New Custom Homes
A custom home isn’t the same as a tract or builder home that is already designed, and which you get to “customize” by picking your upgrades, tile finishes or that special epoxy floor in the garage. While great marketing for a developer or spec house, there’s really nothing custom about a home that, except for a few cosmetic touches, is exactly the same as the one next to it.
Your architect works with you and your family to understand your needs, program and budget to design a home that works for you. If you don’t have a program that outlines the type of spaces and adjacencies that you would like to have in your new home, your architect will work with you to develop one. Designing a home is a personal journey because the architect needs to understand how you and your family live, your day-to-day schedules and activities, your habits, and how you would like to live your daily lives. All of this is brought together by your architect to develop a program, conceptual design, final design, and finished product
Design Fees & Construction Costs
Many people, at the start of their project, do not have a firm grasp of all the issues and costs associated with their residential project, whether it is a new custom home or remodel. So, we present a hypothetical project and its associated costs. These tend to be skewed towards local market trends and are subject to change. We all know how fluid things like interest rates have been in recent years. We advise you to use these only for what they are; a hypothetical example.
Architect’s fees for full professional design services can range from 10% to 20% of construction costs for a new custom house, and 15% to 25% for an addition/remodel projects (remodels are riskier and more complex). To some clients, this seems excessive and they are unable to comprehend the added value they actually get with good design services. What we need is a proper context of the true costs of design fees.
So let’s consider the typical 25-30 year life cycle costs of a home (based on a 30-year mortgage). Do note that these are representational numbers. We will use the table below as an example for a 3,000sf custom home (these numbers are only an example and do not apply to any specific home or project);
How Architectural Fees Fit Into Your Long-Term Investment
- Cost of Property/ Building site: $500,000
- Construction cost: $1.500,000 (3,000sf x $500/sf)
- Architect’s 8% fee: $120,000
- Broker, closing, title fees, legal: $10,000
- Landscaping and paving: $250,000
- 5.0% interest on $1,200,000 mortgage (assumes 20% down payment): $1,120,524 (30 years fixed)
- Taxes at $9,000 per year: $270,000
- Total: $3,850,000 over 30 years
As a percentage of a total cost, it is easily seen that an architect’s fee represents less than 3.5% of the total cost. Note that these figures do vary; lower interest rates, lower costs of construction, and lower home values should be considered in the above example. This does not take into account that homes designed by good architects tend to have added value.
Potential Return on Investment
The appraised value of the home tends to be much higher than its construction costs, bringing in instant equity and a respectable profit to the homeowner should they ever sell. If the building is well documented, competitive bids can significantly lower the cost differential between the construction bids. Construction costs are where most of your upfront expenditure resides. A good architect can help design an efficient home that functions well, is aesthetically pleasing to the eye, environmentally friendly, saves on energy costs, and site responsive. They can help control construction costs and obtain competitive bids. However not all clients require the comprehensive services provided by architects. Read further on and we will get to this.
Other factors we did not list in the above hypothetical that can add to the cost of owning the home are maintenance items like landscaping/ gardening, operational costs, upgrades over time, etc. All these significantly lower the first time costs of an architect’s fees. Yet, if designed and built right, an architect’s services can result in significant savings over the life of the building. In some cases, profit from the sale of a well-designed home, especially if it was published in a design magazine or if it had won an award, can be comparatively generous. An energy efficient sustainably designed home can reduce the overall life time maintenance and operational costs of a home. Factor innovative design solutions, alternative construction materials and methods, personalized service, and so many other benefits, the return on investment for the use of an architect’s design services is more than made up for during the life of the building.
Efficient Homes
Construction often comes down to money and the costs of a new home. The bigger the home and the more lavish the fittings, the higher the costs. Many architects and designers specialize in designing large edifices. This gives the impression that many architects just want to design large lavish homes. Remember that the architect doesn’t design these buildings without the input of the client. A large home comes about because a client wants it.
While architects can design large homes, sometimes the greater challenge is to work on smaller lots with tight space constraints and to develop attractive, sustainable designs that are functional and innovative, sometimes with limited construction budgets. You may choose an architect because you have an unusual situation and are hoping to make the most of it. As a client, it’s your responsibility to find the architect who will best convey your dreams into a home you enjoy over your lifetime. To reach that point, takes skill, talent and hard-earned knowledge.
Things to Consider and Questions to Ask
- Will I need the services of a structural or civil engineer?
- Will I need the services of a landscape architect?
- What services are included in my architect’s fees?
- What are the utilities on site; i.e. sewer, gas, electrical, water, telephone and cable?
- Is my site in an ecologically sensitive area which requires special consideration?
- Are there any wetlands, creeks, lakes on or near the property?
- Are there difficult design review requirements or zoning/planning ordinances?
- Does my architect have a good relationship with local officials?
- Do you already have a contractor or will your architect help you find one?
- If you choose to not utilize the architect during construction administration, who will represent you?
