Cost Per Square Foot Concepts: They’re Dumb And They Don’t Work

Cost Per Square Foot ConceptsCost per square foot concepts. On paper, they seem like a great idea. You get the peace of mind that your home will be built to your exact budget. On top of that, you know what to expect from your builder during the development process.

Unfortunately… that’s not how it works in the real world.

In the real world, cost per square foot concepts cause way more problems than benefits.

The Information Gap

The main problem with these concepts is they offer a perception of mutual understanding between the home buyer and the builder. You think that the builder knows exactly what you want built, and will follow the plan down to the last word. Unfortunately, the builder doesn’t share that mindset — they know that developing a custom house isn’t as simple as following a plan. Why? Because there are a variety of complications that are not covered by a cost per square foot concept.

For example:

  • How will you calculate the square footage? If your builder is being forthright, that generally means just the living area… not the area under the roof.
  • What else is included in the home? These concepts make a massive number of assumptions, to the point where the initial quote becomes irrelevant. What kind of roof will be used? What type of finishes? Is there even money allocated for a front door?
  • How much development will take place outside the home? For example, do you need to allocate money for a swimming pool? What about a multi-car garage? Well, those are going to massively skew your final cost.

These are just a few of the incredible assumptions (and problems) that are created by relying on a cost per square foot number. And they will occur every single time — regardless of the builder or the home buyer. This issue is inherent with custom home building because you are doing just that: making a home that is personalized to your exact desires. There are no “standard” options or choices, absolutely every element of the house is under your control.

If there are so many problems with quoting a projected cost per square foot… why is it used so frequently?

One of the main reasons is that people are lazy. Both realtors and home buyers are risk adverse; they want a rough estimate for the home so they can feel secure. On top of that, they want to know their budget is being respected and that the builder will not take advantage of their trust. Due to all of this, builders are forced into providing estimated cost per square foot quotes, whether or not they believe it to be a smart decision.

Not All Builders Are Created Equal

Watch out: Sometimes unethical builders will use this point of contention to draw in unsuspecting clients. These builders will quote a lower cost per square foot in the hopes that it will cause the client to work with them (rather than scare away potential clients by quoting a real number). The idea is that once a client has committed to the project, the builder will then “reveal” the hidden costs. In reality, these hidden costs existed all along… but you’re not able to back out of the arrangement at this point with a half-finished custom house.

Similarly, another common “bait and switch” technique used by builders is putting an astronomical amount of allowances into the quoted price. Since the client is unaware of how much money goes into these individual pieces, they end up massively underestimating the costs required to build their dream home.

For example, let’s say your builder asks what you want to use for cabinets. You make a decision, and the builder decides to put a $8,000 allowance into the plan for them. Well, when you are developing the home and head over to the cabinet store to make your purchase… it turns out that $8,000 allowance will barely cover two cabinet doors in your preferred style. I’m exaggerating of course, but you get the idea. So now you’re faced with a lose-lose situation: either accept a lower-quality home, or go into your wallet for even more money. 

As a home buyer, you should be aware of these unscrupulous tactics and choose to only work with real professionals. Every builder says they don’t do it, but the harsh reality is they all do… because clients force them to quote an estimated budget for a project that has unlimited possibilities.

The moral of the story: Go into the design process of your custom home with an open mind, and make sure you work with a builder that isn’t afraid to tell you the absolute truth.

The Right Way To Plan A House

At Cornerstone, we do things a bit differently: We seriously listen to clients to understand their desires, and also provide feedback to explain the real-world ramifications of those decisions.

We often deal with similar situations to those described above. Understandably, clients want a quote for the cost per square foot and often ask questions like: “Are you including building permits in the estimate?”

As you have just learned, there’s no right or wrong answer. The truth is that we don’t have a cost per square foot. We don’t have an estimated price. This is a truly custom home and the only person in charge of the price is youWe will work alongside you during the planning process to help advise your decisions, but, at the end of the day, you are the one in charge.

Why’s that? Because there are ways to design a home that is expensive and there are also inexpensive options. Everything you choose during the design process has a direct impact on your final cost. This includes everything from the type of roofing (shingle, tile, and metal roof costs vary dramatically) and the pitch of your roof (more steep, more expensive) to the finishes inside your home… and don’t forget the windows, doors, plumbing, and energy choices.

This is your custom house, so don’t waste the opportunity by trying to secure a specific cost per square foot. Work with us hand in hand to get the best of both worlds: a custom house designed to your exact specifications while staying within your budget. No assumptions and no misunderstandings.

Interested? Contact us through our website or give us a call today to set up an appointment.

Value Engineering (NOT!)

 

A Great Concept (For Marketing)

I’m sure you’ve heard the term, “Value Engineering”, and it sounds like a good thing. It implies that changes in the construction materials to be used, construction techniques, or finishes will result in substantial savings to the client. I’ve had folks even ask me for it. The term sounds like the builder is going to come up with some special ideas to tweak a few things, things that probably don’t really count for much, to give greater value and thereby benefit the client.

Well – it doesn’t exist, it is a bogus concept invented by builders and some other construction professionals strictly  for marketing reasons. You tell a client that you are going to do some “Value Engineering” and the client then thinks he is getting something worthwhile, secret maybe, really special. Oh Boy! this is gonna be great!

What is Value Engineering Really?

Read More
It is just specifying cheaper stuff, nothing more and nothing less. As an example, lets say that solid core doors are part of the original specifications. We do some magic and specify hollow core doors, same style, same functionality, and save a bunch of money. That might be a good thing because the clients doesn’t really care about solid core doors. But why did the solid core doors get into the specifications in the first place? Somebody wanted it.

I have no problem using hollow core doors. In fact, in most of our homes, we use hollow core doors. But the value engineering hasn’t created any value – we’ve just lowered the specifications. Just building something cheaper doesn’t create value. It may help with affordability, but no extra value.

Now, don’t get me wrong. I am not saying that a person should always pay for the best products or all of the fancy finishes. I’m just saying that there is no mystery or special skill involved when a builder employes “Value Engineering”. Anybody can do it. Just lower the specifications.

 

A Cautionary Tale

Picture of Termite and water damage

The framing under a window sill

Termites and Water

Buyer Beware?

We have a client that we have been working with for some time here in the Tampa Bay area. Their story is truly a terrible one, certainly the worst that I have encountered in over 35 years of being a builder. It all started last summer when we got a referral to these folks because they were having some leak issues. Their home is located in one of the upscale (golf course) communities in Brandon, FL and it was constructed in 1998. I think that the home may have been a Parade of Homes house for the builder, but I am not certain of that. The home is a contemporary, very stylish and with a lot of curb appeal. It is a two story home, all frame with a stucco exterior and a roof that in places is flat. I am not certain of the history of the house, so I won’t talk about who built it or who owned it and what they may have done to the house.

The Adventure Begins

Read More
At first, I thought that I was going to make an initial visit with a prospective remodel client. As we arrived at the house, I immediately noticed a lot of stucco apparently buckling and cracking, discolored areas that were clearly water damage, and paint pealing. When we were invited in, the home had a very impressive two story interior with curved walls, high end ceramics on the floors, and very modern details.  It was also obvious that there was a tremendous amount of drywall damage, mold stains, water stains all over the house, and literally some pans on the floor to catch drips. It would be hard to exaggerate the damage. Our client wanted to repair the exterior and stop the leaks. Neither he nor we knew the full extent of the problems.

Our client had a horror tale to tell us. A few years after they had purchased the home, they started to get leaks. They hired some roofing folks to come and take care of the problem. After various roof repair attempts without solving the problem and the cost escalating, they decided to try and make a claim on their homeowners casualty insurance. The insurance company sent an engineer, who, after a brief inspection, told them that the problem was due to a lack of maintenance and therefore not covered under their insurance. Shortly, their insurance company canceled their policy. No surprise there. They soon found that they couldn’t buy insurance for the home and, because they had to have insurance as a requirement from the mortgage lender, their lender placed the homeowner  insurance (only for the amount to cover the mortgage). The premium is astronomical and got tacked on to their monthly payment amount.

To sum up their dilemma, they can’t sell their home because no one would buy it with the leaks. They can’t buy insurance because they would have to disclose the leak problem and no insurance company would underwrite that risk. They can’t refinance because no mortgager company would make a loan with the leaking problem. Their mortgage payment has tripled to pay for insurance that won’t benefit them in case of a loss and meanwhile, the leaks are getting worse. The stucco is buckling all over the house, every room has leaks around windows, in ceilings, and discolored interior walls.

Of course, we were asked for an estimate of the cost to make repairs and so we returned the following day to try and open up some of the cracked areas plus make an investigation of the condition of the roof. As we opened a small place in the stucco where it had cracked, we saw black. Not black as in black building paper (which is what I was expecting), but black as in mildew and water damage. Pealing off more of the stucco, we were astound to see that the plywood sheating was buckled, covered with mildew, and in most places had completely delaminated, turned into flakes and we could pull it off with our fingers. There was no building paper under the wire lath. Rather, the builder had relied on a product that is intended as an air infiltration barrier – not a water barrier.

We opening the sheating and discovered most of the underlying studs were completely rotted with either mildew or obvious termite damage. The termite damage wasn’t recent and there was no obvious current infestation that we could see, but that is probably because there wasn’t much left for the termites to eat. There were clear places that repairs had been attempted, stucco patched and repainted.

As we continued to open the wall for inspection, it became very apparent that this damage was extreme and had affected the structural integrity of the home. There was no effective water barrier behind the stucco. When stucco is applied to the exterior of a frame structure, wire lath is stapled to the wood sheating. The wire lath has a black paper behind it and it’s purpose

Photo showing air infiltration barrier misapplied

Misuse of air infiltration barrier

is to prevent water, which naturally passes through the exterior stucco and paint, from reaching the underlying wood sheating. I’ve built many frame homes in Tampa, Brandon, Clearwater and Fort Myers using stucco as the exterior finish, but I have never trusted the paper attached to the wire lath to keep water out. WE build many two stories and usually these homes have a second floor which is frame construction covered with stucco. We have always used 30 lb. felt, lapped 4″, applied to the sheating before the lath. This adds some to the cost and isn’t code required, so many builders skip it or don’t question using just metal lath.

In this case, there was no felt paper under the lath, nothing wrapping the window and door openings and nothing but a little paint, some water loving stucco, and a little bit of lathing paper to protect the wood sheating. It hadn’t work at all. I began to wonder literally why the home hadn’t collapsed under it’s own weight. We told our client what we had discovered and that we were bringing our structural engineer to inspect the damage and help us formulate a solution.

Our Engineer Has Some Concerns

The following day we returned with our structural engineer. As we walked around the home it was clear that he was appalled. We could poke a screw driver through the stucco and through the plywood sheating easily in some places. Our conversation turned to how to rebuild the home because it was obvious that the walls that we had inspected where destroyed beyond repair. We decided that we could only safely tackle one side at a time. The question became, how do you demolish the entire side of a two story home, removing the entire supporting framing, drywall, wall insulation, electric wiring and in places plumbing piping, and then rebuild it? The roof could collapse, the floors could collapse, you could get a storm while the side of the home was exposed, the bad possibilities were seemingly endless.

We discussed our findings and proposed solutions with our client and suggested that he and his family move out of the home. They couldn’t afford to do that and pay for the repairs. They elected to stay in the home. Our client felt that he could afford to pay for only one side of the home at a time as he would have to accumulate the money over time to pay for the repairs.

The Work Begins

We start by pulling a building permit, getting a termite inspection and  tenting the house, getting our subcontractors lined up, materials on order, safety equipment on site and shoring materials on site. We had to support the floor and roof by building temporary walls underneath them. Then removing the damaged materials and rebuilding the walls, one section at a time. Each night we had to temporarily close up the open parts of the walls, protect the work from the weather and clean up the trash so that our work wasn’t a nuisance to the neighbors. I’m happy to report that the job is well along with two sides completed. Soon, we expect to start the rear of the home. We’re hoping that the damage there isn’t as extensive.

The Take Away

So what’s the point in telling you this story? There are lots of obvious things that our client could have done before he bought the home to avoid this problem. Probably a good home inspector would have caught the problem by noticing the previous repair attempts – but maybe not. To me, one of the important lessons in this sad tale is that somebody tried to save a few dollars when the home was being constructed – they didn’t know to or didn’t want to pay to place 30 lb. building paper under the wire lath to protect the plywood under the stucco. They relied on a product that was never meant to stop water infiltration. A little lack of knowledge by the builder or an attempt to save a little money ended up with a complete disaster to an unsuspecting family who now have no options but to pay for their home almost twice.

 

 

 

 

 

 

 

 

 

 

 

 

Preventive Maintenance for Homes around the Tampa Area

DO AN INSPECTION:

 

THE EXTERIOR WALLS:

If you have a home in the Tampa Bay area, four times a year, it is good practice to walk all the way around your home and examine the exterior from top to bottom, paying particular attention to the window and door openings. Feel the painted surface, does a chalky residue come off in your palm? Are there obvious signs of settling or cracks that are more than hair line type cracks? Look close to the walls near the ground and move any mulch away from the wall. Is there any evidence of a termite infestation (Look for small tunnels running up the wall)? In a future blog, I will share with you some photos of a home here in Tampa that was just about destroyed by termites. (We’ve been hired to repair the damage, which the word extensive doesn’t begin to describe fully.)  Just try and pay close attention to anything that has changed since the last time you did your inspection. Be observant of wasp nests in the upper corners and underneath the roof overhang (soffit). You can spray wasp killer at the nest and come back later to knock the nest from the wall or overhang using a power washer or long pole.

Read More

THE OPENINGS IN THE WALLS:

Inspect closely around all of the window and door openings. Is the paint cracked, the caulking pulled back from either the wall of the frame of the window, or cracks where the sill meets the wall? These small cracks will, at some point if not addressed, allow water to intrude into the wall, probably behind your drywall. That can lead to mold. Scrape off any dried caulking or cracked paint with a paint scraper. Then buy the very best painter’s caulk that you can find. Reapply caulk to the cracks, filling the space completely and then reprime and repaint with a good acrylic paint. Removing mold and repairing drywall and other water damage is expensive. 

Around door openings, do the same as for the windows, but pay very close attention to door jambs and door sills. If you have a block home, there will be a wood board vertically next to the block called a jamb. As the door is used and abused, this jamb has to take the closing force of the door. It can separate from the block. Odds are, that you won’t notice this because the board is usually covered by stucco or trim. Push on the edge of the jamb – does it move? If it does, then you need to remove the trim, reattach the jamb to the block and then caulk the trim plus, of course, reprime and repaint. Door sills take a lot of abuse. They can twist, separate from the jamb on each side or come loose from what is supporting them, usually the slab or floor adjacent to the interior of the door. Around my home turf, here in Tampa Bay, we get horizontal rains many days in the summer.  All that rain, hitting the door will be driven under the door itself or under the sill if it isn’t attached well to the slab and if it isn’t caulked./span>

THE ROOF:

Look for fallen or loose shingles, loose eave drip or or missing shingles if you have a shingle roof. Look at the ridge (top flat part of the roof). Is it missing shingles or has the ridge vent come loose? If you have a tile roof, look for broken or missing tile. Typically any problems with roofing needs to be repaired by a professional roofer.

While you are there, look closely at the fascia board (flat smooth painted board vertically attached to the edge of the roof). This area can easily dry rot if not kept painted and caulked. Usually there is a metal drip edged which helps keep water from running down the face of the board, but it can get really wet in a rain storm. If you have gutters attached to the fascia, check them closely to make certain that they are not loose or filled with debris. Any debris in the gutters will cause rain water to back up and saturate the edge of the roof and the fascia board. Constant wets will eventually cause this part of your home to dry rot and decay. It is expensive to repair. Keep it painted and caulked!

MORE LATER ABOUT MAINTAINING TAMPA AREA HOMES:

I’ll cover some other important topics like heat pumps, water hose attachments, other openings, etc. in a later blog.

Sign Up Below to Get Email Updates from Our Blog!

[mc4wp_form]