Construction financing for the architect-designed house

Hello,

I came across this forum yesterday and hope for a little help.

We have been looking for a property (house) in the Stuttgart area for several months. At first, we looked at existing properties, but considering the current price/performance ratio, we quickly turned to the topic of building. In fact, we have now surprisingly managed to get a nice little plot of land in a convenient location at a reasonable price from a municipality. The municipality is planning the notarization appointment for May and is currently preparing the sale.

A single-family house is to be built on the plot; we have already contacted two construction companies who want to give us initial offers. Yesterday, we visited an architect who seemed sympathetic and creative to us. He would tender the craft services and take over the construction management. He said he could not make us a binding offer that we could present to the bank because he would first have to make a design in order to then calculate the costs reliably. However, we do not want to sign a contract without a watertight financing. He replied that we could get a financing commitment from one or more banks. On the other hand, as far as I know, a bank wants something more concrete and not: “We would like about 400,000 for our building project” – roughly speaking.

Our question: Since the plot must be partially financed, acquisition and then “looking for a provider” afterwards is out of the question. So we would need the complete package. But now we are a bit unsure about how to proceed if we decide on the architect. Or: How did you proceed? Were you given a price by the architect in advance? I am very grateful for ideas/experience reports.

Greetings from Stuttgart

P.S.: If anyone knows a good construction company for a single-family house in the Remstal: gladly

It works more or less like this!

You go to the bank, they tell you what is possible, and with this amount you go to the architect.

You can proceed with the property as follows! After you know the amount of possible financing, buy the property and bridge the financing.

In principle, it is the same situation as with us. The property was partially financed and another part of the equity was retained for the house. The architect could only provide us with a rough cost estimate before the financing. Amount x per sqm plus architect costs plus incidental construction costs plus buffer and miscellaneous. With this amount, we went to the bank and fixed the financing. If the money is not enough during construction, we have to make compromises or compensate with more equity. This is consciously intended by us. A subsequent financing is out of the question.

If all this is too uncertain for you, building with an architect is not right for you.

Regards, Steffen

You go to the bank, they tell you what is possible, and with that amount you go to the architect.

I consider this approach completely wrong. Banks regularly overestimate there.

Think about the most important things (size of the house, building form, etc.) and from that the architect can make a rough estimate. Then use any financing calculator online to calculate the monthly burden and decide for yourself whether this is desired for you. After that, go to the bank.

If you want a house individually planned for you by the architect, then go to the architect with your ideas for the house and have them make a rough cost estimate. A cost breakdown by trades and/or cost overview by cost groups [Wikipedia: Baukosten] should be achievable on an A4 page based on the initial discussions. This also includes the land costs. Then you have a rough reference point, which – according to our experience – is sufficient for the banks as a basis to determine the required loan amount for financing.

Since the estimates at this early planning stage are usually not yet based on offers, it is worthwhile to include a certain buffer. (In our case, every subsequent, more concrete cost estimate by the architect was higher than the previous one) The banks we contacted in our case also accepted this.

Ok, great, thank you very much for the helpful answers!