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How Much Is This Home?

Clients deserve a straight answer, but getting it requires an honest conversation

Tract builders and realtors often market homes in terms of square-foot costs, but that approach can be misleading for a custom home. Sam Rashkin, founder of the Energy Star for Homes program, expressed this idea forcefully at a recent industry conference. "If you put 100 of the smartest people from the building industry in a room for a week and asked them to come up with a worse metric than cost per square foot," he said, "they wouldn't be able to do it."

Rashkin was talking specifically about energy-efficient, healthy, and durable high-performance homes—the kind built by today's best professional builders.

It's no mystery why so many homeowners latch on to this metric, however. It's an understandable shortcut people use to try to understand what they will be getting for their money. As builders, it's up to us to provide that understanding.

Some builders simply reply that square foot costs depend on what you want. That's factually correct—custom homes are by definition unique, so the final cost will vary with the details. But the answer is incomplete in that it doesn't address an important underlying concern.

Yes, people want to know if they can afford a given builder, but they also want assurance that the builder will be a good steward of their budget and their vision. That's why a professional builder will view this question as a conversation starter. This conversation is an opportunity to demonstrate our respect for their cost concerns, perhaps by showing photos of completed homes and sharing the final prices of those homes. But we also need to go deeper.

Part of the custom builder's job is exploring the client's vision and budget to help build the best house they can afford. If they love a particular home we show but it seems too expensive, we can explore what aspects of that home apply to them. For instance, it may have been on a sloped lot, but their lot is flat, or it may have 10 outside corners and 24-foot vaulted ceilings, while they would be happy with something simpler and less cavernous but with a similar look and feel. The variables are nearly infinite.

Besides fleshing out their needs and wants, we also must understand the clients' budget. If they have a particular cost target in mind—say, a 3000-square-foot home for $300 per square foot—we can help them understand what designs and products they can realistically expect for that price, as well as what tradeoffs they will need to make.

The conversation is also a chance to clarify the clients' notions of square footage. Do they assume it includes the unfinished basement? The garage or patio? How about land costs and permit and design fees? There's no standard way of calculating home size, so a reputable builder will work to make sure everyone is on the same page.

Ultimately, what most people want is assurance that they can trust the builder. One way a good builder earns that trust is by investing the time and effort needed to understand all the variables involved, then using that information to calculate an accurate price. Clients deserve nothing less.