Building a house will likely be the most expensive thing you ever do, as a house is usually the biggest asset most people will ever have. Whether you're building the house yourself or contracting it out yourself or even just a hiring a company to build the house for you, estimating the cost is critical to making the right choices and building within your means. Because house building has so many variables and complexities you will have to realise from the beginning that an estimate is exactly that and the number you come up with may easily change by a large amount depending on market conditions, personal choices and the laws of supply and demand. However, you can get a good starting estimate to work with if you plan carefully and do your research thoroughly.
Find out the demand for your area. Often the biggest cost of a house is the land and where it sits. This is based on which part of the country you live in as well as how close you are to quality schools or a body of water. Find out the selling price of other houses in the nearby area as well as the immediate neighbourhood you're looking to build in. You can use online tools (see Resources) or you can go to your county court or tax offices to find out the selling price of a home. The tax office may list an assessment of the land separate from the buildings on the land. The easiest way may be to contact a real estate agent and have them look up comparable houses or tracts of land, to the one you want to build or buy. This will help you get an over all idea of the estimate but you can use this to figure out the demand for the area and what the cost of the land will average.
Get a take-off. If you have blueprints you can take them to a lumber yard and they will figure out what you need for your lumber and give you their prices on the lumber. This will be one of the single biggest expenses in your house.
Talk to contractors. Call and schedule visits with local contractors to find out how much they would charge to do the job. Make sure you cover every area including plumbing, electrical, HVAC, carpet layers, tillers, carpenters and masons. Each contractor can probably tell you what they would charge in terms of labour and sometimes parts. You should try to find out just the labour costs and price the parts separately.
Price out all the stuff your home needs. Make a list of everything in your house, such as appliances, plumbing fixtures, lighting fixtures, heat pumps, countertops and anything you want in your new house. Go to Home Depot or Lowe's and price out the models you want to buy. Make sure to include things such as windows and doors.
Pay special attention to high expense areas such as kitchens and baths. These are the two most expensive areas of your house. Find out exactly what you want in your new house as far as these areas are concerned. If a home builder gives you an estimate per square foot, this is really an inaccurate number because these areas cost much more per square foot because of appliances and bath tubs and cabinetry. Also, building a second story is cheaper than a large first floor because you save on foundation and roofing costs.
Watch out for upgrades. It can be easy to pick out the least expensive items when estimating costs for anything, so try to pick the options you really want when estimating costs. If you think you really want double pane windows, then price double pane windows. Most homeowners make upgrades during the process of building a home because they decide it's worth the extra cost for one thing or another. One item at a time may not seem like much, but this can add up to be a significant percentage of your total costs.
Add it up. Add up all of the prices to estimate your costs. Be sure to include any fees or taxes imposed by county, state or local governments. It's also a good idea to add an extra 10% at the end for miscellaneous and unforeseen costs.