A common misconception we observe is the idea that square foot pricing of an existing home is a meaningful method of comparison or way to project remodeling costs. With existing homes, it is often the case that it would be impossible to rebuild the home today for what it is currently valued at. Even new construction pricing, especially from larger volume production builders, is never a realistic comparison. The idea that a 3,000sf home purchased for $600,000 means that it costs $200/sf to build is inaccurate for multiple reasons, but it certainly doesn’t mean that you can add master suite addition to that home for that same rate. Building the same home over and over versus a unique ‘one of’ remodeling project are two different animals.
Production builders tend to build the same plans repeatedly. While they may change over time and some builders offer more variety than others, repetition is the key to their success. The effort to make their plans as efficient as possible is not necessarily about just using “builder grade” (a term I detest) products, but more about having efficient plans. For example, a builder may use the same 3 window sizes that they know are readily available for every home. Every aspect of the home is going to be analyzed to this degree to keep costs low. Then of course, a large production builder is purchasing such a sheer volume of product that they receive great discounts. On the labor side, they also realize great pricing discounts in return for providing their contractors a place to come work virtually day after day year-round. Not to mention the type of subcontractor that may be adequate for working on a new build is not necessarily the same contractor someone would want to have work in a client’s lived in home.
While a production builder can provide relatively accurate square foot price for their homes, they are able to do so, because they have their product and costs down to a science from building the same thing repeatedly. That is in sharp contrast to a company doing remodeling, where literally every project is a prototype, they are working in peoples’ homes, and do not benefit from the same volume discounts a large production builder is privy to.