The Dream of Owning a Home - The Nightmare of Planning

Hello everyone!

My fiancée and I will get married next year, and the dream of owning our own home is not too far off in the future. We have set a goal to start purchasing or building a home by the end of 2013.

By then, we should have about 25,000 EUR in equity and 190,000 EUR in matured home savings contracts. I am quite familiar with financing questions, so I know roughly how much we can afford. We have a budget of around 400,000-450,000 EUR. We want to live in this house, so it should have everything one needs for living. We live in Munich, so we expect a pure land price of 150,000-200,000 EUR. That leaves 250,000 EUR for the house. However, here comes the first question:

What do we get for this money?

We have already researched on the internet and have been overwhelmed by the various options.

I will start by writing down which questions weigh on my mind regarding the individual points:

1. Architect
I have found absolutely no reference as to what a house like the one we envision would cost if designed by an architect. Can anyone maybe give me a tip?

2. Prefabricated house
Basically, we like some prefabricated houses quite a bit and they would also be financially feasible. However, we have no idea what is included in the catalog prices. And what extra costs special requests would incur. For example, more sockets, an additional wall, etc. Also, we have heard so many bad things that we are a bit scared. But I think if we follow the checklists, hardly anything should go wrong, right? We hardly know anything about building a house and fear being taken advantage of. Experts are always mentioned who one should consult. Where can I find such an expert?

Perhaps there is recommended literature one can read beforehand? I would be very grateful for appropriate tips. I have been trying for weeks to organize the whole chaos a bit. But I just can’t manage to... :(

Thanks a lot in advance!

EDIT: oh yes, now I completely forgot to write what we actually imagine:

Either a detached single-family house or a nice semi-detached house. Minimum 5 rooms, minimum 130 sqm, garden, basement, energy-saving house at least Kfw 70. These are the framework data we already know.

Also hello,
[…] We live in Munich, so we are calculating with a pure land price of 150-200K EUR. That leaves 250K EUR for the house. However, here comes the first question:

1. Architect

I haven’t found any reference points at all regarding what a house like the one we roughly imagine costs if it is created by an architect. Could someone maybe give me a tip?

When planning with an architect, you have to consider that in this option you cannot calculate with a fixed price. From experience, you should expect an overrun of the total price for the project – as forecasted by the architect – of 15 – 30%.
In case you want to consult several architects, you should also keep in mind that – according to the highest court ruling – a valid contract is concluded even if your conversation implies that the architect should start planning your house. Note: it is not necessary to explicitly give/sign a contract, meaning from this moment the architect is entitled to bill according to HOAI.

2. Prefabricated house

[…] Besides, we have already heard so many bad things that we are a bit scared. But I think if we follow the checklists, hardly anything could go wrong, right? We hardly know anything about building houses and are afraid of being taken advantage of.

In the prefabricated house provider industry, there are – as unfortunately everywhere else, too – some bad apples; however, the majority of providers have a reputable background. I don’t know which checklist you mean here, but if you mean the checklist from the Federal Ministry of Transport, Building and Urban Development, you should in my opinion consider that this list was created by “officials” J As supplementary reading it certainly makes sense, but unfortunately the checklist leaves out important aspects, such as safety.

It is always said that you should consult experts. Where can I find such an expert?


Here you will find a short guide that should help you, among other things, to find appropriate experts.

One last note: it is not enough to just consider the costs for the land acquisition or the actual construction of the dream house in your financing; reputable financial brokers will point out to you that the ancillary costs also make up a not insignificant part. That means you have to reduce the remaining part of your capital – after deducting land purchase – by the amount of ancillary costs. Only then will you know how much money you can actually base your house construction on.

Regards
Building expert

@BuildingExpert

When planning with an architect, it should be taken into account that in this variant you cannot calculate with a fixed price. From experience, you should expect an overrun of the total price for the project - as forecasted by the architect - of 15 to 30%.

The joke is good :D

In recent years, through my execution planning and tendering, I have easily achieved up to 30%, with a maximum cost overrun of 5%. That makes an average plus of easily 15-20%. Especially in metropolitan areas like Munich, there are very high price differences compared to the rural surroundings.

The joke is good

This is not a joke, this is experienced knowledge.

In recent years, I have easily saved up to 30% through my detailed execution planning and tendering, with a maximum cost overrun of 5%. This results in an average gain of easily 15-20%.

Depending on which provider I find in the competition, I also know before my offer that our fixed price, calculated by quantities, is about 20, sometimes 30% below the competitor’s offer. This does not mean that the competitor generally offers overpriced prices; most often this price difference simply results from the competitor’s infrastructure. For example, quite a few building customers do not want to maintain model houses; this circumstance must be taken into account. Therefore, it is only logical that the offer price of a provider operating on the market in this way considers this item in its calculation.

It always depends on what motivation drives the future builder; not every interested party becomes a customer. The latter, however, has already happened with the architect through the usual case law by the oral request to create floor plans; without any signature.

Especially in metropolises like Munich, very large price differences to the rural surroundings are to be found.

It is no different in the Rhineland and probably also not in other big cities in relation to their surroundings. Nevertheless, I personally know an architect with whom I would enter the experiment “contract award”; he cannot reliably guarantee a fixed price, so the risk of cost overruns always remains open.

So stay relaxed, Dipl.-Ing. Architect. | Business Informatics | BAFA & KfW Consultant Parcus; as in every industry, there are all kinds of people and sometimes simply more of some kinds than others.


Kind regards

From as little as 10%, the builder can sue for the interest with high chances of success. At 30%, any architect would have very bad odds, as their liability insurance would have a different opinion. I would also have no understanding in that case.

I myself work with fixed prices in the builder/architect concepts, with full warranty on the builder's own work.
In the last 3 years, I had an average cost overrun of about €5,000 per single-family house in reality, which were subsequent special requests.
I did not do any worse myself, as the prices of individual trades have always gone down a bit since then.

This year remains to be seen, the first half of the year was very steady with me in the Rhein-Main area as well as the Ruhr area.
What is, of course, also very important is how many construction projects a planner has running.
Of course, it makes a difference whether I tender one roof or five roofs in parallel.

The fact that a contract also comes about through implied conduct is quite justified. Because no reputable planner can prepare a cost calculation based on sketches with which a builder usually comes.

That means first finding a preliminary design that also works.

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Of course, I am not referring to prefabricated houses here; a price guarantee is certainly not an issue here, and ultimately everything is a matter of contract. The planning costs are also minimized here. One could also question whether it is justified to charge the builder corresponding costs when today sometimes just the address is changed in the drawings.

@ Parcus

From 10% upwards, the builder can sue the interest with high chances of success. At 30%, every architect would have very poor odds, because their liability insurance would disagree. I would have not the slightest understanding in this case.

In the case of exceeding the construction budget, the builder normally cannot have the additional costs reimbursed. Only with a contractually agreed and guaranteed fixed price does the situation differ. That is why I pointed out in my first post to Dr. Faustus that in any case financing should provide sufficient leeway for unforeseen cases also from the perspective of budget overruns.

[…]This year remains to be seen, the first half year was very stable for me in the Rhein-Main area as well as the Ruhr area.

Those are good prospects. Congratulations!

I am, of course, not referring to prefabricated houses here; a price guarantee is certainly not an issue, and ultimately everything is a matter of contract. Naturally, the planning costs are minimized here as well. One might also question whether it is justified to charge the builder corresponding costs when sometimes today the address is barely even changed in the drawings.

Yep, that certainly applies to the part of providers who generate orders exclusively with their model houses and therefore cannot deviate from their templates. On the other hand, the estimated architect fees for this group of providers are so low that it probably would hardly make a difference if this item were credited to the builder when taking over an existing plan.

I can hardly recall a project in my area of responsibility where no changes were made to the plans; even for semi-detached houses, where you would actually expect the scope for modifications to be marginal, apart from the length and width of the building structure. Recently, it is rather the case that we literally start with a blank sheet of paper; architectural and structural engineering costs, however, arise in both cases.

However, I also work with conventional “stone stackers” :D

Kind regards