronger concrete for your slabs so the cracks are hairline instead of ¼ inch wide.

What no one is telling you...

Even when builders in the same market are consistent in their method for measurement, their notion of square feet and buyers' notions are likely to differ. Most buyers think this means "useable space." But most builders calculate it in terms of the total area occupied by the building, and this can make a substantial difference. For example, using the builder's approach, 150 to 200 square feet of a two story house billed as "1,800 square feet," can be solid wall.

The second problem with the cost-per-square foot calculation is that the two builders may not be calculating square feet in the same way when calculating your total home building price.

The conventions for calculating these figures still vary from one region of the country to another and within the same market from one builder to another.

Some builders include only what you can walk on, excluding regular-sized closets but counting walk-ins. Others count two story spaces twice because the entire volume is finished space that must be heated and cooled.

To further complicate matters for consumers, realtors and appraisers often use methods for calculating square footage that differs from builders.

The major distinctions are "finished" or "unfinished" and "above grade" or "below grade".

A "finished" area is defined as "an enclosed area that is suitable for year round use". The finished area calculation also includes all walls, both interior and exterior. "Unfinished" areas most commonly include garages and unfinished basements.

Most of building plans have square foot calculation printed right on them - which means exactly nothing...

On most building plans, square footage is electronically generated by the computer program the plans are made in. Some programs take into consideration outside wall dimensions, some inside wall dimensions. Some include the garage while some don't. Some differ between above and below grade: "Above grade" includes all floor levels that are entirely above the ground. "Below grade" includes all floor levels which are partially or entirely below the ground. When a house is built into a hillside, the entire structure will receive the "below grade" designation.

Also, sometimes the usable area is measured at the floor level, so that two-story spaces such as entry foyers and family rooms can only be included in the calculation once.

Some of the standards will strike the layman as nit-picky--for example a fireplace and chimney can only be included when the hearth is at floor level--but seemingly minor differences of 25 to 50 square feet (at $150 per square foot), here and there can add up to a substantial amount.

Therefore, pricing a home per sq/ft bases is never a guarantee that you will end up in the home you expect. Quite the opposite - it is often a way for some builders to calculate only the cheapest materials allowed by the Building Code in order to get the job.

A much better solution for the homebuyer would be to be very clear on the usage and advantages and disadvantages of different materials used to build their home.  An experienced builder will be of enormous help in assiting you to make the right choices when choosing the materials for your new home.

Courtesy of: http://www.icfhome.ca/

http://www.ontario-home-builder.com/price-per-sq.ft.htm