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Understanding the Cost of Building a Home

By Steve Bielinski

When you’re building a new home, there are four main costs that you will need to take into consideration: the lot cost, home site improvements, the home base price, and options and upgrades. That might sound intimidating, so let me break it down for you.


When looking at lot prices, you’ll need to consider more than just the sticker price. For instance, how is the land graded? Sometimes a lot needs to be altered to make sure the land slopes away from the home to properly drain rainwater and snowmelt.


A lot that needs many grade change can mean spending money or completely changing your plan. A lot with grade changes might require the need for an exposed basement (look-out or walk-out), which is more expensive than a non-exposed basement. A good builder will help you figure out how your lot cost can change and affect the overall cost of building a home.


Some examples of home site improvements include building permits, culverts, stone driveways, and municipality impact fees — like sewer or water connections. These are all items that will need to be installed when you’re building a new home. And these all add to the overall cost of building a home.

One of the biggest home site costs is the difference between municipal sewer and water and privately owned wastewater treatment systems (POWTS) and well water. Most cities and villages will typically have their own municipal sewer and water to connect too, however most rural lots will require a POWTS and well water. The difference between these types can be quite large, so it’s a must to factor these costs into the overall budget.


Most reputable builders will have a portfolio of home plans already drawn up that are exclusive to them. The plan’s cost (without changes) is the base price of the home.

Usually this base price is determined by valuing a standardized list of building materials for that particular home. It is important that you know exactly what’s on that list to determine if it’s is the right product for you. Each builder uses a different set of standards to create their base price. What may be included as standard by one new home builder may be considered an upgrade by another. The home base price is one of the most important prices that needs to be considered, as this is normally the most expensive price out of the four main costs.


Once you review the list of building materials that forms the base price of your new home, you may consider making some changes. These changes are typically referred to as options or upgrades.

In today’s era of DIY and HGTV, the sky’s the limit as to what you can do. Flooring, cabinets, countertops, electrical, plumbing fixtures, and cabinet hardware. There’s an endless offering of different products available in every category you can think of.

But be careful, some building material upgrades can be very expensive and could alter a budget significantly.

It’s important that you determine what your must-haves are in the home before you blow your budget on upgrades alone. It’s important to find a builder that will be upfront with you about pricing and help you build your perfect home.

Contact us if you have further questions on building with Bielinski.
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    Bob and Darla Landgren
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    Peter Holzwart and Therese Gaynor-Holzwart
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