All custom builders know that a happy job has all parties—client, architect, and builder—headed for the same goal: the estimated price to build the house. But sometimes clients can get led in the wrong direction when an outside “expert” misinforms them about what their house should cost. And when that horse is out of the barn, the results can be disastrous, as these custom home clients learned.
Samantha and Tom Jackson had been waiting for quite a while to get their custom home project started. The new residential community they wanted to build in had been slow to get approvals and financing in place. The Jacksons had been waiting 10 months for roads and infrastructure to be completed before they could select a lot.
Their frustration grew as they learned that the opening lots would be offered in a lottery. Buyers could identify their lot or lots of choice, register with the developer, and then elect to purchase that property at the lottery gathering. If more than one buyer registered for the same lot, then a bidding process would ensue.
These custom home clients already had an architect and interior designer on board and had worked with these professionals to identify features and design requirements, but they couldn’t proceed with design until the property was purchased. The lot topography, size, trees, views, and relation to the subdivision amenities varied greatly within this new golf course community.
The Jacksons had identified several lots that would meet their criteria, and they anxiously awaited the lottery drawing. Their first choice was Lot 757, listed at $455,000. Nine buyers had prioritized that lot. At the conclusion of the bidding process, the lot sold for $585,000, but not to the Jacksons. Still vigilant, they watched the same process occur on their next three lot selections. Their final lot selection had a list price of $960,000. They were the sole bidder and purchased the lot for that price. They were ecstatic. They had real property for their real custom dream house.
The architect immediately began prioritizing the Jacksons’ design requests. During preliminary discussions, the owners had inquired about costs, and both the architect and designer responded that in their experience most custom projects priced out at $175 to $225 per square foot. “Lots of projects are being built in that cost range,” offered Kyle Kelly of KK Architecture. “We know how to design within those cost parameters.” Not a lot of time or effort had been devoted to that topic. It was a general question, posed by the clients and answered with a generic response. After all, can anyone really price out a new, unique project until all of the facts, figures, and details of the construction are known? You can only base your response on what you know (or don’t know, for that matter). The architect also might have been thinking about the translation of design fees as a function of construction costs. Quoting higher construction costs could force the clients to seek design services elsewhere—for less money.
The Jacksons, exhibiting typical human behavior, only heard the lowest price and calculated the construction contract price by multiplying $175 times the square footage. “We’re going to build about 4,000 square feet, so we should expect construction costs to run about … $700,000, plus or minus,” they figured. Then they roughly calculated that they were also contractually committed to pay the architect 8 percent of that amount—ballpark, $56,000. Later that night, over a lot purchase celebration dinner, the owners estimated their new home package should cost about $1.716 million (land + architect fees + building costs). And it dawned on them, “Geez. That’s already $500,000 above what we thought we’d spend.”
Design Drama. Tom Jackson had just arrived home from work on a Monday night when the phone rang. “Hey Tom, this is Kyle at KK Architecture. We’ve got your preliminary plan completed and want to schedule a meeting with you and Sam to go over the details. As soon as we get your approval, we can get the blueprints completed.” “Let’s meet at your office at 10 a.m. on Friday. I know both Sam and I can make that,” Tom replied.
The meeting began promptly at 10. The Jacksons were a little intimidated by the scope of the plans, but overall it really was a beautiful home. “Is the roof really curved like it’s shown in the drawings?” asked Samantha. Kyle affirmed that the “half-circle geometry is the design theme for the house. It’s really defined by the eyebrow arch-shaped roof over the front entry porch. And the geometry is carried a degree further by the arched glulam beam supports. As you can see by the six other covered porches, along with the great room ceiling and eyebrow arched hallways, this unique geometric design theme envelops the entire home.” “It’s really dramatic and beautiful,” beamed Samantha. His wife’s enthusiasm made Tom pleased as well.
“We’ve got quite a list of simple, but necessary questions for each of you that when completed will enable us to finish the working drawings and begin the bidding process,” Kyle explained. “We’re ready,” responded Tom.
