Q: How much money would I save subcontracting my own home, verses having it done lock and key. House will be about 2300SF.

A(John Willis):It's a broad question, but I'll try to address it. The simple answer is to figure out the overhead and profit of the average builder and subtract that from the total cost. In most situations builders sell homes for 'retail', or the same amount they will appraise for. Most
people save approximately 20% because that's the approximate overhead and profit of most builders.

The devil is in the details, so here are some things to consider. If you use bank financing, they will force you to "do the right thing" which includes creating a very thorough Construction Cost Worksheet and perhaps more importantly getting a 'subject to appraisal'. That's an appraisal that says if the house you propose to build where there today, this would be it's value using the comparative approach. Whether you build it yourself or have a builder do it for you, it's possible to wind up with a house that cost more than it's worth. I've seen it happen and it's heartbreaking.

Also, consider the value of your own time. Consider that a big builder will get volume discounts on materials and have 'priority relationships' with subcontractors. An owner builder is much more likely to have problems with subs. Part of the value in hiring a builder is eliminating risk, but you pay for it.

There's an option in between. You can hire a construction consulting firm such as UBuildIt. They pass on volume discounts on materials and the benefits of 'priority relationships' with subs. They help you with costs and bids. They will dramatically limit your time commitment. And their fee usually approximates what they save you, so you get all that help and you'll still probably wind up with 20% savings (or equity). It's hard to argue with that value if you're
already considering being your own builder.

One more cautionary note. If you're considering using a construction only loan rather than a 'One Time Close' construction loan that automatically rolls to permanent financing on completion, be sure to get fully qualified for your permanent financing first! It's very conceivable to finance the construction of an 'alternative' structure, but not be able to get permanent financing on it, leaving you with a large balloon payment and no way to pay for it.

Q: May you tell me what the most cost effective way to build a home is? Do you have any information on this or on cost per square foot for homes build with certain construction materials?

A: (Kelly) I would say that the most cost effective way to build a home would be to:

1) Choose a very modest, compact design.
2) Choose a method of building that is fairly simple and doesn't require much skill.
3) Use natural materials that can be found locally for not much money.
4) Do most of the work yourself or with others who don't charge high wages.
5) Shop around for the best deals on materials and supplies.
6) Where appropriate consider using used or recycled materials.
7) Do the building as you can afford it, so that you are not paying high interest on borrowed money.

I do not have information about  the cost per square foot for homes built with certain construction materials. This would take some research on the materials available in your region and analyzing their costs.

Q: My wife and I are looking at purchasing a 6 acre lot (heavily wooded) in the Blue Ridge Mountains of Virginia. The land is at my best guess between 20 - 30 degrees in slope. I am a bit concerned about the cost of excavating such a property to build a home on. Can you give some idea what what I might be up against?

A: (Kelly) The amount of excavation necessary depends on the design and placement of the house. If your slope is generally facing south, you are in luck and can use this to your advantage in digging into the hillside to have a bermed house that fits naturally into the landscape, with passive solar features.  As far the cost to do this, you would need to consult a local excavator for an estimate. This sort of work is rarely more than a few thousand dollars.

Q: I am a Construction Science major at Texas A&M, and I am doing a final project in which I write a paper on how to reduce the costs of an existing home. I'm supposed to re-design an existing home, or 2 or 3 aspects of it, that in turn will be a creative way to sell homes in a slumping house market. I am supposed to value engineer the home through design, construction methods, materials, etc. My first thought was to improve the home by "green" improvements that would most likely be initially higher in cost but save money in the end through energy efficiencies. What such "green" energy-efficient additives could I add to a residential home?

A: (Kelly) Adhering to the principles of good passive solar design could increase the comfort and economy of the home over time: appropriately sized and shaded south-facing windows, with relatively fewer windows to the other directions; excellent insulation of the entire shell of the home; the inclusion of a considerable amount of thermal mass on the inside; solar water heaters on the roof pay for themselves rather quickly and are very effective; although more expensive, the addition of PV shingles or panels for the production of electricity will offset the electric bill; choose energy-effcient appliances throughout the house; use compact fluorescent lighting throughout...these are some ideas.