Budgeting construction costs is not trivial. This is not only demonstrated by large public projects such as Berlin Airport or the Elbphilharmonie in Hamburg. Even when building private homes, unexpected cost overruns can occur. For most builders, building their home is the largest investment they will ever make in their lifetime. It is therefore all the more important that unexpected costs do not become a nasty surprise. Such cost traps in building a house almost always arise from insufficient preparation of the house construction project or an uncritical attitude towards the house offers received. Below we’ll show you how to best avoid the biggest cost traps when building a house:
COST TRAP 1: DON’T FORGET THE ADDITIONAL COSTS
It is quite difficult for laypeople to identify cost traps in advance when building a house. Prospective builders rarely have a job that has to do with home construction, and as mentioned, most only build once in their lives. That’s why you should first have a complete picture of the costs involved in building a house.
This means that land costs alone plus house construction costs do not equal the total investment required. Just as additional costs are added to the net rent in a rental agreement, there are also considerable additional costs when building a house, which you should not ignore in your overall budget. Depending on the federal state, additional real estate costs for intermediaries, property transfer tax, notary and land registry costs amount to up to 15% of the property price to be paid. Furthermore, there may be costs for the development of the property as well as the costs of connection to the sewerage, water and energy supply.
When building a house, in addition to the pure construction costs, there are certainly additional insurance costs and costs for electricity and construction water. Additionally, there may be significant disposal costs and earthwork costs. And if, like most builders, you finance the construction of your home with a bank loan, the binding interest and interest that accrues during the construction period for the part of the construction financing used are also part of the additional costs that must be factored into the overall budget.
Once the home is completed, there are additional costs that are not included in the actual price of the home. This includes costs for external structures, but also moving costs, renovation costs of the old apartment and costs for new furniture and kitchen. You can read more about additional costs when building a house here.
COST TRAP 2: TOO LITTLE RESERVE IN THE BUDGET
Even if you have carefully calculated all the costs and additional costs and included them in your overall budget. When building a home, all too often unexpected events occur that result in higher costs. For example, delays in the construction period due to bad weather conditions, geopolitical upheavals or bureaucratic obstacles in obtaining building permits can inevitably lead to additional costs that you were unable to calculate in advance.
Therefore, always plan a financial reserve for unexpected events in your construction budget and think about how to take countermeasures if, contrary to expectations, your financial situation worsens. If your total budget is about 10% higher than the sum of the calculated costs and additional costs for the house and property, you have enough margin for unforeseen events and do not have to refinance expensively later. In the worst case there is a risk of a financial deficit and the construction project has to be stopped.
COST TRAP 3: LACK OF HOME SUPPLIER RELIABILITY
When looking for the best deal on a home, many builders only look at price. Cheap doesn’t necessarily mean cheap. It can easily happen that you end up with a supplier who does not have the necessary experience or, even worse, is only interested in initially collecting a partial payment without providing any service. Aside from unnecessary hassle, the subsequent costs of repairing defects or finding a new company far outweigh the supposed savings on the initial price.
So, research a home provider before making a decision. It is better to rely on the advice of friends and acquaintances. Before signing a contract, be sure to talk to other builders about their experiences with the construction company and don’t be fooled by simple reference lists or reviews on the Internet. Only if a construction partner has references in your construction region that you are personally convinced of, you can be sure that, like the regional construction partners of , they will bring your dream house project to success without cost traps.
COST TRAP 4: SCOPE OF SERVICES NOT PRECISELY DEFINED
According to the Association of Private Builders, nine out of ten builders opt for a turnkey home. In turnkey construction, however, the contracting parties enjoy wide contractual freedom in terms of content. This means that builders often subsequently incur costs that they had not anticipated due to unclear terms in the construction and service description. Therefore make sure that the agreed construction work is described exactly in ‘s 40+ page construction description. It should also be clear what is not included in the fixed price and how imponderables are handled, for example in relation to ground conditions.
You should also pay close attention to changes and special requests. With MYMassiv-Haus®, individual equipment requests are taken into account in the form of a separate additional building description, which becomes part of the contract and in which all special requests included in the fixed price are described. Potential builders at this point may not be careful enough to avoid later problems or unplanned cost traps when building a home.
COST TRAP 5: REPLANNING
When it comes to planning, the more complex the architecture, the higher the costs. On top of that, unusual floor plans are more likely to lead to planning errors and misunderstandings during construction. That’s why you should design the floor plan more simply. This doesn’t mean giving up style when it comes to architecture. On the contrary: already in 1924 the architect Walter Gropius declared that the Bauhaus aimed at «simplicity in multiples».
However, the biggest cost trap when building a home is the redesign and changes during the construction period. Not only do they cost a lot of money and, in extreme cases, can blow your home construction budget. There is also a risk of construction delays and errors if, for example, when the floor covering is subsequently changed from carpet to parquet, one forgets that this also changes the floor height and suddenly there is a danger of a threshold under the living room door. So take all the details into consideration when designing the house.
COST TRAP 6: LACK OF CONSTRUCTION PROGRAM
One of the most common cost traps when building a home is delays in construction time. It is not possible to influence external factors such as bad weather or geopolitical crises. However, it is not necessary to delay appointments due to a craftsman’s error. Not only defects have to be repaired at great cost. You also pay a longer rent and additional binding interest on your construction loan.
On the one hand you can avoid this by carefully selecting your regional construction partner as mentioned above. On the other hand, you should agree with him on a binding construction program, as is the case with the MYMassiv-Haus® construction contract. If the agreed construction time is exceeded, the house contractor is liable for delays for which he is responsible, so that you are protected from additional costs.
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