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This year we embarked on an adventure of a lifetime. We built our first custom home- our dream home.

Having talked to many couples who have gone through the same process, we knew we were in for some stressful times.   Along the way, we managed to find several tips to save quite a bit of money and wanted to pass some of these dollar saving tricks on to you.

Are you building a house soon?  If so, take a breath, grab a notepad, and hang on–it’s going to be a bumpy ride.

And remember: what doesn’t kill you, makes you stronger.

Husbands, another piece of advice: The wife is always right.  Always. Trust me. :)

Now, let’s go build your dream home and save some money while you do it.

1. Selling Your Own Home Without a Realtor

Dream Home - For Sale By OwnerIf you have the time and you lived in a desired neighborhood, consider selling your house For Sale By Owner (FSBO).

That way you pocket the proceeds and avoid paying the 6% realtor commission.

We started this direction because we weren’t in a rush to sell the house.

We also felt that we lived in a “high demand” neighborhood, and felt that a For Sale sign in the front yard would do the trick.

It did, in a sense, because we got several phone calls in the first weekend and even an offer.

Unfortunately, the buyer couldn’t get financing and the deal fell through.

We were bummed out, but not shortly after, had a second offer. Unfortunately, the second deal fell through as well. This is when we decided that being our own real estate agent was a little more work than we had hoped for.

However, if you’re determined to save a buck, and willing to give up some of your free time, FSBO can save you a TON of money!

2. Hiring a Realtor with a Discount

When the first few deals fell through, we decided that we needed to generate more foot traffic to our house.  Not ready to hire a real estate agent yet, we turned to FSBO.com.  It allowed us to get a MLS listing so that every real estate agent in the market could see our house and it got listed on the top websites like Realtor.com and Zillow.

If a real estate agent showed our house, we would only have to pay a 3% commission fee; but if someone found our house directly, we could still sell it without having to pay a dime to the realtors.

3.  Hire an Awesome Real Estate Agent

selling dream home - hiring real estate agentAs we got close to our house nearing completion, we decided that it was time to bring in the professionals.

We had several “lookers” and, reflecting back, we probably had our house a little too high.

It was tough though, since we had two offers, but the competition was beating us out.

We found a local realtor who really knew our neighborhood and after the first meeting we realized how little we really knew.

After one planning meeting, we already felt much more comfortable with the situation compared to the previous experience we had.

Turns out we had an offer two weeks later, and our house was off to escrow.

4. Have a Contingency Plan

The thought of carrying two mortgages did not excite us a bit.  To prevent such a catastrophe, we wanted to make sure we had a back-up plan. We found some local real estate investors that were willing to pay us just over $1000/mo and then find a renter for our house.  The house would still would be in our name and then after a five year period they would pay us an already agreed upon price.

The plus side is that we wouldn’t have a mortgage payment (because the $1000 covered it).  The downside was that the mortgage would still be in our name, which the bank would not like.  It wasn’t the ideal situation, but it was definitely a good plan B.

Luckily, our house sold and we didn’t have to journey down this path. With the real estate market still not stable these days…I would highly suggest having a plan B.

5. Borrow Home Books

Home books are freaking expensive and there are tons of them! Those books alone can cost you $20 to $30 a piece. Find a friend that’s built a home and borrow all of their home books. We had several friends who had built or were building in the near future so we were able to get our hands on quite a few books.  So many that they all started looking the same.

If you don’t know of anyone, then hit up your local Barnes & Noble and look through their books and magazines in the store so you don’t have to buy any.

6. Visit Many, Many Homes

You think you know what you want your dream home to be, but do you really?   After scouring the home books, we drove around and visited as many homes as we could.  We even drove to St. Louis (90 miles away) to get another perspective.   If you can find a newly developed area, they may have some model homes that can give you tons of ideas.

7. Find a Good Architect

Find a good architect for building your dream home

When it comes to having a vision of what something is to look like, I’m horrible!  On top of that, we had purchased a lot where the back of the home would face a lake, but the front would be facing a culdesac.   Essentially, we needed a unique layout that no home book could provide. (Good thing we borrowed them!)

Thankfully, the architect we hired really helped us establish a floor plan that was open (really open!) while maintaining the lake as a focal point when you walked in the home.   In the end, the floor plan couldn’t have been any more perfect and that’s all thanks to the architect.

8. Hire The Right Builder

I can’t stress this enough!   The subdivision where we purchased our lot required us to use their builder.  In many situations, this could be a really bad deal.  We had seen his work and visited some of the other homes he had built, so we were confident in his ability but worried about the total cost.  We negotiated with the developer’s  to allow us to get outside bids to make sure the builder’s cost was within reason (more on that next).

If you have the option to hire your own builder, DO YOUR HOMEWORK! Hiring the wrong builder can be a horrendous experience.

Before you hire a builder, get a list of references and ask to see some of there work.  GET EVERYTHING IN WRITING.  And I mean everything!  It’s amazing how quickly people can forget a conversation.   This applies to subcontractors, as well.

9. Bid out Your Cost

Deciding the right house plan

This is an easy way to save tens of thousands of dollars before you even begin the building process.   As I mentioned above, we were required to use a certain builder but were still allowed to shop around to make sure his bid was fair.  To our amazement, the 2nd closest bid (out of 4 bids total) was $40,000 higher!

Yes, that reads FORTY THOUSANDS DOLLARS.  That was a HUGE savings right out of the gate.

Why the difference? Honestly, we don’t know.  We were told that some home builders just don’t need the work so they price themselves out.  Our builder has a 3 man team and then subs out most of the other work (drywall, paint, concrete, plumbing, etc).

Of course, the most important thing is that the builder stays within that bid. If the bid looks too good to be true, have someone else look at it (we did).  We realized that the allowance for the kitchen and bathrooms was a bit low for what we had in mind, but so were the other builders bids.

10. Have a Heart to Heart With Your Builder

Communication with your builder needs to be stronger than the communication in your marriage.  Seriously.  If you don’t tell them what you want, how are they going to know? Be specific, and make sure you are all on the same page.  Trust me — it will save you many headaches and arguments in the end.

11. Find a Good Banker

You’re banker is the instrumental piece that can save you tons of money in the beginning as well as thousands of dollars of interest over the lifetime of your mortgage.   When we first started building, 30 year mortgage rates were around 4.5%.  I was drooling and stressed that rates would shoot up.

By the time that we were 30 days to completion we were able to lock in our rate at 5%.  The whole time I was in constant contact with him (and I mean constant) making sure we pulled the trigger at the right time.

Unfortunately, we were a bit premature and rates dropped a bit.   Luckily, we were able to re-lock in our rate at 4.875% by going through a different lender and we didn’t have to pay an additional cost.

12. Negotiate the Construction Loan

Most builders are going to want a sizable down payment (usually around 10%) and will constantly be feeding you invoices to hand to your bank.  To our luck and amazement, our builder only required a $5k down payment (which we paid cash).

In addition to that, he wasn’t constantly hounding us for more cash.   In fact, I can remember my banker making a comment of how impressed he was that our builder had only received 40% of the construction loan when our house was over 80% complete.  A rough calculation had us saving $4-$6k of interest because of this. Not bad.

13. Take Advantage of Online Stores that Offer Free Shipping

Shop online to save money building the house of your dreams

The cabinet hardware quote from our kitchen specialist was $450. We were able to buy the exact cabinet pulls on eBay for $135 with free shipping. We also bought the bathroom vanities that come with the whole package: vanity, top, sink, and faucet. By buying on eBay, we were able to get a cheaper price, free shipping, and were able to ask the seller for a discount.

In both cases, the eBay store owners gave us discounts: $75 off on one and $195 off on another. Proof that it never hurts to ask!

14. Search Online Wholesalers Instead of Buying Retail.

We were able to buy a $6,000 front door for $2,300 unfinished, sent straight to our house. ($3,700 in savings!) We just needed to find somebody handy to help stain it. Luckily, my father-in-law is as handy as they come. If you’re not as blessed and don’t have a handy family member, ask friends and coworkers, and I’m sure you can find someone to help stain your door for a few hundred bucks.

15. Buy Your Lighting on Sale.

My wife knew what lights she liked, and she bought them from a few different places. Compare prices and buy from the place that gives you the best deal. She searched the Sunday paper flyers and compared Home Depot, Lowe’s, and Menard prices. At least one of them had their lighting on sale when we needed it. Don’t forget that you can usually find a discount lighting store online that will beat any home store price.

Example: The chandelier that she wanted, out of the local distributor’s catalog, was $873. By searching online, she found the same chandelier on clearance for $174.99.  It gets even better.  See the next tip.

16. Never buy Online Without Searching for a Coupon Code First.

Coupon codes can usually save you 10% to 20% off most online retailers. Rotate coupon codes and you can usually always find some type of discount out there.

Even Better Example: The clearance chandelier that she bought she found a coupon code that gave us an additional 15% off clearance items. The chandelier originally priced $873 that she found on sale for $174.99 only cost us $149 with no shipping.

17. Use it or Lose it

We were able to use my father in law’s employee discount to purchase all of our appliances; however, just don’t assume that the employee discount is the better deal. A mini beverage refrigerator we liked was $900 with the employee discount. By shopping around, we found a mini fridge very similar for one-third of the price, $379, plus a $50 mail-in rebate. Do your homework.

18. Get By With a Little Help From Your Friends

Have friends or family that can save you money building your home?  We were fortunate to have friends that did our house plan (architect), kitchen and bathroom counter tops and cabinets.  Just to make sure we were truly saving some money, we also bid out the cost and confirmed that we saved a significant amount.

19. Sweat it Up

Sweat Equity on building my dream home

Are you afraid to get your hands dirty? If so, you may want to skip this section.  If not, dive right in and start sweating it up.  Use your own skills (or find someone that has skills) and do some of the labor on your own.  Again, with a handy father-in-law, we were able to tile the custom shower, hang the siding, install the kitchen cabinets, and install all the hardwood and tile floor on our own.

Tiring, yes. Worth it, most definitely.  We saved thousands of dollars by doing some of our own work.

Be careful, though. If you don’t know what you’re doing, then this money saving tip may end up costing you more in the end. You don’t want to have to go back and re-do your poor quality job. Make sure you’ve got the skills and you know how to use them.

20. Know All Your Tax Credits

Congress has passed many laws recently that are favorable for many homebuyers and homebuilders.  The most recent update to the first time homebuyer’s tax credit would have given us a $6,500 credit, except that we were 6 months shy of meeting the 5 year requirement- Doh!   Luckily, we did qualify for nice credits for making our home energy efficient.

We netted some serious dough in tax credits for our energy efficient windows and insulation.  The big credit was for the geothermal unit that we had installed.   We lucked out and were able to get a 30% tax credit on the price of the unit and installation cost.  Previously, the credit had a cap of $2,000 if installed in 2008.

21. Collect Boxes

moving boxes

DO NOT underestimate the number of boxes you will need. You can never have too many. We called our local grocery stores and they were willing to give us as many boxes as we could take. All in all, I loaded over 5 loads of boxes in the back of my Tahoe and a friend gave us about 20 additional boxes. This was not including the 40 or so storage bins that we already had.

22. Price Your Movers Wisely

Having never moved before, we turned to the Yellow Pages to look for some moving companies. We called three different companies to give us a bid on what it would cost to move our house. Keep in mind that our new house is only approximately 2 1/2 miles from our old house, so we did not have that far to go.

The first two moving companies didn’t even come out to the house and quoted us $80/hour and $107/hr respectively and both expected the move to take around 6-8 hours. If we wanted them to pack the boxes for us it was $24 per box and $34 if it was fragile (glassware and dishes). See why it makes sense to get plenty of free boxes?

The third company actually came out to look at our house to see how much we had to move. They quoted us $132/hour and claimed that the other companies underestimated how long it would take to move us and would then end up costing us more. Maybe so, but we weren’t sold yet.

Luckily, our fourth option was a referral from a friend. They had hired some guys from a local furniture store to move their house. After giving them a call, we learned that it would only cost us $475 total to move the entire house and all we had to do was rent the U-Haul-which ended up costing us $49.98 plus $20 gas. Needless to say we were sold.

23. Figure out Furniture you need in Advance

With an upgrade in size of our new house, we knew that we had to buy some new furniture, most notably a couch.  We set out months in advance and found an awesome couch that was on clearance for a fraction of what we would have had to pay if we missed the sale.  Other examples are wall hangings, rugs, and other accessories where we were constantly on the look out for good deals.

Have you built a home recently?   If so,  how did you save some dough?  What did I miss?



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Comments | 34 Responses

  1. says

    Man, we just our first home that was already built and THAT was stressful. I can only imagine what it would be like if we went through the process from the ground up.

    Congrats on the house and great tips!

    • Marilyn says

      We just finished building our first custom home. Yes, all the bid items were low, and we ended up going over budget for everything, although we did buy some things online instead of through the vendors. Next time I would ask for a detailed line item bid list instead of a general list before deciding to build. Also, we underestimated the cost of the extra concrete drive (we are in a rural area, so
      needed a longer driveway) as well as the landscaping. There were quite a few unexpected expenses, and although we love our home, we would never build again. We did, however, feel our builder was attentive to our concerns and was eager to please.

  2. says

    Great tip with #8. I’ve seen so many of my friends (myself included) get stiffed by not checking up on these builders and contractors. There are so many shady businessmen out there and we often tend to caught up with trying to get the home finished, we lose our sense of patience and hire someone who doesn’t know what they’re doing. In the end, you wind up paying someone twice the amount to undo the wrong job and do the right job. Excellent point. All of them actually. :-)

    Juliette Samuel

  3. says

    Wow! Having an own home is the greatest dream of all and building one is truly an amazing experience. This article may be the best guideline for achieving a relative task that is indeed convenient and efficient. Thanks for the post.

  4. profitconfidential says

    I was in Miami last weekend and realtor after realtor was telling me that the biggest condo building bust in history has bottomed out and is rebounding with the U.S. housing market. Buyers are snapping up properties, one-third of them paying cash, and the best deals are gone. So better think of the Real estate and Housing market too.

  5. priti.mulam91 says

    There are so many shady businessmen out there and we often tend to caught up with trying to get the home finished, we lose our sense of patience and hire someone who doesn’t know what they’re doing. In the end, you wind up paying someone twice the amount to undo the wrong job and do the right job. Excellent point. All of them actually. :-)

  6. priti.mulam91 says

    There are so many shady businessmen out there and we often tend to caught up with trying to get the home finished, we lose our sense of patience and hire someone who doesn’t know what they’re doing. In the end, you wind up paying someone twice the amount to undo the wrong job and do the right job. Excellent point. All of them actually


  7. vadim revin says

    Man, we just our first home that was already built and THAT was stressful. I can only imagine what it would be like if we went through the process from the ground up.

    Congrats on the house and great tips!

  8. Karen says

    We built a “champagne” house on a beer budget by shopping at home improvement auctions. Example – carrara marble tile for $1/ft.. Best buy was a 7ft palladian window for $25 !!! Of course we couldn’t use our garage for 6 mos because it was full of building materials. Definitely worth it.

  9. Katie says

    Keep in mind that your builder can usually get a builder discount on most of the items you priced online and shopped around for. Many times they have relationships with local wholesalers and can get better quality products for a better price (e.g. Lights, plumbing fixtures)

    • Christin says

      Good point Katie, also to EVERYONE remember if you shop for light fixtures, plumbing fixtures etc. on-line the person who installs them will NOT have to stand by them if they are defective….you have to handle that on your own. Please check return policies on these types of fixtures and use a certified installer.

    • Leslie - architect says

      These are lessons learned the hard way.

      Purchasing your own building components has an impact on the builder’s warranty. For example, the one-year builder’s warranty required under Florida (many other states have similar laws) covers materials and labor of what the builder supplied. So (for example) if the owner supplied the toilet and later there’s a plumbing problem traced to the owner-supplied toilet, then the builder’s warranty does not cover the toilet replacement and plumbing repair costs, even for related piping etc. You’re on your own.

      Buyer beware: building codes vary by locality, but the online store and even the local big box home improvement store sell building products that do not meet local building code requirements. Doesn’t mean that the products are bad — just not code compliant everywhere in the world. If your building inspector rejects installed products as not meeting code, you will find it difficult or impossible to return for store credit. Think windows, doors and hardware, roofing, siding, plumbing fixtures, electrical fixtures.

  10. Shelley says

    I have owned 8 houses.. And this will be my second house to build What makes this 1 different it it’s on budget. I have to put I have to put in aseptic an and well and build it for and build it for 50 bucks a square foot there’s no room for a general conractor. but that maybe the good hah I am begging borrowing so we may not ge b? both bathooms and all the kitchen and all the ktchen cabinets they have to paint pay

  11. Katie says

    How does it work if you do some of the work, like installing the flooring? Does the builder knock that off the price and the bank lowers your loan balance?

    • says

      @Katie Each builder is different and some may not be willing to do this for you. Ours was.

      The bank will give you a loan based off your house plans and make sure your income level justifies the amount. They will only give you up to a certain point. If you’re able to reduce the loan needed, then that’s less interest you have to pay. Unfortunately, I see a lot of people use the extra amounts to buy furniture, TV’s etc. The main reason I don’t like that is because you’re paying on a TV for 30 years that way!

  12. says

    Hey Jeff,
    Congrats on building your own home! That’s so cool, and kinda my dream! Most people can’t wait to buy their first car, but all I’ve looked forward to building my own home… as you can tell from my pinterest. Anyways, my question is, what financial advice do you have for someone who is 22, graduated college debt free, has a full-time job, and hopes to build their own home?

    • Mazy says

      Find a location (land) that is affordable, that is close to your work, and that seems to have the kinds of homes being built that you plan to build. If you don’t have the cash to buy the land, make that your first goal, to save the money to pay CASH for the land. That will help offset the amount of down payment you need to start building and also get you on the right track as far as thinking about what size and kind of house you want to build.
      The best advise my husband gave me was to design or find a home design that was a square or a rectangle. In our part of the country every extra outside corner that you add to a house adds another $5,000. We built a 3,800 sq ft house with a huge front porch for the same amount of money that our friends spent building a 2,400 sq ft house with all kinds of extra roof peaks and jogs in and out on the front. And we also paid much more attention to energy saving building materials so our utilities are much lower than theirs. So find out as much as you can about the costs associated with the styles of homes that you like and what you can do to keep monthly utilities very low.( low utility costs helps resale value as well)
      And lastly, practice paying yourself your future mortgage payment, maintenance costs, and if you haven’t already, get a good retirement plan and life insurance policy started. A house is a 20+ year payout for most people so even though you are very young now, budget like you are 42 to give you a clear perspective.

  13. Tasha says

    Where would you find a good list of tax credit ideas? We’re going to owner build our home this year (2nd one – from experiece I can say you have put together a fantastic list!) and haven’t paid attention to tax credits! Google searching isn’t giving me much…

  14. says

    I had no idea that building could be less than buying! That is just crazy to me….I could either buy a “used” home or build a “new” home for less?

  15. VBarkley says

    When my sister built her home, she did a LOT of negotiating with the builder, purchasing all of her appliances and lighting fixtures. The builder liked her lighting choices so much, he added them to his future plans for electrical options.

    Don’t be afraid to fire subcontractors – we fired a plumber after we caught him smoking and tossing cigarette butts – twice – into the basement remodel we were doing, even after telling him we had 2 people in the house on oxygen and could not have ANY smoking. Our contractor never used him again.

  16. Tera says

    We lost our home in the moore EF5 Tornado and are rebuilding. Though we didn’t have to sell because our house was leveled, this had been incredibly helpful! Our home is customized to our liking and we can’t wait to move in!

  17. Michele Dickey says

    We are going to be building a concrete home in may! It is called ICF insulated concrete forms. I was wondering if anyone has any experience with these. I want to know exactly where to start. From beginning to end. We want to buy a few acres of land to put it on. I thought I had found the perfect house plan but our realtor said it was way too big for our budget so back to the drawing board. My hubby and I went to a used book store last night and I found 5 house plan books for 6.00 each!!

  18. Lisa says

    Some advise is good, but I think some of the tips are way off. Like buying everything you can online. Wrong!!! If it weren’t for the store that showed you hardware and the front door you wouldn’t have known you wanted it without seeing it. If your ok with all the retail stores going out of business because everyone buys online. Than keep doing it! But if you want to be able to keep seeing the things before buying them than support your local brick & mortar stores. Stay away from online retailers if you can. Be honest with the local stores see if they can be competitive. And a little bit extra is worth it, at least you could view the item before you bought it. Without them you never would have known what you were getting.

  19. Bonny says

    We are currently building a custom home and I have one big money saver not listed. If your community has a Habitat for Humanity Re-Store, GO THERE! Builders donate unused supplies form jobs, individuals can donate unbroken and gently used items that can be re-used. And if it is an electrical item they do testing and have a return policy just in case there is a problem. We saved a lot of money because I found our tile there for 1/10th of the price the same exact tile sold for at Lowe’s and the local tile shops. I also found our pedestal sink there. Paid $25 for a $500 sink. I looked up the brand and price checked it from my phone while at the Re-store so I could read reviews and ratings. It may not be the EXACT brand I was going with originally but it looks amazingly similar and actually has better reviews. So I’m a happy girl. Other things purchased there…Hunter ceiling fans (with remotes!), mirrors, light fixtures, even light bulbs. And everything that I purchased (except the mirrors) was brand new and in unopened boxes. Best of all…the store has minimal paid employees, a lot of volunteers, and most of the money raised is used to build homes for those that otherwise could not afford to buy a home.

  20. Zack says

    Another great source for boxes – fast food restaurants! As a former chick-fil-a employee, I knew that the local one would have at least 15-25 high quality boxes by lunch. The majority of our stuff was moved in waffle fry boxes which are wayyyy more sturdy than any you could buy at a hardware store. Just ask the store to save some in the back or dumpster dive if they won’t.
    Thanks for the blog Jeff! Really enjoying reading through the archives!

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