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Overspending Your Homebuilding Budget and What To Do About It

Posted by John Holahan on Oct 16, 2015 7:00:00 AM

If you’re like most individuals considering building a new home, you probably spend a fair amount of time thinking (or even worrying) about your homebuilding budget. You may wonder if you’ll go over your allotted budget for your new home. Let us put your mind at rest: you probably will! 

Most people do exceed their initial budgets to some extent when building a home. It’s easy to understand why it happens. First of all, it’s really hard to anticipate everything that will come up in the building process. Maybe you opt for upgraded appliances because they’re just a little bit more (and they’re so much nicer). Or maybe you’re in the process of picking out carpet for the bedrooms and you realize that the upgraded carpet (that looks better and will last longer) is only $2 more per square yard. Seems like a “no-brainer,” right? 

The fact of the matter is that some of the changes you want to make are legitimate—and it will never be cheaper to make the changes you want to make. And while we never encourage anyone to spend more than they can, sometimes you may need to spend a little bit more in order to get the value you want. But the key is not to overspend in the wrong areas. 

Don’t Overspend on Things That Don’t Add Value.

There are some things that seem attractive, but don’t really add that much to your home. Before you add something to the features in your home ask if it will increase your comfort, your security, or your energy-efficiency. Or could making a change now can save you money later. If you think you may need an extra room down the road (for a family addition or for a home office) it probably makes more sense to add it now than later. 

Avoid Things That Are Fads.

Sometimes a new idea will pop up in the world of interior decorating that just seems like a “must have.” But if it’s purely cosmetic, it may well be a fad. That means you’ll have to redo it a year or two down the road.

Stay Away From Over-Customization.

It’s easy to get excited about things that appeal to your personal taste. But those things can break your budget, and you may have a hard time recovering your investment. Let’s say you really like tropical fish. You could design your family room around a built-in aquarium. It would look really cool! But it’s probably going to cost you a lot—and if the people who want to buy your home after you aren’t big fish fans, not only is that not a draw—it’s a hindrance to making the sale. 

Be On the Lookout for “Upgrade-itis.”

This goes back to a point we made earlier. Upgrading your appliances or your carpet may be the right thing to do. But make sure your upgrades truly add value and aren’t just something that moves the “coolness” If an upgraded stove will last longer, make cooking more enjoyable, and be a draw when it’s time to sell—it might make sense to do it. If an upgrade doesn’t really add value (comfort, convenience, resale value), you may want to think twice.

As a final thought, you may find it helpful to think about changes to your original plan (and budget) in terms of: is it something we must have; something that would be nice to have; or something that would be great to have if money were no object?

Will you go over your initial budget? There’s a good chance that you will. But if you do, make sure you do it for the right reasons.

Topics: budgeting for new PA home, Poconos Homes

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