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Don’t Rely Solely On Cost Per Square Foot When Building A House

The Pitfalls Of Cost Per Square Foot

It’s tempting for homebuyers in the planning stages to request a cost per square foot calculation from their homebuilder. While this may provide a straightforward figure on paper, it can be misleading and lead to costly mistakes. Despite its popularity, cost per square foot is an unreliable measure for accurately determining the costs associated with building a new home. Misunderstandings around its calculation can lead to expensive decision making.

Cost Per Square Foot: An Explanation

The ‘true cost per square foot‘ cannot be accurately determined until every expense associated with the build, such as building materials, labour cost, subcontractor bids, lot preparation, and interior finishes, has been identified by your builder. This typically only occurs once the official estimate has been drafted.

Calculating Cost Per Square Foot: An Example

Calculating the cost per square foot isn’t a simple task. At Para Builds Custom Homes, for example, we calculate the square foot price by dividing the total cost of the home by the livable square feet of the home. Here, ‘livable square feet’ doesn’t include spaces like porches, garages, driveways, or unfinished areas, but the costs for these areas are included in the total cost.

The Formula: Total Cost of the Home ➗ Livable Square Feet* of the Home

*Livable square feet exclude porches, garages, driveways, and unfinished spaces (such as attics) in the home, although the costs of these items are included in the total cost.

It’s important to note that without all the critical details, the cost per square foot metric can lose its usefulness. Different builders may calculate these costs in various ways, making it essential to understand each element involved.

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Misleading Aspects Of Cost Per Square Foot

If you’re trying to compare estimates between builders using cost per square foot, it’s like comparing apples to oranges. You might think you’re getting a better deal when, in fact, you’re not. For instance, building a 2,000 square foot home with a 100 square foot porch and a standard garage will have a different square foot cost than a 2,000 square foot home with an 800 square foot porch and a three-car garage. The same goes for different finishes in homes of the same size.

When Is Cost Per Square Foot Useful?

Truthfully, it’s almost never useful. While it’s understandable to lean on metrics like cost per square foot in the planning stages of building a home, it remains an unreliable measure due to lack of industry standards for what constitutes being part of a ‘square foot’ calculation. Instead, if you must use this metric, consider it as a rough estimate for your final cost.

If you choose to use cost per square foot to compare homebuilders, ensure you’re making a direct comparison. Clarify how your home builder calculates the cost per square foot and have an in-depth discussion about the construction cost. We always recommend customers sit down with their builders to discuss the costs associated with their project.

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Para Builds is your go-to contractor and project management team for your custom built home and major renovation project. Our expertise  in design and construction, combined with a passion for quality, ensures we use only top-tier materials for your project.

A new home and custom home building project requires careful planning and a clear understanding of your expectations and budget. Trust is key, so it’s essential to partner with professionals committed to outstanding service.

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We always prioritize our clients first, recognizing our responsibility to provide not just exceptional service, but also to serve as their advocate, ensuring their best interests are at the forefront of all we do.