How to Save Money When Building a House

by on October 20, 2011

There are esentially two ways to save money when building a home.  You can save money on labor and service costs, and you can save money on material costs.  We’ll look at each type of cost separately and give some advice on how to save money on each expense.

How to Save on Material Costs for a House

Building a home means buying the wood and materials and then putting it all together.  Materials are the stuff that houses are made of, and there are lots of ways to ensure you get the best prices.  This means that you have to stay somewhat involved with any contractor you have hired during the building process to make sure that you keep a lid on material costs.  Here are some ways to save on material costs.

Pick the Right Contractor – The best way to get the best material prices is to find a contractor that cares.  Many contractors buy their materials from people they’ve done business with for years, and may or may not be getting the best prices available.  Ask your contractor where they buy the materials and what sort of discounts they get.  A contractor that is looking out for your costs can save you tens of thousands.  When choosing a contractor, get as many contractors’ estimates as you can.  Then compare their material costs and labor costs separately between quotes.  More importantly, find out if your contractor is willing to work with you on saving additional money on materials and labor.  Read through the advice below and make sure your contractor is willing to work with you on these issues before you sign any contracts.

Lumber – Lumber is the largest single material expense when building a house.  Ask your contractor where he buys his lumber and what level of discount he has.  Then, go directly to the lumber store and ask them for a bigger discount if you agree to purchase all of your lumber from them.  If you’re in a small town, don’t be afraid to have lumber shipped in from up to 100 miles away.  We knew a contractor that ordered his lumber from another state because they gave him bulk discounts and free delivery.  Also, while the typical contractor discount at our local lumber store is 8%, we were able to get a 12% discount if we agreed to buy all of our lumber and trim from them.

Flooring – Most contractors use a separate flooring contractor that gives them a contractor rate.  The contractor then charges you the rate plus their fees.  The problem here is not so much the labor rates, but the prices of the flooring materials.  We’ve found two avenues that have saved us over 50% on flooring.  The first, was to visit the local lumber liquidators (in our town we used floorsforless.com).  Floors for Less offered us prices 50% below Home Depot and we picked up the flooring ourselves to save on labor and delivery.  The second way we found to save was to visit the largest flooring store in town.  They have a warehouse building full of clearance priced remnants, including carpet, hardwood floors and tile.  Whereas the prices at this store are typically higher than a Home Depot, the clearance section, which takes up an entire warehouse, had unbelievably good prices.  The only downside is that the selection is what it is, and some of the clearance flooring was not large enough to cover an entire house.

Fixtures – Light fixtures, vanities, mirrors, ceiling fans and other fixtures can be bought at a local Home Depot type store, often for much less than what your contractor will pay through a subcontractor.  Get an even bigger discount by signing up for your store’s commercial account.  Another option is to open a store credit card, where they will often give you up to 10% off your first purchase.  If available in your area, there are many wholesale suppliers that will sell to the public.  And if they won’t, get your contractors license number or use their account to pick out and purchase the fixtures yourself.  For lights and other small fixtures, you can shop online for the best prices.  Picking out and buying the fixtures for yourself can save you as much as 30-50% on your fixtures cost.

Wiring and Electric – Ask your electrician what they charge per linear foot for their wire and then check it against a discount retailer or wholesaler.  If the prices vary a lot, either ask for a discount on the electrician’s prices or offer to buy the materials yourself.  Often, electricians charge prices much higher than even your local hardware stores.

Appliances – Check with your contractor to see where they buy their appliances.  They may have a substantial discount that you could use to pick out your appliances.  Even if they do, make sure you do your own research and pricing elsewhere before you buy.  In our location, there is a family owned superstore that offers once a year pricing at employee rates.  The prices on this sale blow away all the others in town.  You can also save a lot on appliances if you buy from the clearance section, which includes dented appliances or returned items that are as good as new and come with the same warranty.

Used or Reclaimed Materials – There are lots of building supply stores that offer reclaimed materials.  If you’re looking for some charm in your house and you want to help with global recycling, it makes sense to check out these stores.  We’ve heard of many people getting doors, floors, and especially external hardwood trim, posts, ballisters and beams.  Another option is to find a rich person that is remodeling their house (ask some contractors to help you find someone).  Then, offer to remove the items they are getting rid of in exchange for letting you have them.  It will save them demo costs, dumpster costs, and it will save your landfill hundreds of square feet.  We know someone that got nearly brand new solid maple 3/4 inch flooring for free using this approach.

How to Save on Building Labor and Services Costs for a Home

Contractor – Make sure your contractor has competitive labor rates.  More importantly, make sure that your contractor is efficient.  Get a list of references and ask them specifically about any overages or delays that they experienced.  Ask them if they felt like they got a good deal on their price.  The largest labor expense comes from your contractor, so reducing it can mean tens of thousands in savings.  Make sure you contractor is willing to work with you on the labor saving ideas highlighted below.  Your contractor should give you a detailed quote so that when you do something yourself, it can easily be subtracted from his overall quote.  If your contractor is unwilling to do this, consider offering to pay based on time and materials.  For an honest contractor, this often means the most effective rate for both the contractor and you, as there will be no “extra” worked into his quote in case of mistakes or overages.

DIY –  Do It Yourself.  As in, get involved and do as much as you can yourself, assuming you can do it right.  Anything that you can do will help lower your costs.  Even the little things are expensive and take nearly as much time for a professional as you.  Following are more specific tasks that you can often do yourself to save money on building your house.

Picking up materials – It’s amazing how much time is spent at the stores picking out, buying, loading and unloading materials.  There are dozens of hours spent at high labor rates that you may be able to do yourself.  Ask your contractor if you can help, or agree that you will pick out and buy such items as flooring, fixtures and appliances.

Become a subcontractor – Take on some of the parts of building your house yourself.  That’s if you have the time, patience and drive.  For example, give your contractor notice that you would like to build the deck, finish the bathroom, tile the floors, or take care of the landscaping.  Whatever it is that you can add value to, don’t hesitate to tell your contractor that you will take care of something.  However, if you do take on some projects yourself, make darn sure that you don’t hold up your contractor.  Have your contractor let you know when you can begin your projects and then be sure and start and finish them on time.  Holding up your contractor means they might put your job on a lower priority and begin working elsewhere, causing major delays.

Pulling Wires – It’s probably best, and sometimes required by law, that you let your electrician design your electrical layout.  With that said, there’s plenty you can do yourself that you don’t need a license for.  And remember, plumbers and electricians are the highest paid of any labor you are paying for, so even a few hours of work can save you hundreds.  If you want to save on your electrician bills, work with your electrician to drill and pull the wires through your house.  Most electricians despise this part of the work and it can save you thousands.  Use some of the money you save to invite some friends to help and offer to buy them beer and pizza afterwards.  Make sure you agree on and mark the wiring routes with your electrician before you start to make sure its done right.

Flooring – Flooring installers are fairly pricey, especially for hardwood floors and tile.  If you have the skills, installing tiling isn’t that difficult and a room can typically be done in a day.  Regarding hardwood floors, you can install them if you’re comfortable, or you can at least save money by picking them out at a discount (see above) and delivering the flooring to your house.  A decent portion of hardwood flooring expense is the labor needed to get the floors from the store to the work area.  The same holds true for tiling.

Painting – When your drywall is finished, your outlets bare, and before the trim is on, is the perfect time to paint.  Have your colors ready to go and ask your contractor to give you a timeframe when it will be ready to paint.  Painters charge a lot of money for their labor, and painting is much quicker and  to do when there is nothing to protect from the paint.  Painting the inside and maybe outside of your house can save you thousands.

Installing Electrical Outlets and Light Fixtures – We recently made the mistake of paying our electrician to install ceiling fans and to replace outlets during a remodel.  He phrased it as, I’m going to be here anyway, do you want me to throw this in for you?  We knew our mistake as soon as we saw the bill.  The price was nearly a thousand dollars more for installing three ceiling fans and replacing about a dozen wall outlets!  It takes a long time to unpack, assemble and install ceiling fans – don’t let your electrician charge you a hundred dollars an hour to do it!  The same can be said for light fixtures.  Read above for ways to save on buying the fixtures, then learn to install them yourself.

Finishing Wood and Trim – If you’re good with trim, you could save quite a few hours of labor by installing the trim and moldings yourself.  If this isn’t an option, at least offer to do the finishing.  Applying stain and polyurethane yourself is a great way to save another thousand or so dollars.

Landscaping – When it comes to finishing  the outside of your home, landscaping costs can be unreal.  We were quoted $9,000 to put in a 50 foot long, 4 foot tall retaining wall.  Instead, we opted to build a deck for half the cost.  Our point is that landscaping is expensive.  It is also very hard work.  The most efficient tool for landscaping is the Bobcat.  Let your contractor smooth out the areas with a Bobcat and lay down the topsoil.  They can do all of that in a day or two.  If you want to save on landscaping, you can do all of the seeding and planting yourself, as well as mulching or addng decorative rocks.  Even if you can’t handle all the labor, you can get the plan together and then hire some high school or college kids to do the labor.

In summary, the key to saving money when building a house is to not only be cost conscious, but to make sure you contractor is both cost conscious and willing to work with you.  Don’t be afraid to attempt some projects that you aren’t sure about.  Your contractor should offer you advice not criticism, and if you fail, your contractor should be eager to help you out.

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