Buying a house? 3 reasons to build it yourself.

Looking for a previously built home isn't always the most cost-effective move. Here are three questions to ask yourself to decide between buying and building.

Joshua Lott/Reuters/File
Workers construct the roof of a house in Phoenix, Ariz. in this 2011 file photo. For some, building a home from scratch is a cheaper option than buying an existing house.

Often, when someone decides that they’re ready for a home of their own, they start hitting the real estate listings and looking at houses. In many situations, that’s the best move, particularly if you desire living in a home in a pre-existing neighborhood or in a population-dense area.

However, it’s not always the most cost-effective move. There are many situations where you should consider building a home instead of buying a pre-existing one in terms of maximizing your housing dollars.

Whenever I talk to someone who is considering buying a home, I ask them a few questions.

First, do they know exactly what they want, or are they hoping to “find” what they want? If you know exactly what you want, down to the point that you can quickly sketch out floor plans and other aspects of the house, you should lean more towards building.

While there are websites that sell pre-made house plans for a reasonable cost, most people are building their own homes because they know exactly what they want. This allows them to drastically reduce the cost of having formal house plans assembled, because you’re not going to have to go through fact-finding or extensive editing of the plans to discover what you want. You can move pretty directly to the building part of the equation.

Second, can you do any of the work yourself? Are you willing to hang drywall, install plumbing, or work on other such tasks? Would you even be willing to serve as your own general contractor?

If this all seems incredibly frightening to you, you’re going to be paying someone else to do it, which means the cost of building is going to go up significantly. You’re going to be paying for labor and likely also paying for some degree of markup on the components of your home.

It also reduces the control you have over the building of your home. You’re now relying totally on the general contractor and the people he hires and the items he chooses to go into your home.

The more involved you can be, the more cost-effective building becomes.

Third, do you need to connect to city services? For many building situations, it’s far cheaper to have a well (for water) and a septic tank (for sewer) than it is to dig a trench and lay pipe to connect to water and sewer services.

Are you willing to live with a well and/or a septic tank if the cost is far in their favor, or are you insistent upon city services? The more flexible you are here, the more money you’ll save by building yourself.

There is enough potential savings on the table that it’s worth considering building yourself if you answered yes to any of the above questions. If you answer yes to more than one, strongly consider it. You’ll end up saving significant money.

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