The devil is in the details

So, we got our first bid from a builder over the weekend.  It was a turnkey estimate, but it came in way above what we were hoping for.  And I mean, WAY above.  So far above that I don't think the house will be worth that once it's done.  Needless to say, that was very discouraging.

If there is one thing I can recommend to a prospective owner-builder, it's determination.  Especially when  you think you have an idea of what is required or if you have some help/consultation from people who haven't built a house in a while, new regulations and requirements can really catch you off guard.  Plus, the costs of building may have gone up significantly if your "help" built their house more than 10 years ago. 

Some hidden costs are things like permits.  I'm pretty sure that, if you dig a hole to take a crap in you need a permit for it.  You need the building permit, yes, but that doesn't cover everything.  You need separate permits for plumbing, electrical(which will usually require you to submit a wiring print showing switches, circuits, etc), and so on.  Also, you have to calculate cost of labor vs your time to complete.  If you are paid by the hour this is a huge consideration because if you are taking time off of work, unpaid, to work on your house, you may be paying more than just paying a professional to do it.

Another thing to watch out for, some banks will not give you equity on the parts of the house you build yourself.  Check with your bank for details on that, but an owner-builder that we know had this happen to them.  The upside is that their taxes were lower because the house was assessed for a lower value, but who wants their house to be devalued just because they did work themselves.

The lesson from all of this is to ask before you plan.  Had I asked some of these questions previous to starting the project my expectations would have been a lot better and I would have been prepared.  Don't get me wrong, I'm not advocating a turnkey solution if for no other reason than there seems to be some collusion between the state, the banks, and the builders on construction.  I find it difficult to believe that a builder has a greater interest in a well built finished product than a homeowner.  I realize that banks have been burned on these projects in the past, but in business you win some and you lose some.  The Vegas-style idea of "house never loses", or in this case, "bank never loses" is garbage.