Wednesday, November 6, 2013

Valuable Upgrades and Omitted Options

To upgrade or not to upgrade, that is the question that every person building a new home asks themselves. Inevitably, every feature you care about is an added extra while the dozens of "bonuses" that are included aren't important enough to pay a second thought to. That's why every patron of new construction seems so surprised that their house costs more than they planned.

At the time all of our friends were like, "how are you surprised? The price is right there." And it was there, plainly visible for anyone with an internet connection to see. That price included granite countertops, 42 inch cabinets, stainless steel appliances, and hard floors through most of the first floor. That's more than we wanted or expected, so what else could we possibly have to pay for?

Oh, cable jacks and outlets. We need those. And overhead lights. And a railing on our stairs. What about a lot to build on? I guess we'll need one of those too.

By the end of the day we signed our contract, we had added $5,000 of "non-negotiables."

The first days add-ons were "structural" upgrades, such as the front elevation, deluxe master bath (just the layout, not the finishes), window trim, and light fixtures. This is also the time we would have added on french doors, additional windows, crown molding, a fireplace, a screen porch, a third floor, an apartment over the garage, and the list goes on and on. All things considered, we got off easy only spending $5,000.

We were also asked to select our lot on that first day, which mandated we chose a location (and the coordinating lot premium). I knew several neighborhoods have lot premiums on waterfront or corner lots, but I had no idea builders add on a fee for the most basic land your house will be built on. I expected to pay more if we wanted an uptown view, not for our little lot at the bottom of a hill.

Yep, that'll be extra.

In our neighborhood, corner lots carried a $7,500 lot premium with a mandatory wrap-around porch upgrade to the tune of $8,000. Basically, more than $15,000 for the privilege of having a marginally larger yard. For some reason, people still jump hurdles to get a corner lot so there wasn't even one available.

By the time we signed, there were only 4 lots left in our "phase" of construction, two of which we immediately ruled out because they backed up to a church's parking lot. Of the remaining two, one had a larger lot and a lower premium. Decision made.

Once our financing had been approved, we had our design center appointment. We went in telling ourselves that we had a budget of $8,000 for this appointment, where we would select all the finishes and agree to pay the price for each. Overall, my mom convinced us to spend a little more (around $11,000) to get all the features we wanted. She wisely pointed out that we would hate ourselves down the road for nickel-and-diming the building process.

Our prevailing theory was to pay for what we can't DIY later and skip anything within our skill set. We also tried to rule out a few desirable features that wouldn't add value to our day to day lives. We tried to think of everything in terms of trade-offs, ex. "we can afford an unfinished 3rd floor with no other upgrades, or almost everything except the 3rd floor." "If we want to upgrade the cabinets, we won't be able to do the double sinks in the guest bath."

Design-wise, we picked two alternatives for everything: good-enough, budget option or all-out, dream finishes. Then we used those when deciding on which features we needed and which to skip. "Would we rather have the perfect kitchen or the good-enough kitchen and a screened porch.?"

What we chose:

Window trim for the whole house came in at $1,300 and crown molding would have been around $1,000 per floor. I knew we couldn't afford $3,300 of molding and since our builder would have only installed a 1x4 for crown molding I decided I could tackle that later. I also plan on adding some wainscotting down the road.

Overhead lighting seemed like a no-brainer, but our builder (like most builders) doesn't see it as a necessity. To get a ceiling fan prewire was only $25 more than an actual light, but we did have to buy and install our ceiling fans (we would not have to do that for basic lights). Considering we always have a fan running in any room we're in, it seemed like the natural choice to shell out a few extra dollars.

As a matter of fact, we didn't add a single light fixture that wasn't a ceiling fan prewire. The value was just there for us. This is one of the few things I knew I would regret not doing. Our builder also accidentally included an outdoor prewire on our covered porch (score!), so there will be a fan outside come spring. That's six ceiling fans total.

I knew we wanted to run hard floors through the first floor, rather than having carpet in the dining and living room. In order to do that, we had to settle for apartment carpet upstairs. Okay, no biggie. As we see it, the carpet will likely need to be replaced within 5 years, so we can upgrade then. LVF (Luxury Vinyl Flooring) was the included option for most of the first floor. While I would have loved hardwood floors, it's nearly impossible to justify a decrease in durability for a $5,000 price hike. To add LVF to the two rooms it wasn't included in came in around $1,000. That's a $4,000 savings.

Speaking of $4,000, the most inexpensive off-white cabinets would eat up that savings and then some. Like every other blogger, I knew I wanted off-white cabinets, but I needed to make some huge trade-offs to bring it into our price range. I considered the standard, dark wood cabinets with an upgraded cream-colored granite (only $900 more), but in the end realized that our kitchen will truly be the heart of our home and so I should get something I will love for quite a long time. Our cabinets were our single largest upgrade.

Because we sprang for the nice cabinets, we had to skip the "easy kitchen package" (for approximately $400) which is basically pull out shelves and cabinet organizers. We really don't need much of that stuff and can get the little bit we do need from The Container Store.

Also in the kitchen, we knew we wanted a gas cooktop. After comparing and contrasting we realized the cheaper gas range would make the rest of our kitchen's finishes look cheaper than they are, so we selected a mid-level gas range. Lucky for us, the range we selected wasn't available in time for our closing, so we got a free upgrade to a double oven. To save money, we omitted pendant lights (it's still pretty without them) but we do have a prewire should we want to put them in later (another accidental builder bonus).

White subway tile was one of my non-negotiables of home-building, so I was thrilled to discover it was considered a lower end upgrade. Don't confuse my words, it was still an upgrade that we paid more for, but not the most expensive tile they offered by far. One surprising upgrade is we had to pay extra for the staggered, brick pattern versus having it set in a grid pattern. Even though it was $175, it was $175 well spent. We also upgraded to tile walls in the master bathroom and tile floors in the guest bath and laundry room. It just didn't seem right to have low end linoleum floors in an otherwise nicely finished home.

We omitted the extra windows and french doors in the dining room. Those upgrades changed it from a "dining room" to a "study," and I knew the high price tag was more for the name change than the features themselves. Looking back, Pat really wishes we had added the french doors.

Upstairs, we decided against closet systems in favor of cheap, terrible wire shelving. We also skipped cabinets in the laundry room for more wire shelves. Those are easy after-market upgrades that we plan on doing as needed/money allows. Right now the plan is to professionally finish one closet per tax return and we are in no hurry.

As I mentioned, we chose the deluxe master bath which basically includes a separate tub and shower versus just a shower. It also added an extra, large window. While we are mainly shower people, I do love a good bath every once in a while.

Personally, I think it seems foolish from a resale perspective not to include the garden tub. Even if you never take baths, some people simply won't buy a house if there's no tub in the master bath. While we definitely built our house for us, not the future owners, I did try to foresee and avoid any potential dealbreakers for future buyers. One of the houses currently under construction decided to skip the deluxe bath (and it's sad that I can pick them out as the one house that didn't get a tub)... I do not understand why anyone would make this choice, but to each their own. They got the 3rd floor.

Total we spent about $15,000 over the base price, some in non-negotiables, like the lot premium or the master bath but mostly on features to make the house more personalized. Compared to buying an older home or even an inventory home, there is no way we could have found a home that featured exactly what we wanted. Building new, even with all the added costs, was definitely the way for us.

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