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Apples to Apples - The Myth of New Construction or Remodeling Cost per Square Foot

by *Mike Fournier, CAPS, CPB

Comparing apples to apples is common trap we all can fall into. According to Wikipedia, there are over 7,500 different types of apples. Which apple are we comparing? Instead of comparing an apple, it is best to find a knowledgeable, competent builder or remodeler that you can trust. Then work with them from land purchase, building design to completion. Building or remodeling a home is a long, sometimes stressful relationship. If you are a builder or remodeler, you and the customer must insist on blue prints and a detailed spec sheet for the scope of work that coincides with the blue prints; and don’t fall into the trap of cost per square foot.

When clients begin researching a builder or remodeler for their home; most often the first question asked is – “What is your price per square foot?” Most people believe this is the best way to get an idea of what it will cost to build or remodel their home. The misconception is the potential customer believing that a builder or remodeler can give them an accurate ballpark price based on another home they saw on the builder’s website, or on social media – because the square footage is similar.

Unfortunately – this isn’t the right question to ask a builder or remodeler when starting to develop a long relationship. What is really happening is the builder or remodeler (who has most likely been cold called by the prospective client, sight unseen of any drawings or specs; and without the customer performing any due diligence on the builder or remodeler) is being forced with that question to give a starting point to at least capture the potential clients confidence, only of which then erodes like a snow ball in south Texas in the hot sun once the builder sees the plans and begins giving true costs (which are often higher) and the potential client is still stuck on the original price quoted as if it were gospel.

The REAL Factors That Make Up Price Per Square Foot:

Will your house cost $150 per square foot, $200 per square foot or $300 per square foot to build or remodel? It’s impossible to say based on a builder or remodeler not seeing any finished blue prints, not having any idea of interior or exterior specifications etc.  Size of the home and property size is not enough to gage a ballpark price per square foot from; even though builders and remodelers will try to give you an idea. This figure will change, and will most likely increase.

If you choose to go this route, you will end up feeling like you’ve fallen for the “bait and switch” when the builder or remodeler tells you the initial price per square foot given over the phone has now increased and you’ve just spent weeks in the courtship process. Even if it’s increased by only $20 a square foot, multiply that by 3500 s.f., and that’s an increase of $70,000! Any builder or remodeler that gives you a price per square foot over the phone without having seen the finished working plans from your architect or designer, hasn’t met with you, hasn’t walked your property etc., is NOT providing you with a professional and honest answer, and you should prepare yourself for unhappy surprises.

All Rooms Are Not Created Equal:

Some rooms are much more expensive than others. For example, kitchens contain expensive items like cabinets, appliances and countertops. They have more electric lights, power hook-ups, gas and plumbing connections, and tile backsplashes. Bathrooms contain a lot of plumbing piping and fixtures, tile floors and walls. Kitchen, bathrooms, and theatres are the most expensive rooms in any house; and price per s.f. is way higher in these rooms when building or remodeling.

The lower cost rooms in your house are rooms that are built within the roof structure, i.e., the attic, garage or a basement (if you live in a part of the country with basements). The shape of a roof over a room with a flat ceiling creates an attic space that is going to be constructed whether you finish off the attic or not. Because most houses have a sloped roof, an attic is the by-product.

The steeper the roof, the greater the volume of space created within the attic. For example, a 10/12 roof pitch will have 80% more storage space than a 6/12 roof pitch. Finishing off attic space is very economical. This is also true with a basement space. If your site or climate dictates that you build a basement, adding heat and air conditioning, an electrical system, drywall, paint, and a floor finish can often be done for a much lower cost than the average cost per square foot of the rest of the house.

There are several other things that affect the construction cost of building or remodeling your home without actually adding square footage. The type of construction, the exterior wall surface materials, the appointments, finishes, and equipment within the house, and the building site are big factors.

A house built with a poured concrete basement, 2×6 stud walls, a slate roof, and a high efficiency heating and air conditioning system will be a lot more costly than one built on a concrete slab with 2×4 stud walls, an asphalt roof, and a basic heat pump.

A house built with radiant heat, wood windows, slate roof and oversized custom cabinets will be a lot more costly than one built with a basic forced air furnace, vinyl windows, asphalt roof and a minimum of cabinets.

A house with a stone exterior is more expensive than one with composite siding or brick. A house with a Sub-Zero refrigerator, Viking range, Bosch dishwasher will cost more than one with a basic free-standing refrigerator and laminate countertops.

A house built on a steep slope will cost more than one built on flat land. All of these houses could be exactly the same square footage, but the constructions cost, and their cost per square foot, would vary wildly. Each of these are excellent examples of why you should not put much faith into an “apples to apples” exercise.

Different Builders or Remodeler’s Calculate Square Footage By Different Methods:

Usually this is an innocent difference in opinion of how square footage should be calculated. But sometimes the builder or remodeler’s purpose is to make his bid look lower and more appealing than those of his competitors. For example, some builders or remodelers will include the areas of the garage and decks into the total square footage, while others don’t. In these cases, the total cost of the house would be divided by a greater number of square feet and the “cost per square foot” would be considerably lower.

The best way to calculate an effective cost per square foot is to use an Architect’s blue print calculator for living space “under roof”. Otherwise, the cost per square foot information you get is useless. No matter what method you use, make sure that you are comparing things equally when you’re looking at different bids and different builders or remodelers. Please don’t fall into the trap of estimating the cost of your project based on a cost per square foot estimate alone. You won’t have an accurate price until you have an accurately calculated price which comes from blue prints, and a detailed scope of work spec sheet.

*Mike Fournier of Tulsa, OK is a local and National award winning contractor.The NAHB named him Remodeler of the month in May of ’17; and was published in Qualified Remodeler magazine.Additionally, Mike has won the HBA 2016 Spike Award, and the HBA 2017 Spirit Award, as well as being named Best of Broken Arrow in 2012.  Mike has owned Sonrise since 2000, and has served over 11,000 customers, as a custom builder, remodeler, and swimming pool contractor.