ᐅ How can you determine if the cost of building a house is too high?
Created on: 21 Jan 2013 13:02
S
Skeeve
Hello everyone,
we are looking into building a new house for the first time. Currently, we have a supplier who only sells the land and house together. The house can be customized, and the price of the land is known.
Are these house prices negotiable, or do you just have to rely on the seller? The seller says we can discuss about 3,000 euros, but the house with the land costs over 300,000 euros.
We have talked about prices for ceramics and fittings, the price per square meter of tiles and flooring, as well as the volume of the building. How can I tell if the supplier is trying to overcharge me?
Sorry if these questions sound very naive, but we really have no idea.
Thank you
Stefan
we are looking into building a new house for the first time. Currently, we have a supplier who only sells the land and house together. The house can be customized, and the price of the land is known.
Are these house prices negotiable, or do you just have to rely on the seller? The seller says we can discuss about 3,000 euros, but the house with the land costs over 300,000 euros.
We have talked about prices for ceramics and fittings, the price per square meter of tiles and flooring, as well as the volume of the building. How can I tell if the supplier is trying to overcharge me?
Sorry if these questions sound very naive, but we really have no idea.
Thank you
Stefan
Your description suggests that you are planning to build with a developer, right? Hopefully, you are aware that property transfer tax applies to both the land and the house price in that case. A developer once told us about various tricks to avoid this, but that is tax fraud. (This is not tax or legal advice)
You should expect at least a few percent discount, and we didn’t even have to negotiate hard for that. The idea of being ripped off is relative. The markups that general contractors (we are not building with a developer; we purchased the land independently) charge for our special requests are sometimes ridiculously high. For example, they charge up to four times the price of a plumbing store for a larger bathtub, and you still don’t really have much choice among different options. For tile work, you either have to do it yourself or hire someone yourself; making any special requests here seems pointless, as every general contractor demanded outrageous additional costs.
However, it should be clear—and it makes sense—that the standard offer is usually more expensive than contracting the work separately. After all, managing the trades also involves work that must be paid for if you don’t do it yourself.
You should expect at least a few percent discount, and we didn’t even have to negotiate hard for that. The idea of being ripped off is relative. The markups that general contractors (we are not building with a developer; we purchased the land independently) charge for our special requests are sometimes ridiculously high. For example, they charge up to four times the price of a plumbing store for a larger bathtub, and you still don’t really have much choice among different options. For tile work, you either have to do it yourself or hire someone yourself; making any special requests here seems pointless, as every general contractor demanded outrageous additional costs.
However, it should be clear—and it makes sense—that the standard offer is usually more expensive than contracting the work separately. After all, managing the trades also involves work that must be paid for if you don’t do it yourself.
B
Bauexperte21 Jan 2013 20:20Hello Stefan,
Regarding your plot in KR: house and land together should cost around €300,000 (turnkey, including all additional costs?). In the city center, prices per square meter range – depending on the location – from €280.00 to a peak of €500.00 per square meter. I will assume your seller’s price is about €280.00 per square meter. For a detached house, you need at least 300 square meters (3,229 sq ft) of well-arranged land. That already means €84,000 for the plot, so €216,000 remains for a single-story detached house. If I deduct typical incidental building costs of around €35,000–40,000, you have about €175,000 left for the new build. According to my calculation (building costs per square meter of living space), you should expect a maximum of about 116 square meters (1,248 sq ft) of living space. Keep in mind that “turnkey” delivery usually still excludes painting and flooring, which are generally done by the owner. You will also want a driveway and terrace within reach, but those also cost money.
We have just submitted the building application for a semi-detached two-story house on a slab foundation in Kempen, and the cost is already about €210,000.
From this perspective, €300,000 – although certainly a lot of money – for KR, especially the city center, is not the largest amount you need for a solid construction project.
Kind regards
Skeeve schrieb:Yes, that’s exactly what it means; if you want more details, we can gladly discuss it via private message.
I just checked your profile and saw the note "Review and evaluation of private homeowners’ building documents." Does that mean you would, for a fee, review and assess the offer I get from my seller? (Could I therefore avoid becoming an expert myself and just spend money instead?) What would that cost?
Skeeve schrieb:I have already stated this many times... To be on the relatively safe side, every homeowner in NRW should calculate about €1500.00 per square meter (10.8 sq ft) of living space for a KfW 70 efficiency house. This rough figure varies depending on the look (villa or detached house, Bauhaus style or traditional), as well as equipment and technology. In the northern part of the country, prices are 3 to 5 times lower, while in the south they are 5 times higher or more.
Otherwise, I am currently studying your posts to find something to help estimate construction costs.
Regarding your plot in KR: house and land together should cost around €300,000 (turnkey, including all additional costs?). In the city center, prices per square meter range – depending on the location – from €280.00 to a peak of €500.00 per square meter. I will assume your seller’s price is about €280.00 per square meter. For a detached house, you need at least 300 square meters (3,229 sq ft) of well-arranged land. That already means €84,000 for the plot, so €216,000 remains for a single-story detached house. If I deduct typical incidental building costs of around €35,000–40,000, you have about €175,000 left for the new build. According to my calculation (building costs per square meter of living space), you should expect a maximum of about 116 square meters (1,248 sq ft) of living space. Keep in mind that “turnkey” delivery usually still excludes painting and flooring, which are generally done by the owner. You will also want a driveway and terrace within reach, but those also cost money.
We have just submitted the building application for a semi-detached two-story house on a slab foundation in Kempen, and the cost is already about €210,000.
From this perspective, €300,000 – although certainly a lot of money – for KR, especially the city center, is not the largest amount you need for a solid construction project.
Kind regards
B
Bauexperte21 Jan 2013 20:22Hello Der Da,
Kind regards
Der Da schrieb:BUT only where every discount is calculated in advance 😀
The statement that over €3000 can be discussed is pure mockery... you can negotiate much more than that.
Kind regards
Hello Construction Expert,
We are currently in preliminary talks with a general contractor (GC). When we asked if there would be any discount, he said no. However, since I requested some special features, including electric roller shutter motors for all the windows, our sales representative mentioned that the additional cost for the electric motors might be negotiable. (In our case, this would be about 2000€.)
During a site visit to the company, I spoke with the homeowners, and they told me that during the selection of finishes (at the building materials wholesaler working with the GC and the tradespeople), they were able to negotiate a 10% discount on the materials. They had researched prices for tiles, sanitary products, doors, etc., at other suppliers beforehand, but no other retailer could match the prices.
Is this realistic or not? In other words, is it common practice that discounts are more likely to be granted on materials during the selection process? And is a discount of 10% reasonable?
We are currently in preliminary talks with a general contractor (GC). When we asked if there would be any discount, he said no. However, since I requested some special features, including electric roller shutter motors for all the windows, our sales representative mentioned that the additional cost for the electric motors might be negotiable. (In our case, this would be about 2000€.)
During a site visit to the company, I spoke with the homeowners, and they told me that during the selection of finishes (at the building materials wholesaler working with the GC and the tradespeople), they were able to negotiate a 10% discount on the materials. They had researched prices for tiles, sanitary products, doors, etc., at other suppliers beforehand, but no other retailer could match the prices.
Is this realistic or not? In other words, is it common practice that discounts are more likely to be granted on materials during the selection process? And is a discount of 10% reasonable?
M
Micha&Dany22 Jan 2013 08:07Hello @all
I have to agree with the building expert – I have also found that you can only really negotiate (significant) discounts where they are already included in the initial price.
What is usually negotiable is including a few additional services “free of charge.”
For example, if the builder reduces the price by 1000 euros (about 1100 US dollars), it costs them 1000 euros, and the customer benefits by that amount.
If the builder adds electric shutters worth 1000 euros, it might only cost them about 400 euros (440 US dollars), but the customer still gains the full 1000 euros’ value.
This kind of discount benefits both parties!
If a supplier can offer a 5–10% price reduction, that would be a reason for me not to do business with them.
Who knows where else they might be hiding significant markups in order to be able to give discounts to the few customers who negotiate well...
Regards
Micha 😎
I have to agree with the building expert – I have also found that you can only really negotiate (significant) discounts where they are already included in the initial price.
What is usually negotiable is including a few additional services “free of charge.”
For example, if the builder reduces the price by 1000 euros (about 1100 US dollars), it costs them 1000 euros, and the customer benefits by that amount.
If the builder adds electric shutters worth 1000 euros, it might only cost them about 400 euros (440 US dollars), but the customer still gains the full 1000 euros’ value.
This kind of discount benefits both parties!
If a supplier can offer a 5–10% price reduction, that would be a reason for me not to do business with them.
Who knows where else they might be hiding significant markups in order to be able to give discounts to the few customers who negotiate well...
Regards
Micha 😎
Hello everyone,
and thank you very much for your comments. Since I spent a lot of time reading the forums yesterday, I feel a bit more confident now. On another website, I found reference values for land prices, so I now have a rough idea of what I should expect to pay.
Here, in Bauexperte’s album, I found some guidelines on other costs. Furthermore, I now know that a KfW 70 house can or should cost around 1,400 to 1,500 euros per square meter.
Hello Stefan,
Yes, that’s what it means; if you want more detailed information, we can gladly exchange messages via private message.
Hello Bauexperte, thank you very much for your support. As soon as I receive more detailed documents, I will get back to you about commissioning a "review and evaluation of private builders’ construction documents" for a fee. Especially since you apparently work in the Lower Rhine region, as noted below.
Understood, as mentioned above.
These numbers are almost exactly what I expected. When I print the offer, I will look closer at the details, but I think this will really come down to a consulting fee.
Flooring is already included; the developer provides rates per square meter that can still be adjusted.
Unfortunately, the developer won’t disclose that openly.
I agree with that.
and thank you very much for your comments. Since I spent a lot of time reading the forums yesterday, I feel a bit more confident now. On another website, I found reference values for land prices, so I now have a rough idea of what I should expect to pay.
Here, in Bauexperte’s album, I found some guidelines on other costs. Furthermore, I now know that a KfW 70 house can or should cost around 1,400 to 1,500 euros per square meter.
Hello Stefan,
Yes, that’s what it means; if you want more detailed information, we can gladly exchange messages via private message.
Hello Bauexperte, thank you very much for your support. As soon as I receive more detailed documents, I will get back to you about commissioning a "review and evaluation of private builders’ construction documents" for a fee. Especially since you apparently work in the Lower Rhine region, as noted below.
Bauexperte schrieb:
I have written this many times already .... To be on the reasonably safe side, every builder in North Rhine-Westphalia should budget about €1,500 per square meter of living space for a KfW 70 efficiency house. This approximate value still varies depending on the style (villa or detached house, Bauhaus or traditional), finishes, and technical equipment. In the north of the country, it is about 3 to 5 times cheaper, and in the south, it can be 5 times more expensive.
Understood, as mentioned above.
Bauexperte schrieb:
Regarding land in Krefeld: house and land together should cost around €300,000 (move-in ready including all additional costs?). In the city center, the price per square meter varies—depending on the location—between €280 and up to €500 per square meter (city forest area). I assume that your offer is priced around €280 per square meter. For a detached house, you need at least 300 square meters, and the lot must be well shaped. That already means €84,000 for the land, leaving €216,000 for a one-story detached house. Subtracting the typical additional construction costs of about €35,000 to €40,000 leaves €175,000 for the new build. According to my calculation (construction costs per square meter of living space), you should expect a maximum of 116 square meters of living space.
These numbers are almost exactly what I expected. When I print the offer, I will look closer at the details, but I think this will really come down to a consulting fee.
Bauexperte schrieb:
Don’t forget that with “turnkey” contracts, painting and flooring usually still need to be done by the homeowner. A small driveway and a terrace should also be considered, but these also cost money.
Flooring is already included; the developer provides rates per square meter that can still be adjusted.
Bauexperte schrieb:
Hello Der Da,
BUT only where every discount is calculated upfront 😀
Best regards
Unfortunately, the developer won’t disclose that openly.
Chris82 schrieb:
Your description sounds like you want to build with a developer? Hopefully, you know that property transfer tax applies to the land plus house price. A developer once told us about some tricks, but that’s tax evasion. (This is not tax or legal advice.)
A few percent discount should be possible, we didn’t even have to negotiate much. The so-called rip-offs are relative. The price premiums general contractors (we didn’t build with a developer; we bought the land independently) charge for special requests are sometimes ridiculously high. For example, a larger bathtub can cost four times as much as buying directly at a plumbing store, and you often don’t have a real choice among different models. You usually have to do tiling yourself or hire it yourself—making special requests here is pointless, as every contractor charged crazy premiums. However, it should be clear and makes sense that the standard offer is generally more expensive than subcontracting separately, since managing the trades is work that must be paid for if you don’t do it yourself.
I agree with that.
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